News Corp. chairman and CEO Rupert Murdoch assured Wall Street on Wednesday that the company’s phone-hacking scandal has had no material impact on properties outside the News of the World and said that he would not be relinquishing any of his duties to second in command, Chase Carey, any time soon.
"The board and I believe I should continue in my current role of Chairman and CEO, but make no mistake, Chase Carey and I run this company as a team," Murdoch told analysts during a conference call to discuss the company’s fiscal fourth quarter and full year results, which reflected its MySpace write-down.
Despite that failed foray into social media, News Corp. still reported profits of $683 million for the fourth quarter — below investor expectations and last year's results, but good enough for an increase in year-to year profits.
News Corp. netted $2.74 billion over the past fiscal year, a 7 percent increase over last year's $2.54 billion.
The phone hacking scandal deepened after the quarter closed on June 30. Murdoch spent most of his prepared remarks discussing his company's response to the scandal.
"There can be no doubt about our commitment to ethics and integrity," Murdoch said. "As we work through this matter, it is important to note there has been no material impact on our operations outside the News of the World."
Phone hacking charges date back several years, but did not catch fire during early July when the Guardian exposed allegations involving a murdered girl.
"I've run this company for more than 50 years," Murdoch said. "The kind of behavior that occurred in that newsroom has no place at News Corporation."
Murdoch reiterated that such behavior only took place in that one small part of the corporation and that his support of newspapers had not changed.
The company’s chairman left most of the business details to Carey and Chief Financial Officer Dave DeVeau.
Cable Network Programming continued to be the main driver for the media conglomerate, as it increased its operating income for the quarter by 12 percent to $631 million. Advertising revenue was a big part of that, with domestic cable channels growing ads by 23 percent and international channels by 20 percent. FX posted the most significant increases among domestic cable and Fox News continued to be one of the most successful cable channels around.
Carey said he expects even more profits in the future from the TV as the business model shifts.
"Both Fox and Fox News Channel will take subscription fees to a whole new level in the next year and a half," Carey said.
However, he expected the most sustained growth to come from the international market, where News Corp. wants to double profits from continents across the globe.
When it comes to filmed entertainment, the fourth quarter saw 53 percent increases over last year thanks largely to "Rio" but the annual tally was down because there as no matching the success of "Avatar" and "Ice Age: Dawn of the Dinosaurs."
Though both fourth quarter profits were strong, they were not what investors had expected due to both MySpace and the failed takeover of BSkyB — a result of the phone hacking scandal that closed News Corp.'s British tabloid News of the World.
The tally of $683 million is a drop of 22 percent compared to the same frame last year, when News Corp. profited $875 million.
The failed BSkyB bid raises another question — what will News Corp. do with its excess cash?
News Corp. has already announced a $5 billion stock buyback and Carey said the company would likely pursue additional buybacks because the stock is "woefully undervalued."