Driven by the box office smash "Avatar," News Corporation reported record film earnings and strong overall earnings on Tuesday for its fiscal third quarter — the second straight quarter of positive results and yet another sign that the media giant is emerging from the recession.
News Corp.’s operating income was $1.25 billion, a 55 percent increase compared to the $810 million reported a year ago. The company attributed the profit rise to strong earnings growth across nearly every business segment in which it operates, including its 20th Century Fox studio, which carried receipts from “Avatar” into the quarter.
Specifically, News Corp.’s “filmed entertainment” segment reported record operating income of $497 million, up 76 percent from $282 million a year ago, driven by “Avatar” and its $2.7 billion worldwide box office haul. “Alvin and the Chipmunks: The Squeakquel” also contributed to the cause, generating $440 million at the box office. (However, the company cautioned its investors that it expects fourth quarter film results to be down approximately $100 million due to "year-over-year timing" for studio releases.)
Chairman and chief executive Rupert Murdoch said the results “confirm that no content company is stronger than News Corporation at building both fiscal and operational momentum,” adding that it is “ideally situated” to benefit from a post-recession increase in consumer spending, advertising and “access to new platforms.”
"Content is driving our success, from Avatar to the unstoppable Fox News to hit shows like ‘Glee’ and ‘Modern Family,’" Murdoch told investors during a conference call.
News Corp.’s cable division reported operating income of $588 million, or a 38 percent increase, driven by a 31 percent quarterly profit at Fox News — the highest ever at the cable network. FNC had the top 13 highest rated shows on cable for the second consecutive quarter, the company boasted in its release. (News Corp. COO Chase Carey said the company plans to "get fair value" for FNC in upcoming retransmission negotiations — a move that could eventually renew warfare between Fox and cable operators like Time Warner.)
Higher advertising revenue at the Wall Street Journal helped operating income for News Corp.’s newspapers increase nearly five-fold to $131 million. WSJ’s revenue grew 25 percent, News Corp. said.
Of WSJ’s "Greater New York" section launch, Murdoch dismissed reports of the company’s $30 million investment. "We invested nothing," he said. "We spent a million dollars preparing it, but advertising through June is more than paying for it. Any talk of us spending $30 million in a war is b.s."
The company even said MySpace, its struggling social network, is getting "stronger," though would not reveal specifics.
Murdoch said he is particularly bullish on Apple’s iPad, which he thinks will "revolutionize" the media industry.
Murdoch reiterated his plans for paid content, saying the company will "soon develop innovative subscription model to deliver content to consumers wherever and whenever they want it."
"We have a great slate of films coming up, but we don’t have an ‘Avatar’ in there," he said. "We have three big films coming this summer — not ‘Iron Man’ or ‘Toy Story’ — but they’re strong."
Murdoch also hinted that News Corp. may make investments in the near future, given the company’s "growing air of confidence" about the economy — and an abundance of cash on its balance sheet.
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