4:34 PM
News Corp profit misses on movies and papers
Addison Ray
NEW YORK | Wed May 4, 2011 5:07pm EDT
NEW YORK (Reuters) - News Corp (NWSA.O) posted lower-than-expected profits on a weaker movie box office than a year ago and struggling newspapers, which were partly offset by strong performance at its cable and broadcast television business.
Rupert Murdoch's News Corp, which owns broadcaster Fox and publishes newspapers including the Wall Street Journal and the UK's News of the World, said operating net profit fell to 26 cents before adjusting for one-time charges from 29 cents.
Analysts had on average forecast profit of 27 cents, according to Thomson Reuters I/B/E/S.
It said the quarter compares with a year ago when it benefited from the record-breaking performance of Hollywood blockbuster 'Avatar'.
Revenue dropped 6 percent to $8.26 billion.
News Corp's filmed entertainment operating income fell by 50 percent to $248 million, compared with the quarter a year ago due to 3D movie Avatar.
Publishing operating profits also dropped significantly to $36 million due to a $125 million charge at its marketing service business and primarily due to advertising revenue declines at Australian and UK newspapers.
The story was better at its overall television business, which enjoyed a resurgence in advertising revenues and rising cable affiliate fees like other rivals at CBS Corp (CBS.N) and Time Warner Inc (TWX.N).
Operating income at its U.S. cable networks -- including FX, National Geographic and Fox Sports -- rose by 22 percent, while operating profit at its international networks -- including Star TV and Fox Deportes was up by 34 percent.
The Fox television business received a huge bump from its coverage of this year's football Super Bowl and broadcast retransmission fees, boosting its revenue by 23 percent.
News Corp's expected strong earnings have been overshadowed in recent months by speculation about the companies dealmaking and the controversy surrounding its phone hacking scandal at its UK weekly tabloid News of the World.
The New York-based company is in the process of trying to buy the 61 percent of BSkyB (BSY.L) it doesn't already own.
News Corp made a 700p a share offer last June and the board said it's looking for around 800p or around $14 billion.
Wall Street expects News Corp may have to raise its bid even higher than 800p, especially as the UK satellite company has posted much improved earnings results since News Corp first made its bid [nLDE7270PA].
News Corp is also in the process of assessing buyout offers for its struggling entertainment site Myspace, a one-time pioneer of social networking which has long fallen far behind Facebook. News Corp said Myspace continued to rack up increasing losses during the third quarter.
(Reporting by Yinka Adegoke, editing by Bernard Orr)
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