News Corp. (NWSA) posted better-than-expected results for the fiscal third quarter ended March 31.
The company, which among many other things publishes this blog, reported revenue of $8.8 billion, up 19% from a year ago, and well ahead of the Street at $8.23 billion. Profits of 32 cents a share were a dime ahead of the Street consensus.
Operating income jumped 76% in the filmed entertainment segment to $497 million, driven by Avatar, which is now the highest grossing film ever, with total box office receipts of $2.7 billion. TV segment operating income increased to $40 million, from from $9 million. Cable network programming revenue grew 38% to $588 million.
Operating income in the satellite TV segment fell to $35 million from $63 million; but newspapers and information services grew to $131 million, up from $29 million a year ago. In book publishing, operating income was $4 million, up from a loss of $8 million a year ago.
The company said losses in the digital media group – primarily MySpace – increased from a year ago due to lower search and advertising revenue.
NWSA in late trading is up 36 cents, or 2.3%, to $15.75.
Update: Upon further review, the market is selling the stock: NWSA is down 65 cents, or 4.2%, to $14.75.
Update 2: On a conference call with analysts, the company said it expects Q4 results to be down from a year ago, due largely to an expected year-over-year decline in the film business, due to the timing of releases. Nonetheless, the company says it now expects full year operating income growth in the high 20% range; that is a revision of the company’s previous forecast for growth in the low 20% range. Rupert Murdoch said on the call that the company is seeing strong across-the-board growth in advertising, particularly in the U.S. and Britain.
Update 3: The company also indicated on the call that it has begun piling up too much cash, and that management is considering ways to make the current capital structure more efficient. Possible options include higher dividends, stock buybacks, debt repayment and investing in the business – which could include M&A.
Update 4: Also on the call, the company said it will be holding a press conference in 3-4 weeks with “important announcements” on the News Corp. subscription model for news content. The company, of course, already charges for online content from Barron’s and the Wall Street Journal. (But you get Tech Trader Daily, for free, I would add.)
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