News Corporation reported a strong gain in fiscal Q4 (April-June) operating income, led by its television and cable networks operations. But a good bit of Wednesday’s quarterly conference call was spent on discussing the phone hacking scandal that led to the shut-down of the UK’s News of the World, with CEO Rupert Murdoch vowing to get to the bottom of what happened – and also making it clear that he has no intention of vacating either his CEO or Chairman posts.
Murdoch added that “there can be no doubt about our commitment to ethics and integrity.” The scandal also came up during the Q&A with analysts and reporters. The CEO said he was “shocked and appalled” by what happened at News of the World and conceded that top management should have pursued the matter further when officials of the UK newspaper operation wrapped-up the hacking investigation by concluding that it was an isolated incident. As for the investigations going on now (both in the UK and by US authorities into whether there was hacking here as well), Murdoch said the company is cooperating with the investigations and insisted that News Corporation is “totally committed to absolute transparency for the entire company.”
As for the financial results, News Corp. reported that fiscal Q4 segment operating income jumped 45% to $1.35 billion. Income from continuing operations increased to $982 million, or 35 cents per share, from $902 million, or 33 cents per share a year ago.
Television led the way, with segment operating income up 106% to $233 million, powered by a 7% increase in revenues. “This growth reflects a stronger overall national advertising market and increased retransmission consent revenues. Also contributing to the operating income growth were lower general entertainment programming costs primarily resulting from the absence of 24,” the company said.
“The national ad market continues to be buoyant and we are quite pleased with the low-double-digit CPM increases we obtained in this year’s Upfront for the upcoming broadcast season,” CFO Dave DeVoe told analysts. At the local TV station level, he said ad revenues for the quarter, excluding political, were essentially flat with a year ago.
Asked in Q&A about pacings, COO Chase Carey said local TV is currently down in the high-single-digits for this quarter, but that things look better as September approaches with the NFL and signs that the Japanese auto supply chain problems may be ending. “If you exclude political, it’s probably low-single-digit down,” he added.
Cable Network segment operating income was up 12% to $631 million, with revenues up 15%. That revenue gain was partially offset by higher programming costs. Affiliate fees were up 7% in the US, while ad revenues for the domestic channels grew 23%, led by pricing and ratings growth at the FX Network.