News Corp.’s Full-Year Profits Soar on Back of ‘Avatar’

Company ends fiscal 2010 with operating income up 11 percent

Last Updated: August 4, 2010 @ 9:50 PM

News Corp. said on Wednesday that the company finished its 2010 fiscal year with $4 billion in operating income – an increase of 11 percent – thanks, mostly, to the ridiculous box office success of “Avatar” and a recovering ad market.

Excluding a $500 million litigation charge and other considerations, News Corp.’s operating income was up about 30 percent for the full fiscal year.

News Corp. posted fiscal fourth quarter net income of $875 million – compared to a loss last year during the period — helped, in part, by the sale of a Bulgarian TV station.

Fourth quarter operating income fell slightly to $932 million (from $948 million last year) as gains at its cable channels, TV stations and newspapers were offset by lower profits at its movie studio and Sky Italia.

Chairman Rupert Murdoch said he was “very pleased” with the performance, noting News Corp.’s profit “is more than three times the growth we were projecting when we started the fiscal year.”

“Having the biggest worldwide movie in history helped us achieve these fiscal 2010 results, but that was just a part of a much broader improvement at News Corporation,” Murdoch said in a statement. “These results underscore just how well positioned we are – fiscally, operationally and strategically – for further growth across all of our markets.”

During the three month ended June 30, net income at News Corp.’s 20th Century film studio was $137 million, compared $203 million during the same period last year. News Corp. attributed the slide to not having the box office hits – “Night at the Museum: Battle at the Smithsonian,” “X-Men Origins: Wolverine” – it had during the quarter last year. DVD sales of “Avatar” partially offset the profit decline.

Full-year operating income for the studio was a record $1.3 billion, thanks to the James Cameron film.

News Corp.’s Fox television division reported fourth quarter net income of $113 million – a 13 percent increase – and 45 percent year-over-year on improved advertising.

Cable profits soared to $563 million (up $134 million) and climbed 37 percent (to $2.3 billion) for the year, with Fox News leading the charge.

At News Corp.’s newspaper division, which includes Dow Jones and the Wall Street Journal, fourth quarter profit was up 20 percent. However, Dow Jones saw its quarterly profits slide due to a loss of revenue from the sale of its Index business. Still, advertising for Dow Jones climbed 14 percent during the period.

One area News Corp. continues to struggle with: digital media. Its Digital Media Group posted an undisclosed operating loss (part of a $174 million segment dip) during the fourth quarter, driven down by flailing search and advertising revenues at MySpace.

But Murdoch praised MySpace's new management team and a forthcoming "major overhaul."

"We're going to see it out for some time yet," he said.

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