News Corp warns of less robust 2009 growth

Business Materials 6 August 2008 03:13 (UTC +04:00)

Rupert Murdoch's News Corp said its fourth quarter net profit rose 27 percent from asset sales and profit gains in most divisions, but it faces less robust growth in its current fiscal year, Reuters reported.

Sales of its interests in Fox Sports Bay Area and Gemstar-TV Guide International helped boost its fourth-quarter net profit to $1.1 billion, or 43 cents per share, from $890 million, or 28 cents per share, a year earlier.

Shares of News Corp, which owns the 20th Century Fox movie studios, Fox News, Sky Italia and the Times of London, were down about 1 percent in after-hours trading.

The company warned on Tuesday of economic weakness ahead. "Although we clearly face more challenging macro-economic conditions in fiscal '09, we're well positioned to deliver continued, if somewhat less robust growth," Murdoch said in a statement.

"The focus will be on the outlook for 2009," said Christopher Marangi, an associate portfolio manager at News Corp investor Gabelli & Co, who added that film and cable results looked strong.

Marangi estimated the company's operating income could rise by 9 percent in fiscal 2009.

Revenue rose 17 percent to $8.6 billion.

Quarterly operating income rose 21 percent to $1.5 billion.

News Corp's television unit was among the weak spots in the quarter, with operating income falling 28 percent hurt by lower advertising revenue at the local stations and primetime ad sales declining due to lower ratings at the network.

But that was offset by stronger fourth quarter growth from its cable networks, films and newspaper group.

Film revenue rose 5 percent, but operating income more than doubled to $220 million, as sales of " Alvin and the Chipmunks," "Juno and "AVP: Requiem" DVDs buoyed gains.

Television division revenue fell 7 percent and operating income fell 28 percent to $279 million.

Cable networks revenue rose 26 percent and operating profit rose 10 percent on higher affiliate fees and ad revenue from the Fox News Channel.

Newspapers contributed a revenue rise of 54 percent and operating profit gain of 29 percent from the inclusion of results from Dow Jones and higher ad sales from its Australian newspaper group.

News Corp shares have fallen 32 percent this year on investors fears Murdoch may invest more heavily in the newspaper sector following his $5.6 billion purchase of Wall Street Journal publisher Dow Jones last year.

Eyeing a slowdown in US markets, Murdoch has sought to invest more heavily in Germany, Eastern Europe and India. This week, Murdoch said he would invest $100 million in six new Indian television channels and introduce a new Dow Jones index to track the Indian stock market.