Post date: Aug 08, 2012 11:58:2 PM
NEW YORK CITY, NEW YORK, UNITED STATES (AUGUST 8, 2012) (REUTERS) - Rupert Murdoch's News Corp posted a quarterly loss on Wednesday (August 08) after taking $2.85 billion (USD) of restructuring and impairment charges that overshadowed growth at its cable networks.
The hacking scandal continues to hurt News Corp's earnings, with the media conglomerate losing $1.55 billion (USD) last quarter due to restructuring and legal fees, overshadowing growth in its cable networks which include Fox News.
News Corp's chief financial office David DeVoe released the report via a teleconference."The company reported a net loss in the fourth quarter of $1.6 billion, largely reflecting the previously mentioned impairment restructuring charges that offset segment operating income," DeVoe said.
"Fourth quarter results also include charges of $57 million related to the investigation in the United Kingdom. Excluding these charges and comparable items in the prior year, fourth quarter earnings per share were .32 cents per share, compared the year ago adjusted ETFs of .35 cents a share."
Revenue fell 6.7 percent to $8.4 billion during the quarter.
At its cable networks, operating profit rose 26 percent on a 16 percent increase in affiliate fee revenue from cable, phone and satellite TV distributors.
Advertising revenue at its domestic cable channels rose 5 percent.
"The takeaway was that the fundamentals are pretty much in tact. The cable networks are humming along," said S&P Capital IQ's Tuna Amobi.
"The biggest noise was in payment charge which was unexpected, however we think that positions the publishing business for the spinoff, which should unlock for the value when that transaction is completed over the next year."
Operating income at the company's movie unit fell 43 percent to $120 million.
Fox Broadcasting also saw operating income fall 8.5 percent to $213 million. News Corp owns Fox Broadcasting in the United States, the FX and Fox News cable networks, and such newspapers as The Wall Street Journal and The Sun in the U.K.. It is also parent of the Twentieth Century Fox studios.
The company said in June it would separate its publishing and entertainment assets by next year in move to satisfy shareholders.
News Corp stock was flat ahead of the earnings announcement but has gained more than 30 percent so far this year- investors enthusiastic about its planned spinoff of its publishing division.
That business continues to be in restructuring mode. The company said that its growth will be flat this year.
"These are not growth businesses but Murdoch is taking very serious steps to try to transition to the digital sector in all of his papers and there will be a future for them. They are not going to vaporize," said Mediatech Capital's Porter Bibb.
Bibb says that the bigger concern is the ethical and governance matters impacting senior management.
"Candidly, he's still under a dark cloud in the U.K. in terms of some of the testimony he's given, the phone hacking and other presumed criminal activities that News Corp is being charged with," said Bibb of James Murdoch.
"Those matters are going to continue for another year or two at the very least, maybe longer and they now involve very serious allegations, charges that have been made against Rebekah Brooks, who was the News Corp chief executive in the UK," Bibb said.
A number of senior staff from Rupert Murdoch's News of the World have been arrested on suspicion of unlawfully intercepting mobile phones and other phone hacking crimes.