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News Corp. Swings to Profit

Fox film studio helps reverse year-earlier loss. Revenue climbs 14% to $4.7 billion.

February 13, 2003|Meg James | Times Staff Writer

News Corp. said Wednesday that it posted strong second-quarter earnings driven by television station advertising sales and the mammoth success of the video release of the animated film "Ice Age."

Rupert Murdoch's Australian-based conglomerate reported net income of $239 million, or 16 cents an American depositary receipt, for the fiscal quarter ended Dec. 31. A year earlier, a loss of $606 million, or 45 cents, reflected a $909-million write-down for contracts to air professional sports.

The latest results were in line with analysts' estimates.

"Obviously, this was a very successful quarter for us," said Peter Chernin, president and chief operating officer.

Chernin declined to discuss the company's effort to sell the Los Angeles Dodgers, long considered a strategic step in News Corp.'s bid to acquire DirecTV, the nation's largest satellite television provider. Chernin said, however, that the company was not about to get pulled into a bidding war with other DirecTV suitors.

"It would be a mistake to see this as a must-have," he said.

Second-quarter revenue climbed 14% to $4.7 billion for the company, which also owns 20th Century Fox film studios, the Fox television network, cable channels, newspapers, satellite systems and HarperCollins publishing house.

The company's Fox film studio roared during the quarter. Twenty of the 23 films released last year made money, Chernin said. The studio's second-quarter profit was $255 million, up from $115 million for the previous year. Video and DVD sales, particularly the November release of "Ice Age," contributed mightily.

"There is no frost on the Fox film studios," said Leland Westerfield, media analyst for UBS Warburg.

The television station division's operating income grew by 46% due to strong advertising sales. The company also saved money by combining operations in cities where it owns two stations. The company plans to merge its two Los Angeles stations in April or May, which should save the company about $10 million a year.

The biggest drag on earnings came from the Fox television network, which lost $150 million for the quarter, far more than analysts anticipated. Chernin attributed the losses to higher programming costs and the flame-out of four new series, specifically "Girls Club" and "Firefly."

However, he said they were encouraged by the success of "American Idol" and "Joe Millionaire," which this quarter helped the network erase its obligation to provide free time to advertisers because of lower-than-promised ratings in the fall.

News Corp. announced its earnings after the markets closed. Shares closed at $26.56, up 63 cents, on the New York Stock Exchange.

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