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News Corp. misses 1Q target
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November 7, 2001: 1:23 p.m. ET
Media conglomerate's profit misses estimates by a nickel amid weak ad sales.
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NEW YORK (CNNmoney) - News Corp. Ltd. posted a larger-than-expected drop in first-quarter earnings Wednesday, as revenue at its Fox television and newspapers unit fell due to the weak advertising market and the Sept. 11 attacks.
The company, which also owns Twentieth Century Fox film studios and a host of cable networks, newspapers and satellite assets, reported a first-quarter profit, excluding one-time items, of $83 million, or 6 cents per American depositary receipt (ADR), on revenue of $3.4 billion.
Analysts expected News Corp. to earn 11 cents per ADR, according to earnings tracker First Call. Excluding items, the company earned $149 million, or 14 cents per ADR, on revenue of $3.24 billion a year ago.
"Our September quarter results were achieved under difficult market conditions made even tougher by the Sept. 11 terrorist attacks," said News Corp. Chairman and Chief Executive Rupert Murdoch. "Earnings at our U.S. television operations - the Fox network, the station group and the cable channels - were hurt as advertising revenues declined and the cost of covering the war on terrorism rose."
The company said it lost more than $100 million in advertising revenue due to its commercial-free coverage of the Sept. 11 attacks.
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Income at News Corp.'s Fox television unit dropped to $52 million, almost 50 percent below the $100 million earned a year ago.
In a conference call Wednesday, Murdoch said the television unit had a great start to November, with the World Series stretching to seven games. He said each additional game brought in $20 million of advertising revenue - a number which would have been much higher in past years.
Income at the company's newspaper unit, which includes the New York Post, came in a at $74 million, 24 percent below the same period last year.
News Corp. (NWS: up $0.18 to $27.93, Research, Estimates) recently lost its bid to acquire Hughes Electronics to EchoStar Communications (DISH: up $0.16 to $24.54, Research, Estimates). Pending regulatory approval, EchoStar will purchase the satellite TV provider for $26 billion in cash and stock.
"We've come to the end of that story," said Murdoch during a conference call, referring to the lost bid for Hughes (GMH: down $0.05 to $13.91, Research, Estimates). "Life is too short to dwell on it."
However, when asked for his opinion on the chances that the EchoStar-Hughes deal will be completed, Murdoch said he thought there was a 70 percent chance the merger will go through.
News Corp. also said it is comfortable with its previously reported guidance for fiscal year 2002, when it expects operating income to grow in the high-single to low-double digits. Prior to Sept. 11, the company expected earnings to grow between 20 percent and 26 percent.
Analysts expect News Corp. to earn 19 cents per ADR in the fourth quarter and 69 cents per ADR in fiscal year 2002, according to First Call.
Separately, Fox Entertainment Group (FOX: up $0.49 to $22.99, Research, Estimates), which is 83 percent owned by News Corp., reported a first-quarter loss of 3 cents per share, in line with analysts' estimates and narrower than a loss of 63 cents per share a year ago. 
-- from staff and wire reports
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