• by Wayne Friedman , August 9, 2007

News Corp., the new prospective owner of Dow Jones & Co., showed a 4% gain in net profit in its fourth-quarter fiscal period to $890 million--fueled by growth at cable networks and its SKY Italia direct broadcast satellite division. Revenues climbed 8% to $7.4 billion for the period.

Cable TV operating income climbed 46% to $284 million in the period, and 26% for the year overall to $1.1 billion. Rising affiliate fees and advertising revenue were the main drivers at Fox News Channel, its regional sports networks, FX Network and its international channels.

Peter Chernin, president and COO for News Corp., noted in a conference call with industry analysts and journalists that Fox News Channel got high single-digit percentage increases during the upfront advertising selling market.

But other divisions, such as TV and film entertainment, had a tougher road. Its TV division witnessed a 4% drop in operating income to $385 million, mostly due to continuing losses from the startup costs of MyNetworkTV.

Regarding MyNetworkTV, Chernin said: "Those were not tolerable losses. [But] our losses decreased 50% in the fourth quarter." Caught in that wake were some of Fox's television stations that run the network. There was a 5% decrease in operating income.

News Corp. noted that TV results were lower because of a rating softness with the Major League Baseball post-season games and higher NFL programming costs.

At the Fox Broadcasting Company, Chernin said the network got "high single-digit CPM increases, and mid-single-digit absolute dollar increases. We are also enjoying a strong scatter market right now."

Chernin expects stronger advertising growth for local TV stations later this season. "We expect to see political spending take off in the later part of the year," he said. "Most of our categories are up--including autos, which is the single biggest advertising category."

The film entertainment unit suffered because of higher revenue comparisons from the fiscal fourth quarter 2006. Operating income dropped 47% to $106 million, versus the last fiscal fourth-quarter period that pulled in $1.2 billion worldwide box office sales from "Ice Age: The Meltdown" and "X-Men: The Last Stand" combined.

Fox Interactive Media, led by its major MySpace property, reported that it had its first full year of profitability, with $10 million in operating income.

Fox Interactive pulled in $550 million for the year--$50 million more than the company projected. For the fourth-quarter fiscal period, Fox Interactive doubled its revenue to $183 million and took in $30 million in operating income.

Next year, Rupert Murdoch, chairman and CEO of News Corp., also on the conference call, said MySpace is on pace to pull in $800 million in revenue in the fiscal year 2008. Recently, MySpace grew its unique monthly users on average by 1.5 million per month. He also noted that MySpace has added 2 billion in page views on average--recently getting to a big 4.3 billion in one month.

Murdoch touted the recent proposed deal to buy Dow Jones & Co. for $5.6 billion as a major asset that will gain benefits from News Corp.'s worldwide marketing machine. He said the prestigious financial publisher would greatly help News Corp.'s new Fox Business Channel, which will launch Oct. 15 with a minimum of 31.5 million subscribers.

But it would add editorial muscle for a while. Business news channel competitor, NBC Universal's CNBC, has a long-term editorial deal with Dow Jones in which it can use its reporters and editors on air. The contract expires in five years.

Murdoch said the deal only applies to business news. "There are lots of other things we can associate ourselves with," he said, but didn't elaborate.

He told investors the valuation of the Fox Business Channel will exceed $4 billion quickly--which, he noted, is the current value of NBC Universal's CNBC.