Despite economic upheaval and the phone hacking scandal that
resulted in the closure of the publication of 'The News of the
) posted better than-expected second-quarter 2012 financial
results, beating the Zacks' expectations on both counters. Healthy
performances across cable-television networks and film and
television studios were the catalysts that drove the quarter's
Owned by Rupert Murdoch, News Corporation's quarterly earnings
of 39 cents a share beat the Zacks Consensus Estimate of 34 cents,
and surged 34% from 29 cents earned in the year-ago
On a reported basis, including one-time benefits and $87 million
charges related to the investigation of phone hacking, News
Corporation informed that quarterly earnings came in at 42 cents,
up substantially from 24 cents delivered in the year-ago
News Corporation, a diversified media conglomerate, hinted that
total revenue edged up 2% year over year to $8,975 million,
reflecting growth across Cable Network Programming (up 9%), Filmed
Entertainment (up 14%), Television (up 11%), Direct Broadcast
Satellite Television (up 0.3%), partially offset by Publishing
(down 9%). The Other segment's revenue plunged 52%. Total revenue
also came ahead of the Zacks Consensus Estimate of $8,930
Total adjusted segment operating income soared 23% to $1,584
million during the quarter. However, when including phone hacking
probing charges, it hurt the operating income by $87 million, which
then showed an increase of 16% to $1,497 million. Management
cautioned that the series of investigation procedures will
adversely impact the company's future profits. Sans these
investigation costs, management reaffirmed its low to mid-teens
growth in operating income for fiscal 2012.
Another media conglomerate,
Time Warner Inc.
), one of the competitors of News Corporation, posted
fourth-quarter 2011 earnings of 94 cents a share that beat the
Zacks Consensus Estimate of 87 cents, and surged 40% from 67 cents
in the prior-year quarter, reflecting higher adjusted operating
income across Networks and Publishing segments. Total revenue grew
5% to $8,193 million from the prior year-quarter, and handily beat
the Zacks Consensus Estimate of $8,096 million.
Operating income at
Cable Network Programming
jumped 20% to $882 million, boosted by growth in revenue, and
reflecting a 25% increase in the domestic cable channels' operating
income and 8% higher contribution from the international cable
At the domestic cable channels, affiliate revenue grew 9%,
reflecting increased rates across Regional Sports Networks and the
FX Network. Advertising revenue climbed 6% because of pricing and
ratings growth at the FX Network, though partly offset by lower
advertising at the Regional Sports Networks due to NBA lockout.
At the international cable channels, affiliate revenues grew
19%, reflecting growth at the Fox International Channels in Latin
America. Advertising revenue rose 5% on the back of improvement
witnessed in advertising marketplace and viewership trends.
Advertising revenue at STAR India remained even with the prior-year
operating income more than doubled to $393 million, reflecting the
success of - theatrical releases, Alvin and the Chipmunks:
Chipwrecked and The Descendants and the home entertainment
performance of Rio, Rise of the Planet of the Apes, X-Men: First
Class and Mr. Popper's Penguins.
segment's operating income surged 25% to $189 million from the
year-ago quarter, reflecting higher broadcast network advertising
revenue and substantial rise in retransmission consent revenue.
These were somewhat offset by rise in programming costs and a drop
in local political advertising revenue at the local television
Direct Broadcast Satellite Television
or SKY Italia
posted segment operating income of $6 million, reflecting a sharp
improvement from an operating loss of $12 million in the year-ago
quarter, on the back of rise in advertising and subscription
revenues and reduced operating and programming expenses.
SKY Italia ended the quarter with a subscriber base of 5.03
million, representing an addition of about 23,000 subscribers
during the quarter.
segment reported an operating income of $218 million, down 43% from
the year-ago quarter. News Corporation hinted that the drop in
operating income was due to closure of the publication of 'The News
of the World' in the United Kingdom, and fall in advertising
revenue at the Australian newspapers.
segment, posted an operating loss of $191 million compared with an
operating loss $156 million in the prior-year quarter. The current
quarter results include an investigation charge of $87 million,
which was partially offset by absence of losses from Myspace and
Other Financial Details
News Corporation ended the quarter with cash and cash
equivalents of $9,432 million, total borrowings of $15,454 million,
reflecting debt-to-capitalization ratio of 36%, and shareholders'
equity of $27,454 million, excluding non-controlling interests of
On July 12, 2011, the company's Board of Directors approved a
share buyback program that raised the remaining authorization of
$1.8 billion under the previous program to $5 billion. Through
February 7, 2012, News Corporation has bought back approximately
$2.7 billion of shares at a price of $16.76 per share.
News Corporation also announced a dividend of 8.5 cents to be
paid on April 18, 2012, to shareholders of record as on March 14,
Currently, we have a long-term 'Neutral' rating on News
Corporation. Moreover, the stock holds a Zacks #3 Rank that
translates into a short-term 'Hold' recommendation.
NEWS CORP INC-A (
): Free Stock Analysis Report
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