Media conglomerate News Corp. (NWS,NWSA), Tuesday reported a profit for the second quarter over a net loss last year, due to double-digit revenue growth at majority of its business segments, as well as the absence of hefty impairment and restructuring charges recorded in the previous year. The company also increased its quarterly dividend by 25%.
The New York-based company posted net income attributable to shareholders of $254 million or $0.10 per share in the second quarter, compared to a net loss of $6.4 billion or $2.45 per share in the prior year quarter.
Results for the quarter included a one-time charge of $315 million or $0.12 per share related to the settlement of litigation filed against the company's Integrated Marketing Services business. The company's year-ago result included impairment and restructuring charges of $6.75 billion or $2.58 per share.
Excluding one-time items, adjusted earnings grew to $644 million or $0.25 per share from $399 million or $0.15 per share in the year ago quarter. On average, 17 analysts polled by Thomson Reuters expected the company to report earnings of $0.20 per share for the second quarter. Analysts' estimates typically exclude special items.
News Corp. posted net income of $284 million in the second quarter, compared to a loss of $6.4 billion in the previous year quarter.
Total segment operating income dropped to $712 million from $839 million a year ago. Excluding the litigation settlement charge, total segment operating income would have been $1.2 billion, an increase of 44% over last year.
Earnings from affiliates for the second quarter grew to $58 million from $30 million a year earlier, due to higher BSkyB contributions in the absence of the prior year write-down of its ITV investment.
Second quarter revenue increased 10% to $8.68 billion from $7.87 billion in the same quarter last year, reflecting double-digit percentage growth at the majority of business segments. Thirteen analysts had a consensus revenue estimate of $8.23 billion for the second quarter.
Commenting on the results, chairman and CEO Rupert Murdoch, said, "Our strong top-line revenue growth demonstrates that News Corporation is emerging from this recession with renewed vigor and strength."
The Filmed Entertainment segment reported revenues of $1.90 billion, up 28% over last year. Operating income for the segment nearly tripled to $324 million in the second quarter, driven by several worldwide home entertainment successes, including Ice Age: Dawn of the Dinosaurs, X-Men Origins: Wolverine and Night at the Museum: Battle of the Smithsonian, as well as the pay-TV performance of Taken.
The current quarter film results also include launch costs for the successful worldwide theatrical release of Avatar and Alvin and the Chipmunks: The Squeakuel. Avatar, which has surpassed Titanic as the highest grossing film of all time, has already garnered more than $2 billion worldwide and remains the number one box office draw after seven weeks in release.
Revenues from Cable Network Programming segment rose 18% to $1.76 billion, with an operating income that rose 35% to $604 million, helped by increased contributions from FOX News Channel, the Fox International Channels, the Regional Sports Networks, the Fox International Channels and STAR.
Second quarter revenues from the Television segment grew 10% to $1.25 billion. Operating income was $29 million, compared to a loss of $2 million in the previous year quarter. The improved results reflect increased contributions from the Fox Television Stations and reduced losses at MyNetworkTV, which were partially offset by lower contributions from FOX Broadcasting Company.
Direct Broadcast Satellite Television, SKY Italia, generated revenues of $1.01 billion, up 9% from a year ago. The segment posted an operating loss of $30 million, compared to income of $10 million in the year-ago quarter, hurt by increased programming costs.
At the end of the quarter, SKY Italia's subscriber base declined by 63,000 to 4.74 million over the previous quarter end, as gross subscriber additions were more than offset by existing subscriber cancellations.
The Integrated Marketing Services segment reported second quarter revenues of $291 million, up 2% from last year. The segment reported an operating loss of $414 million, compared to income of $86 million in the prior year quarter, reflecting the litigation settlement charge.
The Newspapers and Information Services segment's revenues increased 10% to $1.66 billion, while operating income grew 30% to $259 million, driven by increased advertising revenues at The Wall Street Journal and lower operating expenses throughout all the newspaper businesses.
Book Publishing revenues grew 25% to $381 million. Operating income increased almost threefold to $65 million from the previous year quarter, due to higher sales at the Children's and General Books divisions.
News Corp. declared a dividend of $0.075 per Class A share and Class B share, which represents a 25% increase over the previous dividend. The dividend is payable on April 14 with a record date for determining dividend entitlements of March 10.
Earlier this month, News Corp. said that it settled with Valassis Communications Inc. for $500 million in a lawsuit filed against the company's News America Marketing unit that was scheduled to go to trial in a Michigan federal court on February 2.
The settlement also covers the $300 million Valassis awarded in July by a Michigan circuit court that is currently on appeal and a pending state court case in California.
Among other events, cable operator Time Warner Cable Inc. (TWC) and the Fox Networks Group, an operating unit of News Corp., agreed in principle to a comprehensive distribution agreement, which will allow 13 million households to continue to access programs from Fox Networks. The companies did not reveal the terms of the deal.
For the first half of 2009, News Corp. reported net income attributable to shareholders of $825 million or $0.31 per share, compared to a loss of $5.9 billion or $2.26 per share in the previous year period.
Revenues for the period increased to $15.88 billion from $15.38 billion in the prior year period.
Among others in the industry, Time Warner Inc. (TWX) is slated to release its fourth quarter results on February 3. Analysts expect the company to report revenue of $6.81 billion for the fourth quarter.
Viacom Inc. (VIA, VIA-B) will report its fourth quarter results on February 11. Analysts are looking for earnings of $0.87 per share on revenue of $4.23 billion for the fourth quarter.
Another peer, Walt Disney Co. (DIS) is scheduled to report its first quarter results on February 9. The Street expects earnings of $0.39 per share on revenue of $9.62 billion for the first quarter.
NWS finished Tuesday's regular trading session at $15.04, up 33 cents or 2.24%, on a volume of 4.52 million shares. In after-hours, the share further gained 65 cents or 4.32%.
NWSA closed Tuesday's regular trading session at $12.76, up 23 cents or 1.84% on a volume of 36.56 million shares. In after-hours, the share further gained 69 cents or 5.41%.
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