3 Nov 2011
News Corp saw net income for its fiscal first quarter drop 5% from a year ago due to the cost of closing the scandal-plagued News Of The World and dropping its takeover bid for British Sky Broadcasting.
The media conglomerate, controlled by Rupert Murdoch, is under fire for the phone hacking scandal and closed the Sunday tabloid amid the fallout.
Net income in the July to September period fell to 738 million US dollars (£463 million), or 28 cents per share, from 775 million US dollars (£486 million), or 30 cents per share, a year ago.
Revenue grew 7% to 7.96 billion US dollars (£4.99 billion), helped by higher fees for pay TV channels such as Fox News and the successful movie Rise Of The Planet Of The Apes. This beat the 7.63 billion dollars expected by analysts. Advertising at its domestic pay TV channels such as FX grew 13% in the quarter.
The company said it remains on track to increase its adjusted operating income in the fiscal year through to next June by “low to mid-teen” percentages from the 4.98 billion dollars (£3.12 billion) it posted last year.
Shares rose 21 cents, or 1.3%, to close at 16.90 dollars (£10.60) in the regular session on Wednesday before the results were announced.
Mr Murdoch, the 80-year-old CEO who controls News Corp through a family trust that owns nearly 40% of the voting shares, did not appear on a conference call to take questions from analysts and journalists.
Earlier on Wednesday, Vanity Fair previewed an article which said Rupert Murdoch had asked son James, the company’s heir apparent, to take leave amid the phone hacking scandal this summer, before changing his mind after a sleepless night. The story appears in Vanity Fair’s December issue, which is out on Thursday.
Chief Operating Officer Chase Carey said that the company had no plans to oust James Murdoch, who is currently the No 3 at the company as its deputy chief operating officer. “We have great confidence in James,” Mr Carey said. “James has done a good job and we are not contemplating any changes.”
Mr Carey said however that the board takes “seriously” a protest vote that saw a majority of voting shareholders who are not affiliated with the family cast ballots against the re-election of Mr Murdoch’s sons James and Lachlan to the board. “The board continues to evolve,” he said. “We’re proactively looking for feedback from our shareholders.”