News Corp. publishing profits down by nearly half after phone-hacking scandal
Home to titles including the Times, Sun and Wall Street Journal hit by $67m charge relating to phone-hacking scandal.
Profits almost halved at News Corporation’s publishing division, home to titles including the Times, Sun and Wall Street Journal, in the three months to the end of September, during which the company took a further $67m (£41.9m) charge relating to the News of the World phone-hacking scandal.
The company’s newspaper publishing operation was also hit by an advertising slow down in its US and Australian businesses in the three-month period.
Overall, News Corp beat analyst expectations reporting total profits – net income – of $2.23bn in the quarter. This was triple what it made in the same quarter last year, due mostly to the sale of its 49% stake in NDS to Cisco, which resulted in a $1.4bn gain, and $75m from a share buyback programme at BSkyB, in which News Corp owns a 39.1% stake.
News Corp’s film business, which includes Twentieth Century Fox, also performed strongly. The company cited the success of Ice Age: Continental Drift, a boost in TV production and revenue from content deals with Netflix.
Total News Corp revenue for the three months to the end of September rose 2% year on year to $8.14bn.
News Corp’s publishing division, which is to be spun-off into a separately listed company that will include publisher HarperCollins, reported profit of $57m in the three-month period. In the same period last year the division produced a profit of $110m.
The ongoing fallout of the phone-hacking scandal continued to mount up financially, with News Corp booking a $67m charge in the quarter relating to ongoing investigations “initiated upon the closure of the News of the World”.
News Corp said the declines in the US and Australian publishing businesses were partially offset by an “increased contribution” from its UK operation, thanks to the launch of the Sunday edition of the Sun in February.
Book publisher HarperCollins also boosted the publishing division thanks to having acquired Thomas Nelson, a Christian book publisher.
News Corp said it took a $5m charge in the quarter in costs related to the proposed separation of the publishing division. The company also took a $152m pre-tax restructuring charge mainly related to its newspaper and digital games businesses.
“We are committed to leading the change that the marketplace and our customers demand as the company builds on its success at leveraging multi-platform opportunities for our content,” said Rupert Murdoch, chairman and chief executive of News Corp.
“We believe that our ability to do so will be enhanced by the flexibility and management focus that will result from the proposed separation of our entertainment and publishing businesses.”
He added: “We have made considerable progress in this process and look forward to providing more details by the end of the calendar year.”
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[Rupert Murdoch via Shutterstock]