News Corp. Analysts, Who Are These Guys?

On Murdoch call, the customary course is the order of the day

While many in the press anxiously awaited News Corp.’s quarterly earnings call with analysts on Wednesday, the reality of the event quickly killed any anticipated drama after weeks of coverage of the company’s phone hacking scandal.

For media analysts, given priority ahead of reporters in questioning Rupert Murdoch and News Corp. executives, staying the customary course was the order of the day. This was exemplified immediately as the first question—asked by analyst Doug Mitchelson of Deutsche Bank—focused on repricing of network licensing at Fox and Fox News and whether affiliate fee revenue growth could be expected to accelerate into the double digits in the U.S.

For a crowd of media insiders eager to hear about News Corp. leadership succession plans and what moves the company has made to be sure dirty reporting tactics have been eradicated, affiliate fees were just about the last topic of interest. The most bland News Corp. issue of the moment may have been addressed by analyst Jolanta Masojada of Credit Suisse, who wanted specifics on the opportunity for rationalizing printing opportunities in Australia. This is the inquest in light of a media empire going through the most critical affair in its history?

The agenda for News Corp. analysts in the wake of a corporate scandal did not waver much from their usual objectives: analyzing the balance sheet, getting a sense of how best to predict growth or losses in different sectors, parsing through the financial guidance the company provides for the upcoming quarter so that the analysts can spell out financial predictions in their notes and reports that advise investors on whether to buy, sell, or hold on to stocks. And, for their purposes, a scandal of this magnitude appears to so far have little effect on the finances of News Corp. The company reported a 45 percent increase in its quarterly operating income year over year.

Of all the fallout created from the phone hacking scandal, the one aspect that seems to have the company’s analysts most concerned is News Corp.’s abandoned bid for BSkyB—and the $12 billion in surplus cash the firm now has on hand. Both Richard Greenfield of BTIG LLC and Alan Gould of Evercore Partners asked questions relating to whether the recently announced stock buyback program would be a fundamental part of the company’s future strategy, if that amount might increase, and if the complete acquisition of BSkyB is now permanently off the table.

Regarding litigation expenses associated with the unraveling of News of the World, Benjamin Swinburne of Morgan Stanley asked if the analysts could expect that to be a onetime cost.

As always, the bottom line prevailed.