Los Angeles - Media conglomerate News Corp reported third-quarter earnings in line with lowered Wall Street forecasts on Wednesday, leading Rupert Murdoch to say "the worst is over" for his company's movie, TV and newspaper businesses.
"There are emerging signs in some of our businesses that the days of precipitous decline are done and that revenues are beginning to look healthier," Murdoch, News Corp's Australian-born chief executive, said on a conference call.
News Corp's net profit grew 1% $2.72bn, or $1.04 per share, in the quarter through March. Most of that was due to one-time gains offsetting big drops at its Fox broadcast television and newspaper businesses, which include The Wall Street Journal.
Adjusted earnings per share were 61c, but 46c of that was due to a one-time non-cash tax benefit.
Excluding all the one-time items, News Corp had first-quarter earnings of 15c a share, matching the average forecast of analysts polled by Thomson Reuters. Analysts typically exclude one-time items from their estimates.
Revenue fell 16% to $7.37bn, below analysts' expectations for $7.72bn.
The New York-based company also maintained its outlook for the current fiscal year, which ends in June, saying operating profits will be down 30% from the $5.13bn it posted in fiscal 2008.
Murdoch's relatively upbeat tone surprised several analysts.
Analyst Alan Gould of Natixis Bleichroeder said he was expecting the full-year operating profit forecast to factor in a larger 34% drop.
"We're pleasantly pleased to hear the outlook has not gotten any worse," Gould said. "What we're trying to determine is: Have things gotten better or have they just stopped going down? And it sounds like they've gotten a little bit better."
'Major cost savings' at MySpace
News Corp's shares rose 15c, or 1.4%, to $10.80 in after-hours trade after the earnings were released. Earlier Wednesday, shares rose 63c, or 6.3%, to close at $10.65.
In a surprise success, operating profits from the filmed entertainment segment rose 8% to $282m from $261m, helped by rerun sales of TV productions such as "How I Met Your Mother" and "Boston Legal" and Fox Searchlight's distribution of "Slumdog Millionaire."
Murdoch declared the movie business was "anti-cyclical" and noted movie theater revenues are up more than 15% so far this year in the US and Canada.
Profits at its cable segment grew 30% to $429m from $330m, driven by strong performance at the Fox News Channel.
Profits at the direct broadcast satellite division housing Sky Italia fell 35% to $63m; magazine profits grew 4% to $97m; while the book publishing unit HarperCollins posted a $38m loss, compared to a $29m profit a year ago.
The "other" segment, which houses the NDS investment and social networking site MySpace, posted a loss of $89m, up from a $7m loss a year ago. Fox Interactive Media, which contains MySpace, posted revenue of $187m, down 11% from a year ago, as MySpace advertising revenue fell 16% and costs rose due to the continued rollout of the MySpace Music service.
Murdoch said he expected "major cost savings" at MySpace. He noted the hiring of former AOL CEO Jonathan Miller as News Corp's chief digital officer last month, along with faster growth, but declined to give specifics.
He also said he remained hopeful that consumers would start to pay for the company's journalism products online, where advertising revenue is smaller than for physical newspapers. The Wall Street Journal is one of the few papers to successfully charge for access to its website.
Murdoch noted that visitors to the Journal's website nearly doubled in April to 26.5 million from a year ago, and that 360 000 people downloaded its iPhone app in three weeks.
"As you can imagine, we will soon be making them pay for the privilege of accessing the world's best business news source," he said. "That it is possible to charge for content on the web is obvious from the Journal's experience."
- AP