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News Corp. profit surges

By Hibah Yousuf, staff reporter


NEW YORK (CNNMoney.com) -- News Corp. posted quarterly profit and revenue Tuesday that soared from a year earlier and beat expectations, helped by its film unit, which produced the box office blockbuster 'Avatar,' as well as cost-cutting measures.

The global media conglomerate said its profit climbed to $254 million, or 10 cents per share, in the three months ended Dec. 31, compared with a loss of $6.4 billion a year earlier.

Excluding a one-time legal settlement charge of $500 million, News Corp.'s earnings per share surged 66% to 25 cents per share. Analysts polled by Thomson Reuters were expecting a profit of 20 cents per share.

The company's revenue jumped 10% to $8.7 billion, topping analysts' forecasts of a 5% rise to $8.2 billion.

"We continue to reap the benefits from the restructuring and cost containment measures we instituted before the downturn began," said News Corp. Chief Executive Rupert Murdoch in a statement.

Needham & Co. analyst Laura Martin added that the company was able to report "overdelievery" in every division of its business because of "excellent cost control."

Sales in the New York-based company's filmed entertainment division, which includes Twentieth Century Fox movie 'Avatar,' rose 28% to $1.9 billion during the quarter. Operating profit in the unit almost tripled to $324 million.

James Cameron's 3-D film has topped $2 billion in ticket sales worldwide since its Dec. 18 release. The company and analysts expect the film to significantly boost current quarter profits.

"We booked much of the film's cost but have only seen a small portion of its receipts," Murdoch said during a conference call. He added that the company will leave the film in theaters as long as it continues to rake in $30 million each weekend domestically, and even more internationally.

Murdoch also said News Corp. is pushing for an Avatar sequel.

"There's no agreement, budget, or timing yet. Since it's Jim Cameron, I wouldn't hold your breath to have one soon, but we'll be pushing for one," he said.

Several other News Corp. units also posted double-digit revenue growth.

Revenue in News Corp's television segment rose by 10% to $1.2 million due to improving advertising, while operating income rose to $29 million compared to a loss of $2 million a year earlier.

The company's Fox Broadcasting Co. has expressed interest in signing Conan O'Brien for a late night talk show following the recent controversy that resulted in the comedian reaching a deal with NBC to terminate his contract just seven months after he was named host of "The Tonight Show."

Although formal negotiations have not taken place with O'Brien, Murdoch said the company is giving "a lot of thought and examination" to the idea, and 'if the programming people can show us that we could do it and be fairly confident about making a profit, we'd do it in a flash."

Sales from the company's cable network programming, which includes Fox News Channel, rose 18%, and operating profit increased by more than a third.

After a heated contract battle, News Corp. reached a deal with Time Warner Cable early on Jan. 1 to charge the cable provider reportedly more than 50 cents per subscriber for the right to deliver Fox networks into homes. The fees could also help increase the division's future profit.

Improved ad revenue also lifted sales in the company's newspaper segment, which spiked 10%. The division's operating profit climbed by almost 30%, driven by higher advertising sales at The Wall Street Journal and cost-cutting measures at all its newspaper businesses.

Murdoch added that the News Corp. expects to expand its practice of charging for online content to its other U.S. titles, given the company's experience and success with the procedure at the Journal.

Sales from the company's book publisher HarperCollins rose 25%, and operating profits almost tripled, due to strong sales that included Sarah Palin's "Going Rogue."

Revenue from News Corp's remaining assets, including MySpace and an stake in Hulu, fell 40%, and the division lost $125 million, but Murdoch said traffic has been stabilizing at MySpace.

News Corp. (NWSA)'s stock climbed almost 7% in after-hours trading, after gaining 1.8% during regular hours.

The company's top rival Time Warner Inc. (TWX, Fortune 500), CNNMoney's parent company, is due to report its fourth-quarter results before the market opens Wednesday. Analysts expect the company's earnings per share to fall 25% to 52 cents, and revenue to plunge 42% to $7.1 billion from a year ago.

Media companies Walt Disney Co. (DIS, Fortune 500) and Viacom Inc. (VIA) are due to release their financial results next week. To top of page

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