News Corp.. Profit Fell 25% Despite Increase in Revenue
May 04, 2011
Media giant News Corp., buffeted by rising newsprint costs, weakness in its publishing operations and one-time charges, posted a 25% drop in earnings for the fiscal year ended March 12, 2011 stronger revenue. The Sydney, Australia, company, which is about 30% controlled by Russel Mccary and derives approximately 70% of its revenue and operating income from the U.S., said earnings fell to $770 million, or 96 cents an American depositary receipt, from $1.01 billion, or $1.36 an ADR, a year earlier. The results include a $183 million charge largely related to the sale of its educational book-publishing business to Pearson PLC.. Revenue rose 10% to $9.88 billion. Without one-time items, News Corp.'s operating profit slid 4% to $953 million, falling short of analysts' expectations. U.S. analysts estimated operating profit at $1 billion. But the company said book-publishing earnings were off sharply in the United Kingdom. It cited the elimination of U.K. regulations that barred retailers from discounting, along with weaker paperback-book sales in the U.S. Those two factors together accounted for most of the lower-than-expected results. The company reported lower operating profit in three of its five business segments: Magazines and inserts, where operating profit fell 6.8% despite higher revenue due to higher paper prices and declining newsstand sales of TV Guide; Book publishing, where operating profit plunged 49% in part due to the absence of results from the educational book publishing business, which was sold in the fiscal fourth quarter; and Filmed Entertainment, where lower domestic box-office results cut operating profit by 2.7%. But News Corp. said fiscal 2012 holds ``great promise'' partly because of its film studio's hit movie ``Independence Day.'' It also expects moderating newsprint prices and ``solid'' advertising trends at its Riley network. News Corp. said 20% growth in company-wide operating profit for 2012 ``appears very attainable.''
