Clearly buoyed by the company's progress in remaking all
kinds of established business models in recent months, News Corp. Chairman and
CEO Rupert Murdoch delivered the most colorful earnings preamble in some time
as the company reported fiscal second-quarter numbers Feb. 2.
Mentioning new COO Chase Carey's progress in establishing a
dual-revenue stream for News Corp.'s Fox broadcast network, thanks to the TimeWarner Cable retransmission agreement and other efforts to return the
print business to a subscription model, Murdoch championed News Corp. as never
"Content plans have gathered around our ideas, and instead
of existential debates over value, now we're haggling over valuations," said
Murdoch, who added that he had been visiting innovative research labs in
Asia and the floor of the Consumer Electronics Show in Las Vegas. "From
crisis comes clarity and strength.
"Excuse the immodesty," he continued. "Content is not just
king, it is the emperor of all things electronic."
Without mentioning Apple's iPad, he derided buzz around tech
devices saying that they were "empty vessels without content."
Separately, when asked about the status of a late-night
block at Fox, Murdoch said the company is not yet having any substantive talks
with Conan O'Brien to move his show to Fox network.
"There are different opinions within the network, and if the
program people could show us we can do it and be confident of making a profit,
we'd do it in a flash." When asked if talks were ongoing, Murdoch
responded that there have been conversations but no "real negotiations." He
added that an 11 p.m. slot might make for some difficult negotiations with Fox
stations that carry syndicated programming at that hour.
Several times during the call, both Murdoch and
Carey took pains to praise Fox News chief Roger Ailes for building what
was described as the world's most profitable network. Recent online news
reports had floated the suggestion that Ailes might be ready to leave the
Retransmission was again the focus of analysts' questions,
though News Corp. management had very little to give away on that front, except
to say that the Time Warner Cable deal was what Carey described as a
In the next two years News Corp. will renegotiate about half
of its deals with the affiliates. "Big cable companies are making great
operating profits," said Murdoch, "What we are asking for isn't going to kill
the cable companies."
As for the strength of the ad market, he said both local and
national TV ad markets were improving, and that there were "surprisingly
strong signals that the trend will continue in the next few months."
Murdoch declined to discuss the upfront, saying it was too
early to predict how it would shakeout. But Carey added, "Given that we are
selling scatter at 15% we're in a good place."
Fox TV stations helped News Corp.'s TV segment turn a $2
million loss in the final quarter of 2008 into a $29 million gain for the
period ending 2009. The Fox TV Stations benefited from a warmer ad climate and
turned in a 19% rise in operating income over the previous year when the
economy had fallen off a cliff.
The Major League Baseball American League Championship Series and World Series
both helped to boost ad coffers even while the stations saw lower political
money than during the previous election year. News Corp. also said the stations
achieved record market share for the quarter; revenue rose 6% against an
estimated market decline of around 2%, said the company.
Better numbers at stations and reduced losses at MyNetwork TV, didn't offset
lower contributions from Fox Broadcasting however. Even while ad revenue was
up, higher license fees for returning series and sports dinted the network
News Corp.'s cable networks continued to do well reporting operating income of
$604 million for the quarter to Dec. 31, up $156 million over the year ago
period. That growth was driven largely by increased affiliate fees from the
cable news network.
News Corp. also recorded a $29 million loss on digital media
dispositions. They also have $10 million in restructuring charges.
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