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News Corp. Ad Sales Double Net Income

Revenue climbs 12% in its fiscal first quarter compared with last year on performances by television operations.

November 06, 2002|Sallie Hofmeister | Times Staff Writer

News Corp. more than doubled its fiscal first-quarter net profit, fueled by strong advertising sales at its U.S. television stations, Fox broadcast network and cable channels that more than compensated for a wider loss at its satellite operations and a downturn in its newspaper business.

The Australia-based company reported Tuesday that net income was $162 million for the quarter ended Sept. 30, up from $73 million in the same period a year ago.

News Corp.'s earnings per share rose to 12 cents, up from 6 cents a year ago. Sales jumped 12% to $3.8 billion, up from $3.4 billion in the year-ago quarter.

The company released its results after the stock market closed. News Corp. shares rose 5 cents to $24.65 on the New York Stock Exchange.

Fox Entertainment Group reversed its $22-million loss from a year ago and reported net income of $214 million for the first quarter. The improved results were partly due to Fox broadcast network narrowing its quarterly operating loss to $8 million, from a $43-million operating loss a year ago, as the talent show "American Idol" bumped up the network's summer ratings 13%.

Fox Entertainment's cable group, which includes the Los Angeles Dodgers, several regional sports channels, FX and the Fox News Channel, swung to an $83-million operating profit in the quarter, from a $16-million operating loss the previous year. News Corp. said ad sales in the quarter tripled at Fox News as ratings surged ahead of rival CNN, owned by AOL Time Warner Inc.

In a conference call with analysts, News Corp. Chairman Rupert Murdoch touted Fox News Channel's growth potential, pointing to new advertising deals at rates higher than its longer-established rival's.

News Corp. officials also said advance advertising sales at its TV station group -- the nation's largest --have gained momentum since the end of the first quarter, growing 13% for November and 21% for December.

Yet Murdoch estimated that advertising sales for the TV operations would grow by only 5% in the current fiscal year. He said, however, that there are no signs of another recession.

"I'm not assuming a slowdown," Murdoch said.

Responding to questions about a potential purchase of Hughes Electronics Corp., the owner of DirecTV, Murdoch said his company had not held talks with Hughes' parent, General Motors Corp.

Federal regulators last month blocked the proposed merger of DirecTV and satellite rival EchoStar Communications Corp., giving Murdoch another chance to buy DirecTV after losing a bidding war last year.

"If it was offered to us, it would be [about] a year before it was consummated and then we don't know what kind of damage might be done," said Murdoch, referring to the potential deterioration in DirecTV's value since GM put Hughes on the market last year. He said if News Corp. made an offer, it would be for GM's 30% stake in Hughes, which has a total stock market value of about $10 billion, about half of what it was a year ago.

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