August 6, 2020

Cable TV Helps News Corporation Increase Profit

Net income at News Corporation climbed to $2.85 billion, or $1.22 a share, compared with $937 million, or 38 cents a share, in the same period last year, the company reported on Wednesday. Revenue increased by 14 percent, to $9.54 billion, largely on the strength of an 11 percent increase from domestic television affiliates and a 2 percent increase in advertising revenue at its cable channels, which include FX and Fox News.

News Corporation is expected to complete a split of its entertainment assets and publishing divisions into two publicly traded companies by the end of its fiscal year this summer. But the company’s third-quarter results already read as if they came from two distinct companies, with the publishing assets dragging on overall profits.

That division, which includes The Wall Street Journal, The New York Post and HarperCollins, had a $45 million decrease in operating income compared with the same period a year ago, largely because of weakness at the company’s Australian newspapers. The company’s cable channels reported an increase of 17 percent, or $147 million, in operating income, to $993 million.

FX, with original series like “The Americans,” about Russian spies hiding in plain sight in suburban America, and National Geographic both reported double-digit growth in advertising revenue.

Rupert Murdoch, chairman and chief executive of News Corporation, said in a statement that the company was on track to complete the split. “I am more confidant than ever of the long-term value the separation will unlock for the company and its shareholders,” Mr. Murdoch said.

Earnings reflected $25 million in costs related to the proposed separation, which will create two companies. One will be called 21st Century Fox and will include Fox Broadcasting, FX and the Hollywood studio; the other, smaller company will retain the name News Corporation and will include newspapers and a handful of Australian pay television assets.

The company spent $42 million on costs related to the closure of The News of the World, the British tabloid that was shuttered nearly two years ago after reports emerged that reporters had hacked into the cellphone of a murdered schoolgirl. News Corporation does not break out results for individual papers, but said the Sunday edition of The Sun, introduced in Britain after News of the World ceased publication, represented a bright spot.

The entertainment company, 21st Century Fox, will not be without its own challenges. Operating income increased by 15 percent at Fox Broadcasting to $196 million, in large part because the fees cable and satellite operators pay to carry the station nearly doubled. But the network reported lower national and local advertising attributable to declines at “American Idol,” now in its 12th season.

On Monday, Fox will hold a session for advertisers known as an upfront, at which it will introduce its new fall TV series. “It’s not been a great year for the broadcast business overall,” said Chase Carey, president and chief operating officer at News Corporation.

In the third quarter, the company’s movie studio reported $289 million in operating income, up from $272 million last year, mostly because of the success of “Life of Pi.”

News Corporation pointed to a decline in quarterly advertising revenues at Fox News, saying that they suffered in comparison to last year because there were no presidential primaries this time to help attract advertisers. Still, Mr. Carey said: “Fox News has been a success story second to none.”

The coming Fox Sports 1 cable sports channel has garnered a disproportionate amount of attention from Wall Street analysts who predict the channel may eventually compete with the Disney juggernaut, ESPN. Mr. Carey said sports were the “driving force” behind the company’s channels business, but he also cautioned that sports should not “cloud the importance” of Fox News, FX and other channels.

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