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COMPANY TOWN

Fox's Profit Doubles on Eve of Stock Offer

November 10, 1998|From Bloomberg News

NEW YORK — News Corp. said its Fox Entertainment Group Inc.'s fiscal first-quarter profit doubled on hit movies as the media company prepares to sell stock in Fox to the public later this week.

Net income rose to $57 million, or 10 cents a share, from $28 million, or 5 cents, in the year-earlier quarter ended Sept. 30. It was the first quarter that News Corp., the world's fifth-largest media company, reported the U.S. unit's earnings separately.

News Corp. Chairman Rupert Murdoch is seeking to fuel investor demand for an initial public offering of Fox, which is gaining momentum in its film business with hits including the blockbuster movie "Titanic."

The Sydney, Australia-based entertainment company is expected to sell 13.4% of Fox, or 85 million shares, to raise about $1.9 billion to be used largely to pay down debt and buy back some preferred stock.

"This is an excellent sign for the IPO," said Bishop Cheen, analyst at First Union Capital Markets. "They've got so many good things happening."

Revenue rose 29%, to $1.8 billion from $1.48 billion.

Fox Entertainment consists of 22 TV stations, the Fox network, the 20th Century Fox film studio, cable networks such as the Fox News Channel, the Los Angeles Dodgers baseball team and other assets.

The studio had the largest share of U.S. box-office receipts over the summer. Hits include the modestly budgeted "There's Something About Mary," which has taken in about $170 million in the U.S. and Canada, and "Dr. Dolittle," which took in about $143 million. The movies boosted results over last year, when the company released flops such as "Speed 2."

" 'Mary' has been massively profitable for Fox and will probably spawn a sequel," said Dave Davis, an analyst at Houlihan Lokey Howard & Zukin. "They've had a really strong year."

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