Advertisement
YOU ARE HERE: LAT HomeCollectionsBusiness

News Corp. posts 47% jump in third-quarter earnings

Net income rises to $937 million from $639 million a year earlier. But fallout from the British phone-hacking scandal continues to dog the media giant.

May 10, 2012|By Dawn C. Chmielewski, Los Angeles Times
  • A committee of British lawmakers issued a blistering report last week finding that News Corp. CEO Rupert Murdoch had “exhibited willful blindness” toward the illegal phone hacking at News of the World and is “not a fit person” to lead a major international company such as News Corp.
A committee of British lawmakers issued a blistering report last week finding… (Noah Berger, Associated…)

Fallout from the British phone-hacking scandal continues to rattle News Corp., even as strong performances from the media giant's cable television and film groups helped it post a 47% jump in net income in its third quarter.

News Corp. on Wednesday reported net income of $937 million for the quarter ended March 31, compared with $639 million a year earlier. Revenue increased to $8.4 billion, up 2% from a year earlier.

Before discussing the New York company's financial results with Wall Street investors, Chief Operating Officer Chase Carey offered a spirited defense of his boss, Rupert Murdoch. Carey said he rejected the conclusions of a British parliamentary committee investigating the illegal conduct, which last week concluded that Murdoch, chairman and chief executive of News Corp., was "not a fit person" to run a giant media company.

"It's unjustified and, in many people's opinion, including my own, purely partisan," Carey said, adding, "He's one of the smartest, most forward-thinking executives of our time."

The company's cable networks reported operating income of $846 million, a 15% gain over the previous year, thanks to double-digit growth at Regional Sports Networks, FX Network and Fox News.

The film studio showed an operating income of $272 million, an improvement of nearly 10% from the same period a year earlier. Movie results reflected the strong box-office and home-entertainment performances of "Alvin and the Chipmunks: Chipwrecked" and "The Descendants."

Chief Financial Officer David F. DeVoe announced that News Corp.'s board had authorized an additional $5 billion to be allocated to the existing stock-buyback program — news that sent the company's shares, which closed up 5 cents at $19.38, up an additional 48 cents in after-hours trading to $19.86.

However, the British phone-hacking scandal continues to drag on the company's earnings. News Corp. took a charge of $63 million in costs related to the ongoing investigation of conduct at the now-closed News of the World tabloid.

News Corp. has been buffeted by the continuing fallout from the British phone-hacking scandal, which erupted last summer when it was revealed that a detective working for one of News Corp.'s tabloids had hacked into voice-mail messages left for a missing schoolgirl who was later found dead.

A committee of British lawmakers issued a blistering report last week finding that Murdoch had "exhibited willful blindness" toward the illegal phone hacking at News of the World and is "not a fit person" to lead a major international company such as News Corp.

News Corp.'s board subsequently issued a unanimous statement affirming the directors' confidence in Murdoch and his ability to run the company he built from a single newspaper in Adelaide, Australia.

Saudi Prince Alwaleed Bin Talal Bin Abdulaziz, News Corp.'s second-largest shareholder, also voiced his continued backing of Murdoch in an interview with the Guardian, but expressed concern that the situation is damaging the reputation of the company beyond its British newspapers.

"I really hope that this is behind us, because really it is not helping the name of the company," he told the Guardian. "We hope that this page is folded and put behind us because really it is not something to be proud of."

Murdoch's youngest son, James, in April resigned as chairman of satellite broadcaster British Sky Broadcasting, in which News Corp. holds a large stake, ahead of what was expected to be a critical report from the parliamentary committee on his handling of the ethics scandal.

Media regulators in Britain are evaluating whether BSkyB is a "fit and proper" holder of a broadcast license because of News Corp.'s nearly 40% ownership position. Some politicians have used Parliament's Culture, Media and Sport Committee's critical report to call for swift action, a call the regulators have resisted.

dawn.chmielewski@latimes.com

Advertisement
Los Angeles Times Articles
|
|
|