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August 5, 2010
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The improvement in advertising trends was witnessed across automotive, retail and telecommunications categories. The quarterly earnings of 30 cents a share outdid the Zacks Consensus Estimate of 20 cents, and rose substantially from a cent delivered in the year-ago quarter. News Corporation anticipates advertising markets to improve as the downturn fades.
On a reported basis, including one-time items, quarterly earnings swung to earnings of 33 cents a share, witnessing a sharp rise from a loss of 8 cents posted in the prior-year quarter.
News Corporation said that total revenue rose 5.7% year-on-year to $8,110 million driven by the strength across Filmed Entertainment (up 4.1%), Television (up 11.6%), Cable Network Programming (up 14.9%), Newspapers and Information Services (up 8.9%), and Book Publishing (up 8.6%), partially offset by Direct Broadcast Satellite Television (down 3.4%) and Integrated Marketing Services (down 3.2%). The Other segment revenue fell 19.8%. Total revenue also comfortably surpassed the Zacks Consensus Revenue Estimate of $7,960 million.
Total operating income dropped 1.7% to $932 million during the quarter. News Corporation now expects fiscal 2011 operating income to increase in the low double-digit percentage range.
Filmed Entertainment posted operating income of $137 million, down 32.5% from the prior-year quarter reflecting a fall in contributions from worldwide theatrical releases partially offset by a jump in home entertainment revenue, driven by the DVD sales of Avatar. Management hinted that the film business could face a tough comparison in fiscal 2011 due to the success of Avatar in fiscal 2010.
Television’s operating income rose 13% to $113 million, reflecting a rise in contributions from the Fox Television Stations, driven by favorable advertising trends mainly in the telecom and automobile sectors, partially offset by lower contributions from FOX Broadcasting Company due to the increase in programming costs. News Corporation believes that strength in the local and national advertising markets, aided by political spending due to the mid-term elections, will continue to boost the segment.
Operating income at Cable Network Programming jumped 31.2% to $563 million, reflecting a 30% increase in the domestic cable channels operating income and 40% higher contributions from the international cable channels. Management expects the segment to sustain its growth momentum riding on the back of a rise in contributions from FOX News Channel, STAR and the Regional Sports Networks.
Newspapers and Information Services reported an operating income of $115 million, up 19.8% from the prior-year quarter, reflecting improved advertising environment. Management pointed that improvement in the advertising market place will continue to assist the segment.
Book Publishing posted an operating loss of $1 million, which remained flat compared to the prior-year quarter.
Direct Broadcast Satellite Television or SKY Italia’s operating income tumbled 37.4% to $97 million, whereas operating income at Integrated Marketing Services fell 19.6% to $82 million.
News Corporation ended the quarter with cash and cash equivalents of $8,709 million, total borrowings of $13,320 million, and shareholders’ equity of $25,541 million.
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