News Corp. Profits Fall

Drop due in part to hacking scandal

News Corp. shareholders may now have more to gripe about on the heels of its annual meeting aside from an unpopular board of directors and the family that leads it. On Wednesday afternoon, News Corp. reported a drop in its first-quarter profits while standing by James Murdoch, who is increasingly being held to account for his knowledge of the phone hacking scandal.

On a conference call with financial analysts and members of the press, COO Chase Carey was asked whether management changes were being considered in terms of Murdoch's role at the company. "We have great confidence in James. James has done a great job," said Carey. "We are not contemplating any changes." When a reporter questioned Carey on whether the company was planning to make changes to the board's composition due to the the dreary results of the reelection votes by shareholders, Carey said, "We take those votes seriously . . . We continue to evolve the board." 

The media conglomerate’s net income was $738 million, down from $775 million during the same period last year. For shareholders, this amounts to $0.28 per share instead of the $0.30 per share they saw this time last year. The company pointed to a fee related to its July withdrawal of the BSkyB bid and a $91 million pretax restructuring charge related to its U.K. newspaper business as factors impacting this decline. Both resulted from the fallout the company has experienced in the wake of the phone hacking scandal that has rocked News Corp. since early July.

In terms of total revenue, though, the company can breathe a sigh of relief. News Corp. reported $8 billion in revenue for the quarter, an increase of $533 million—or 7 percent—year over year. The company thanked a double-digit percentage growth in affiliate revenue at its cable network programming and television segments for the uptick. Double-digit revenue growth in the filmed entertainment segment contributed to the jump as well.