The improvement in advertising trends was witnessed across telecom, automobile, real estate and retail sectors. The quarterly earnings of 29 cents a share outdid the Zacks Consensus Estimate of 22 cents, and rose almost twofold from 15 cents delivered in the year-ago quarter.
On a reported basis, the quarterly earnings came in at 32 cents a share, significantly down by 69.2% from $1.04 posted in the prior-year quarter.
The current quarter earnings include an after-tax gain of $79 million related to the partial sale of a stake in British broadcaster ITV. The prior-year quarter earnings include a gain of $1.2 billion from the partial sale of the company's ownership stake in NDS Group, as well as a $1.2 billion non-cash tax benefit.
News Corporation delivered double-digit growth in the top-line, reflecting recovery in the advertising market. Total revenue rose 19.2% year-on-year to $8,785 million driven by the strength in all major reporting segments – Filmed Entertainment (up 64.5%), Television (up 1.7%), Cable Network Programming (up 16%), Direct Broadcast Satellite Television (up 3.2%), Integrated Marketing Services (up 6%), Newspapers and Information Services (up 20.6%), and Book Publishing (up 13.6%). The Other segment revenue fell 30.6%.
Total operating income soared 54.7% to $1,253 million. Consequently, News Corporation raised its fiscal year 2010 outlook, and now expects operating income to increase in the high 20% range up from low 20% range previously forecasted.
However, the diversified media conglomerate was quick to indicate that its fourth-quarter results would be weak due to weak results from Filmed Entertainment segment on account of the timing of the release of films. News Corporation also hinted at weak results in Fox Broadcasting Company due to higher programming costs and lower network revenue. The news sent the stock down 65 cents or 4.2% to $14.75 in after-market trading on Tuesday.
Filmed Entertainment posted an operating income of $497 million up 76.2% from the prior-year quarter driven by the worldwide theatrical success of Avatar, Ice Age: Dawn of the Dinosaurs, X-Men Origins: Wolverine and Night at the Museum: Battle of the Smithsonian.
The Television segment's operating income rose more than fourfold to $40 million, reflecting a rise in contributions from the Fox Television Stations, driven by favorable advertising trends mainly in the telecom and automobile sectors, improved performance at MyNetworkTV, and cost-containment efforts, partially offset by lower contributions from FOX Broadcasting Company.
Operating income at Cable Network Programming jumped 38% to $588 million due to a rise in contributions from FOX News Channel, the Fox International Channels, STAR, and the Regional Sports Networks.
Newspapers and Information Services segment reported an operating income of $131 million compared to $29 million posted in the prior-year quarter. Higher advertising revenue at The Wall Street Journal and the U.K. newspaper group, and fall in operating expenses were the major drivers.
Book Publishing segment posted an operating income of $4 million, compared to an operating loss of $8 million in the prior-year quarter.
Direct Broadcast Satellite Television or SKY Italia segment's operating income tumbled 44.4% to $35 million due to the loss of subscribers, whereas operating income at Integrated Marketing Services rose 11.3% to $108 million.
News Corporation ended the quarter with cash and cash equivalents of $8,183 million, total borrowings of $13,506 million, and shareholders' equity of $25,209 million.
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