That prophecy came as News Corporation reported that profits were flat for the past quarter. In the current economy, that’s an outcome that many companies would envy. Income improved for movies and cable, but television fell sharply.
“I’m not an economist,” Rupert Murdoch noted, but then the News Corporation CEO declared, “The worst is over.”
“As you know, I have been uncharacteristically pessimistic in recent calls. I would argue that it was a well-founded concern. But there are emerging signs in some of our businesses that the days of precipitous declines are done and that revenues are beginning to look healthier,” Murdoch said in his quarterly call with financial analysts around the world.
In achieving net income of $2.7 billion in fiscal Q3 (January-March), flat with a year ago, News Corporation recognized a couple of one-time gains from the sale of a partial ownership stake in NDS Group and the resolution of tax disputes. But it also had a sizeable one-time gain a year ago as well. Revenues for the quarter declined to $7.4 billion from $8.8 billion.
News Corporation puts operating income front and center in all of its earnings releases. Q3 operating income was down 47% to $755 million. But that decline was far from uniform across the company. Filmed Entertainment saw operating income rise 8% to $282, so it was a strong quarter for the movie business. Cable Network Programming operating income rose 30% to $429 million. CFO Dave DeVoe noted that Fox News Channel had its most profitable quarter ever, almost double a year ago.
The Newspapers division saw operating profits plunge to $7 million from $216 million. And while that was bad, Television was even worse, dropping to $4 million from $419 million.
Fox Television Stations saw operating income plunge 72%, although some of that was due to the lack of the Super Bowl this year and the sale of eight stations. Excluding the Super Bowl and the divested stations, DeVoe said O&O revenues were down 28% for the quarter.
Having talked about evidence of business stabilizing, Murdoch was asked by one analyst about TV pacings for the current quarter. “On our stations, if you’d asked me that question a month ago I would have had to say that the pacings for the next quarter looked frighteningly bad. But we’ve already, in this month, improved by 15% and the next two months look much the same,” Murdoch said.
By the way, Wednesday’s conference call was the last for COO Peter Chernin, who will leave to start his own production business at the end of June. He was praised by Murdoch for his years at News Corporation and received good wishes from analysts as well. When one analyst questioned whether the company would be different with several executives reporting directly to Murdoch, rather than a #2, Chernin insisted that Murdoch had been deeply involved in all aspects of the business during his run, so don’t look for News Corporation to be different without him.