A soft advertising market means things will remain tough for Rupert Murdoch’s Australian and UK newspapers in the final three months of 2011/12.
The media mogul’s News Corporation on Thursday reported net profit for the three months to March 31, 2012, of $US937 million ($A935.92 million), up from $US639 million ($A634.09 million) in the prior corresponding period and well above market expectations.
News Corporation’s film division and booming cable television unit – which generates almost two-thirds of total earnings – were behind the big lift in profit.
But its newspaper mastheads in Australia – which include The Australian, The Herald Sun and The Daily Telegraph – and the UK struggled, reporting advertising revenue declines.
The overall publishing division, which includes Dow Jones and book publisher HarperCollins, reported a 2.8 per cent decline in revenue.
“The advertising markets at our international newspapers have continued to be soft,” News Corp chief financial officer David DeVoe said during the company’s third quarter results presentation.
News Corp shares closed 89 cents, or 4.6 per cent, higher at $20.16, while its non-voting stock rose 93 cents to $19.96.
Earning guidance for 2011/12 full year of growth in the “low to mid-teens” was unchanged from what the company issued three months ago.
However, Mr DeVoe said there was now a bias towards to the lower end of that range given the anticipated weakness in publishing and filmed entertainment.
Mr DeVoe said the film division was expected to post a significant decline in fourth quarter earnings compared with the prior year, due to last year’s successful film releases and costs related to movies released in June and July.
“We are expecting both our publishing and film segments to each be approximately $US125 million ($A124.04 million) below last year’s fourth quarter result,” he said.
The guidance excluded the impact of the phone hacking scandal in the UK, for which News Corp booked a further $US63 million charge.
Chicago-based Morningstar analyst Michael Corty said News Corp was typically conservative on guidance.
“I think they are just making sure it is something that they can meet or beat,” he said.
“I would expect them to do a little bit better than what they said.”
Separately, News Corp announced a further $US5 million ($A4.99 million) share buyback on top of its existing $US5 billion buy-back program.
