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Charges at News Corp. Cause Q4 Loss

UPDATED: 6:30 p.m. ET

News Corp. reported a fourth quarter loss as the company
took a number of special charges on top of lower revenue at its television
division caused by lower ratings at American

The company, which took a $57 million charge related to the
costs of investigating the phone-hacking scandal at its British newspapers, had
a net loss of $1.6 billion, or 64 cents a share, compared to net income of $683
million, or 26 cents a share. The quarterly results also include a $2.9 billion
pre-tax charge related to the publishing business and another $15 million in
losses from the sales of a property in the U.K.

For the fiscal year, News Corp. has taken litigation
settlement charges of $224 million. It took a charge of $125 million in 2011.

The company had operating income of $1.2 billion, down 19%
from $1.4 billion a year ago.

Revenue fell 7% to $8.4 billion, despite 15% growth at the
company's cable networks.

In its new fiscal year, which started in June, the company said it expects operating income to grow by the high single to low double digits.

At the company's television group, which includes Fox Broadcasting, operating income fell to $213 million from $233 million. The company said ad revenues dropped because of lower ratings for American Idol. Retransmission revenues doubled.

News Corp. COO Chase Carey, speaking on the company's earnings call with analysts, said he felt the ad market currently "feels reasonably good," although right now the market was "pretty dormant for most of us not in the Olympics"

Pricing in the scatter market for broadcast was up in the low double digits and the cable market was probably stronger than that, he said. "It's a reasonably good market. It's not great. Not off the charts. But a reasonably solid market in a period where there's lot of anxieties about the economy."

For next year, Carey said he was expecting the advertising market to be fairly flat on the local front. On the network side, he said "we achieved what we set out to do in the upfront. We sold about 80% of our inventory. We're down a touch on volume, up on pricing and the scatter market has been pretty good so far."

Operating income at the company's cable network programming group rose 26% to $792 million from $631 million, as revenues rose 15%. Operating income at the domestic cable channels rose 24%, led by Fox News Channel and FX Network. International cable earnings grew 31%.

Advertising revenue at the domestic cable channels grew 5% in the quarter, led by growth at the regional sports networks and National Geographic Channels. Affiliate revenue at the domestic channels rose 16%.

Expenses at the cable networks grew 11% because of increases programming costs including rights fees for an increased number of NBA games and the launch of the UFC.

Next year the company is expecting more double digit growth from its cable networks, said CFO David DeVoe.

Carey added that he expected the Fox Business Network to be profitable this year.

"We are proud of the full year financial growth achieved over the last twelve months, led by our cable network programming and filmed entertainment segments," CEO Rupert Murdoch said in a statement. "Not only did we execute on our operating plan and deliver on our financial targets, we returned over $5 billion to shareholders through an aggressive buyback program and dividends."