News Corp profits rise 37% despite $63m hacking scandal charge
News Corporation has reported income before taxes of $1.28bn (£793.4m), a year-on-year increase of 37%, despite an ad revenue decline at its British newspapers, the absence of the News of the World and $63m (£39m) in costs relating to the hacking scandal.
News of the World: closed by News Corp at the height of the hacking scandal
According to its earnings release for the third quarter of its fiscal year (January to March 2012), News Corp made income before taxes of $1.28bn, up 36.7% from $939m the previous year.
News Corp, whose assets include 20th Century Fox, Sky Italia and Fox News, reported total revenues of $8.40bn during the three months to the end of March 2012, up 1.8% from $8.26bn in the same period of 2011.
The revenue increase was led by the double-digit growth at the company's cable network programming business in the US and Asia, being partially offset by the lack of the National Football League Super Bowl in its US TV segment.
The publishing division of News Corporation, which includes its newspapers and book-publishing business, reported revenues of $2.03bn in the three months to the end of March 2012, down 2.8% from $2.08bn the previous year.
News Corporation's publishing division recorded operating income of $130m during the first three months of 2012, two-and-a-half times the operating income it recorded the year before, when it paid a $125m litigation settlement charge.
If the litigation settlement is stripped out, segment operating income decreased by 19.3% ($31m) which News Corporation said was driven by driven by local currency ad revenue declines at the Australian and UK newspapers, as well as the absence of contributions from the closure of The News of the World in the UK.
News Corporation closed the News of the World at the height of the hacking scandal last July, and is currently involved in civil litigation with people whose phones were hacked into by journalists at or people working for the newspaper.
Total operating income at News Corporation was £1.31bn, up 23.4% year on year. In the three months to 31 March 2012, News Corporation paid $63m related to the ongoing investigations initiated upon the closure of The News of the World. Without these charges, News Corporation would have made an operating income of $1.38bn.
The "other" segment of News Corporation, which includes its digital businesses, reported revenues of $149m in the three months to 31 March 2012, down 31.3% from $217m in the same period of 2011.
The "other" segment reported a third-quarter operating loss of $147m. This was reduced by 10.9% ($18m) year on year, which was attributed primarily to the absence of disposed-of businesses, including MySpace, but partially offset by the inclusion of the $63m charge relating to the News of the World.
Rupert Murdoch, chairman and chief executive officer, News Corporation, said: "With our disciplined approach to monetising our brands, I believe we are better situated than ever to capitalize on the increasing global demand for our superior content.
"Beyond the ongoing growth of our core businesses, I am very pleased with the company's progress as we execute upon other elements of our strategy to produce sustained, meaningful value for shareholders.
"I am confident in the execution of our strategy, which will continue to drive growth, create value for our shareholders and ensure the long-term strength of the company."
Last week, News Corporation board members issued an "unanimous statement of support" for Rupert Murdoch after a committee of MPs declared him "unfit" to run an international media company.
Follow Maisie McCabe on Twitter @MaisieMcCabe
This article was first published on mediaweek.co.uk
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