) first-quarter 2013 earnings of 43 cents a share beat the Zacks
Consensus Estimate of 37 cents, and rose 34% from 32 cents earned
in the prior-year quarter on the back of double-digit growth
across Cable Networks.
Including one-time items, News Corporation posted quarterly
earnings of 94 cents a share, soaring from earnings of 28 cents
delivered in the year-ago quarter.
News Corporation, a diversified media conglomerate, hinted
that total revenue rose 2% year over year to $8,136 million on
account of revenue growth across Cable Network Programming (up
16% to $2,449 million) and Television (up 4% to $959 million)
segments, partially offset by declines at Filmed Entertainment
(down 2% to $1,745 million), Direct Broadcast Satellite
Television (down 11% to $817 million) and Publishing (down 2% to
$2,018 million). The Other segment's revenue inched up 1% to $148
million. Total revenue also fell short of the Zacks Consensus
Estimate of $8,175 million.
Total adjusted segment operating income increased 3% year over
year to $1,450 million during the quarter. Management now
projects high single to low-double digit growth rate in operating
income for fiscal 2013.
Operating income at
Cable Network Programming
jumped 23% from the prior-year quarter to $953 million, boosted
by revenue growth, reflecting an escalation of 33% in the
domestic cable channels' operating income, buoyed by growth
across the Regional Sports Networks (RSNs), FX Network and Fox
News Channel. Contribution from international cable channels fell
At the domestic cable channels, affiliate revenue grew 16%,
signifying increased rates across all networks, with growth
primarily driven by Regional Sports Networks and the Fox News
Channel. Advertising revenue climbed 8% owing to the augmentation
at Regional Sports Networks and Fox News Channel.
At the international cable channels, affiliate revenue grew
25%, reflecting improvement at FIC and STAR in India, and the
consolidation of the Fox Pan American Sports network partly
mitigated by strong U.S. dollar. Advertising revenue fell 1% due
to strong U.S. dollar that offset growth witnessed at Fox
International Channels in terms of local currency.
's operating income jumped 15% year over year to $400 million,
benefiting from the strong theatrical release of Ice Age:
Continental Drift and higher contribution from the television
segment's operating income grew 17% year over year to $156
million on the back of an over twofold rise in retransmission
consent revenue and higher local advertising, benefiting from
political advertising revenue, partially offset by fall in
national advertising revenue.
Direct Broadcast Satellite Television
or SKY Italia
posted a segment operating income of $23 million, demonstrating a
sharp decline from an operating income of $119 million in the
year-ago quarter due to increased programming costs and strong
SKY Italia ended the quarter with a subscriber base of 4.86
million, representing a net reduction of 40,000 subscribers on
account of the sluggish economic environment in Italy.
segment reported an operating income of $57 million, down
significantly from $110 million in the prior-year quarter. News
Corporation hinted that the drop in operating income was
attributed to the fall in advertising revenue at the Australian
and U.S. publishing businesses, partly mitigated by higher
contributions from the U.K. newspapers and HarperCollins.
segment posted an operating loss of $211 million compared with a
loss of $99 million in the prior-year quarter.
Other Financial Details
News Corporation ended the quarter with cash and cash
equivalents of $12,007 million, total borrowings of $16,457
million, reflecting debt-to-capitalization ratio of 38.5%, and
shareholders' equity of $26,264 million, excluding
non-controlling interests of $513 million.
On May 9, 2012, the company's Board of Directors approved a
share buyback program that raised the repurchase authorization to
$10 billion from $5 billion. Through November 5, 2012, News
Corporation bought back approximately $5.8 billion of shares at a
price of $18.74 per share.
The major news regarding News Corporation that hit the
headlines was its decision to split into two separate publicly
traded publishing and media and entertainment entities. There has
been immense pressure from shareholders to divest the publishing
arm, which has been grappling with lower operating profit
compared with the entertainment unit.
The split is expected to take a year. Also, News Corporation's
stakeholders will receive one share in each new company formed
for each share they currently hold.
The Publishing Company will comprise publishing businesses,
education unit and the integrated marketing services business. On
the other hand, Entertainment Company will include cable and
television assets, filmed entertainment, and direct satellite
Currently, we have a long-term 'Neutral' recommendation on the
stock. Moreover, News Corporation, which competes with
Time Warner Inc.
), holds a Zacks #3 Rank that translates into a short-term 'Hold'
NEWS CORP INC-A (NWSA): Free Stock Analysis
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