News Corp.’s fourth-quarter earnings jumped 27% on profit from asset sales and higher operating earnings in most businesses, but the company faces slower growth in the current year.
Chairman and chief executive Rupert Murdoch said Tuesday he expects “somewhat less robust growth” in the financial year ending next June because consumers are being hurt by higher energy costs, the U.S. real estate crisis and the battered financial industry.
“We are in a much more difficult economic environment,” Murdoch told analysts and reporters on a conference call.
News Corp. expects operating income to grow between 4% and 6% from a base of US$5.13 billion in its 2008 financial year.
Murdoch said there are “considerable financial challenges” in local advertising for the company’s newspaper and television businesses, but that gains in cable networks, satellite television and online properties will more than offset that.
The New York-based media conglomerate, which also owns Twentieth Century Fox, Fox News Channel and Dow Jones & Co., publisher of the Wall Street Journal, rode those businesses to higher net income in the quarter ended June 30 of $1.13 billion, or 43 cents per share. A year ago, the result was $890 million, or 28 cents per share.
Revenue rose 17% to $8.59 billion from $7.37 billion last year, and beat estimates. Strong gains in film, newspapers and cable were partially offset by declines at its television and interactive units.
Lower ratings at the Fox broadcast network led to a drop in advertising revenue, which delivered a 28% slide in earnings at the television unit. Fox-affiliated stations also struggled as advertisers shift spending online.
News Corp. recently sold eight TV stations for $1.1 billion, but said it had no plans to divest itself of additional stations.
Higher ratings and ad revenue at Fox News Channel lifted the cable networks unit to a 10% increase in profit. Fox Business Network, started last year, delivered a loss, but News Corp. did not say how much.
The company also said its Fox Interactive Media unit, which includes social-networking site MySpace.com, had lower operating income, blaming higher development and technical costs.
FIM’s revenue rose 23%, with search revenue contributing half of the gain. The company said costs will rise again in fiscal 2009, but at a pace slower than it expects revenue will increase.
News Corp.’s newspaper publishing unit got a boost from the inclusion of Dow Jones, which it bought last December. The company, which also includes Dow Jones Newswires, the Factiva news database service and WSJ.com, added $24 million in operating income.
Murdoch plans to increase the subscription price for WSJ.com, but did not say when or by how much. The site’s 1.1 million subscribers pay “a healthy price, and one that will be increased,” he said.
Murdoch had reportedly considered lifting the subscription fee on WSJ.com before reversing course earlier this year. Most newspapers support their online sites through ad sales.
