Fox Posts Strong Q4, Sees 'Less Robust Growth' Ahead

NEW YORK Riding the strength of its TV and film units and supported by a solid showing from its interactive unit, News Corp. yesterday reported a 27 percent hike in net income to $1.13 billion (or 43 cents per share) for its fiscal fourth quarter ended June 30.Q4 revenue rose 17 percent to $8.6 billion compared to the year-ago period.That performance outpaced the estimates of most analysts, who had predicted revenue of about $8.5 billion.News Corp. CEO and chairman Rupert Murdoch said he was pleased with the performance overall. He cautioned, however, that "challenging macro-economic conditions in fiscal '09" could result in "somewhat less robust growth."CLICK HERE FOR COMPLETE NEWS CORP. FINANCIAL RESULTS.Fox Interactive Media, which includes MySpace, posted a 23 percent gain in Q4 revenue to $225 million on strong advertising sales, with search ads accounting for half of its business. The group's $6 million in operating income represented a $25 million dip from last year, owing to higher costs for research and development.In 2009, Fox Interactive should grow 30 percent, the company said. According to a Reuters estimate, that would yield $1.12 billion in revenue.News Corp. COO Peter Chernin told Wall Street analysts in its quarterly conference call that the company's core businesses remained healthy. Fox Broadcasting and its national cable nets (Fox News Channel, FX and National Geographic Channel) all performed well, he said.However, "Our local stations are feeling the effects of a worsening economy," Chernin said.Local ad revenue dropped 10 percent in the quarter with weak pacing expected to continue into the new quarter. There has been some political advertising coming in but big categories like automotive, telecom and financial services remain in negative territory.Not so for Fox, which had a strong upfront, a so-far low level of cancellations and what Chernin termed a robust scatter market. The NFL ad market is strong and all three of the top "American Idol" sponsors (Ford, Coca-Cola and AT&T) have all re-upped for the new season that begins in January."We are seeing real strength in national [advertising]," Chernin said.The single biggest auto advertiser is Ford, which just locked in an ad deal for American Idol, he said. Fox also made multiyear deals with a number of car companies on the sports side, which locks them in. And national advertising hasn't suffered as much as local among automakers, Chernin said.There's good news on the ad front with networks like Fox News, FX and National Geographic, as well as new affiliate contracts with Time Warner Cable for Fox News. Chernin said News Corp. was in negotiations with Echostar and Comcast.Murdoch painted a somewhat bleak picture of the economies in the United States and Europe. But he said that beyond the local TV business, News Corp.'s diverse and growing assets would not only weather the storm but also strengthen and grow.Despite News Corp. selling several of its stations, Chernin and Murdoch did not see that it was likely to sell any more over the foreseeable future.Murdoch said that the remaining stations "are the backbone of the network."

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Fox Posts Strong Q4, Sees 'Less Robust Growth' Ahead

David Gianatasio

Paul J. Gough

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David Gianatasio

Paul J. Gough