By Lisa Richwine
Rupert Murdoch's News Corp. (NWS) reported quarterly earnings that beat Wall Street expectations, aided by growth at its cable networks, and said it is on track to split off its slow-growing publishing business by the end of June.
The company's cable and entertainment businesses, including movie studio 20th Century Fox, will constitute a renamed company under the same management, called 21st Century Fox. The spun-off print properties will be grouped together as News Corporation, with different executive leadership. (Quartz has published a helpful graphic on the spin-off plan.)
News Corp.'s revenue rose 14 percent from a year earlier to $9.5 billion in the quarter, ended March 31, News Corp. said Wednesday. The company posted adjusted earnings of 36 cents per share, just beating the 35 cents expected on average by analysts, according to Thomson Reuters I/B/E/S.
News Corp. shares rose 3.6 percent to $33.00 in after-hours trading, after closing at $31.86 on the Nasdaq.
One-time items, including the purchase of a controlling stake in German pay TV operator Sky Deutschland and the sale of an ownership stake in New Zealand's Sky Network Television, helped lift net income to $2.85 billion, a jump from $937 million a year earlier.
The New York-based company said it is on track to separate its cable channels, movie studio and other fast growing entertainment assets from its newspapers, including The Wall Street Journal, near the end of its fiscal year in June.
News Corp.'s entertainment assets helped boost revenue and earnings for the quarter, led by its cable networks business, which includes the Fox News Channel, FX and regional sports networks.
Operating income at the cable network programming unit rose 17 percent from a year earlier to $993 million, as channels in the United States and abroad commanded higher fees from cable operators and more advertising revenue.
News Corp. Chief Operating Officer Chase Carey said the company will invest to build new cable networks, with the launch in August of Fox Sports 1, a competitor to Walt Disney Co.'s ESPN, and FXX, aimed at young adults, in September. The company intends to spend "a couple hundred million and change" over the next year to build those channels and some international networks, Carey said.
The media company is also trying to improve the Fox broadcast network, whose ratings slid this fall as aging singing competition "American Idol" drew a smaller audience.
"We are clearly disappointed with this season's ratings at the Fox broadcast network, and are taking steps now to improve next season's lineup," Carey told analysts on a conference call.
Lower advertising revenue for "Idol" dragged down the performance of the television unit, whose operating income still increased 15 percent, the company said.
The 20th Century Fox movie studio gained from the success of Oscar-winning film "Life of Pi," which grossed $600 million at theaters worldwide, and home entertainment sales from thriller "Taken 2" and animated hit "Ice Age: Continental Drift."
Operating income at the publishing unit, which includes its newspapers and the HarperCollins book publishing business, declined to $85 million, from $130 million a year earlier.
The company recorded $42 million in the quarter for costs related to investigations of phone hacking at its newspapers in Britain.
By Lisa Richwine