News Corp: Cable Revs Beat Broadcast

Anthony-DiClemente-ANews Corp. continues to get a boost from its cable businesses and remains strong for the future. But one analyst has lower expectations about its broadcast business.

Anthony DiClemente of Barclays Capital writes: "Ratings challenges at Fox drive [a] conservative outlook." The good news, he says, is that broadcast retrans fees more than doubled in the fourth quarter, with political advertising also higher.

But he adds that it was "offset by lackluster ratings at the Fox broadcast network, owing to a challenged lineup of fall shows and three fewer World Series [games]." This yielded lower national advertising revenues in its second fiscal quarter.

In its reported second fiscal quarter 2013, News Corp.'s television revenues were virtually unchanged at $1.53 billion versus $1.52 billion. But operating income was up 19% to $224 million, or $35 million, versus the same period a year ago.

Revenues for cable network programming had better results than broadcast -- up 8% in domestic advertising revenue. Domestic affiliate fees rose 13%. International advertising grew 20% with affiliate fees up 17%.

During the period, there was double-digit revenue growth at the Fox Sports regional networks, Fox News Channel, FX Network and National Geographic Channels. All this contributed to higher revenues -- 18% higher, now at $2.6 billion versus $2.2 billion. Operating income grew 7% to $945 million, a $63 million rise.

DiClemente adds that cable TV continues to highlight the company's future: "Cable trends remain strong domestically as well as internationally."



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