) third-quarter fiscal 2013 adjusted earnings of 36 cents a share
came in line with the Zacks Consensus Estimate but fell 2.7% from
37 cents earned in the prior-year quarter, reflecting higher
adjusted effective tax rate.
Including one-time items, News Corporation posted quarterly
earnings of $1.22 per share, which rose over threefold from 38
cents delivered in the year-ago quarter.
News Corporation, a diversified media conglomerate, stated
that total revenue rose 13.5% year over year to $9,538 million on
account of revenue growth across Cable Network Programming (up
17.1% to $2,782 million), Filmed Entertainment (up 17% to $2,014
million), Direct Broadcast Satellite Television division (up
40.8% to $1,300 million) and Television (up 1.4% to $1,225
million), partially offset by revenue decline at the Publishing
segment (down 4.3% to $1,938 million). The Other segment's
revenue surged 87.2% to $279 million. Total revenue handily
surpassed the Zacks Consensus Estimate of $9,028 million.
Total adjusted segment operating income increased 3.9% year
over year to $1,429 million during the quarter. Management
projects mid to high single-digit growth rate in operating income
for fiscal 2013.
Management anticipates channels businesses to deliver healthy
earnings growth on the back of a sustained increase at Cable
Networks and growth at international channels, as well as a rise
in advertising and affiliate revenue buoyed by FOX News, Regional
Sports Networks and FX Network.
The company is also focusing on enhancing its portfolio of
regional sports channels to strengthen the company's Fox Sports
Media Group's position in the lucrative sports entertainment
business, where it competes with
Walt Disney Company
) sports coverage network, ESPN.
In order to bolster its position in the regional sports
television business, News Corporation acquired the regional
sports network, Sports Time Ohio and a 49% stake in the Yankees
Entertainment and Sports Network in Dec 2012. In Nov 2012, the
company acquired the remaining 50% stake in ESPN STAR Sports - a
joint venture with The Walt Disney Company. Later, News
Corporation changed its name to Fox Star Sports Asia. The company
is also set to launch Fox Sports Japan.
The company's list of acquisitions also includes Eredivisie
Media & Marketing (acquired 51% stake) and Consolidated Media
Holdings Ltd. In Jan 2013, News Corporation increased its stake
in Sky Deutschland to 55%.
Operating income at Cable Network Programming jumped 17% from
the prior-year quarter to $993 million, boosted by revenue
growth. Contribution from domestic channels escalated 16% buoyed
by growth across the Regional Sports Networks (RSNs) and FX
Network, partly offset by higher programming and marketing
expenses at FX Networks and National Geographic Channels.
Contribution from international cable channels rose 21% gaining
from robust operating income growth at Fox International Channels
At the domestic cable channels, affiliate revenue grew 11%,
signifying increased rates across all networks, with growth
primarily driven by Regional Sports Networks, FX Network and Fox
News Channel. Advertising revenue climbed 2%.
At the international cable channels, affiliate revenue grew
42%, reflecting improvement at FIC and STAR, and gains from Fox
Star Sports Asia and Eredivisie Media & Marketing CV ("EMM"),
partly mitigated by the strong U.S. dollar. Advertising revenue
's operating income elevated 6% year over year to $289 million,
reflecting strong performance of
Life of Pi,
Ice Age: Continental Drift
segment's operating income grew 15% year over year to $196
million on the back of a more than twofold rise in retransmission
consent revenue and lower programming costs at the Fox
Broadcasting Company, partially offset by a fall in national and
local advertising revenue.
Direct Broadcast Satellite Television
or SKY Italia
posted a segment operating loss of $11 million, demonstrating a
sharp decline from an operating income of $40 million in the
year-ago quarter due to the consolidation of Sky Deutschland
results and lower contributions from SKY Italia.
SKY Italia ended the quarter with a subscriber base of 4.78
million, representing a net reduction of 51,000 subscribers on
account of the sluggish economic environment in Italy.
segment reported an operating income of $85 million, marking a
sharp decline from $130 million in the prior-year quarter. News
Corporation hinted that higher contributions from the U.K.
newspapers was more than offset by waning advertising revenue at
the Australian newspapers and integrated marketing services.
segment posted an operating loss of $190 million wider than the
loss of $147 million in the prior-year quarter.
Other Financial Details
News Corporation ended the quarter with cash and cash
equivalents of $9,324 million, borrowings of $16,317 million,
reflecting a debt-to-capitalization ratio of 32.9%, and
shareholders' equity of $33,249 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 May 7, 2013, News
Corporation bought back approximately $6.6 billion of shares at a
price of $19.50 per share.
News of the
News Corporation's decision to split into two separate
publicly traded publishing and media and entertainment entities
came as major development. The split is expected to be concluded
by the year end.
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, News Corporation holds a Zacks Rank #3 (Hold).
Other stocks to consider in the media and entertainment sector
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), both of which hold a Zacks Rank #2 (Buy) and look
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