Net income nearly doubled in fiscal Q2 (October-December) for news Corporation to $642 million from $388 million a year ago. Segment operating income increased to $1.29 billion from $712 million.
“News Corporation’s second quarter results demonstrate the mounting vigor of our global channels business. In the U.S. market, our cable channels are still expanding and adding subscribers, while increasing their revenues and profits at a double-digit pace on the strength of affiliate fee increases and buoyant advertising markets. I am also pleased with the continued recovery of our U.S. broadcasting business, including our local TV stations and the Fox Broadcasting Company, which posted its best quarterly profit in two and a half years,” said a statement from CEO Rupert Murdoch ahead of his quarterly conference call with Wall Street analysts.
Although cable television networks are still far and away the biggest business, broadcast television was the big winner in the quarter. Television reported second quarter segment operating income of $151 million, an increase of $122 million versus the same period a year ago, led by a $121 million increase in revenues at Fox Television Stations (FTS) and Fox Broadcasting Company, the network business. FTS’ second quarter contributions increased more than 50% from the same period a year ago, driven by a 20% rise in revenue. This growth reflects a stronger overall local advertising market, particularly in the automotive and financial sectors, as well as increased levels of political advertising. Network results improved 24%, as increased advertising revenue from National Football League games and general entertainment programming more than offset lower advertising revenue from this year’s Major League Baseball post season due to lower ratings and one less game than the prior year.
Cable Network Programming reported second quarter segment operating income of $735 million, a 22% increase over the second quarter a year ago, driven by a 12% increase in revenue “despite the adverse impact of a distribution contract renewal dispute at the domestic cable channels” – a refernce to the recent standoff with Dish Network. Operating income contributions from the domestic channels increased 16%, and the Company’s international cable channels grew earnings 37%. Advertising revenue at the domestic cable channels grew 12% in the quarter.
Murdoch was still busy touting the launch of The Daily, so he left the quarterly discussion with analysts to COO Chase Carey and CFO Dave DeVoe.
In discussing the TV segment, Carey declared that scatter pricing remains strong for the network and hailed the value of high-profile programming. “And no programming is more high-profile than ‘American Idol.’ We’re absolutely thrilled with its return, which has been received well, is performing well and continues to be the most dominant show on television. American Idol, along with ‘Glee’ and ‘The X-Factor,’ which premieres this Fall, provide a real foundation for FBC’s [Fox Broadcasting Company] future success,” the COO said.
Carey declared the local TV station business “stable” after the recent advertising recession. Later in response to a question from an analyst, he said that the O&O TV stations are pacing up double digits in the current quarter, which, of course, includes the Super Bowl.
Want to buy MySpace? Carey confirmed what’s been widely rumored for some time. News Corporation is looking at its “strategic options” for MySpace. “With a new content focus and structure in place, we believe now is the right time for News Corp. to consider its strategic options for this business. The new MySpace experience has been very well received by the market and we’ve had some encouraging traffic metrics in the last several weeks. However, we recognize that the plan to allow MySpace to reach its full potential may be best developed under a new ownership structure and we’re evaluating those strategic alternatives,” Carey said.
News Corporation long ago wrote off its investment in MySpace, after acquiring the then-hot Internet business for $580 million in 2005.