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Earnings: News Corp.: First Profitable Year For FIM: $550 Million In Revenue, $10 Million Profit

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News Corp. (NYSE: NWS) beat estimates with profit of $890 million for the spring quarter, up 24 percent from $718 million in the same quarter last year. Revenues of $7.4 billion were up 9 percent over $6.8 billion in the 2006 quarter. The company attributed the revenue growth to double-digit increases from a number of units.
Earnings release | Webcast | Transcript (via SeekingAlpha)

From the unusually long earnings call: News Corp. said Fox Interactive Media had its first full profitable year, making $10 million on revenue of $550 million despite retention and amortization costs of $80 million. The company had projected at least $500 million in revenue for FIM’s full second year so it exceeded what News Corp. calls the “benchmark.” For the quarter, FIM doubled its revenue from the same quarter a year ago to $183 million with operating income contribution of about $30 million. It’s all on the back of MySpace, as chairman and CEO Rupert Murdoch put it. Murdoch said he will be surprised if FIM does not break $1 billion in revenue in FY2008 at margins “well above” 20 percent, with MySpace projected to bring in excess of $800 million.

More after the jump….

DJ: A fair amount about the pending Dow Jones acquisition but not a lot of new information. Murdoch said in excess of $50 million could be saved and that he expects the deal to close by the end of the year. With the launch of Fox Business Network scheduled for Oct. 15, there’s some concern over the CNBC contract. The contract between GE and DJ has five years to go; Murdoch described it as an obstacle and “pretty all encompassing” as far as brands go but said it only covers news and access to reporters so there are other ways to tap into DJ. COO Peter Chernin said he’s confident FBN is already “really differentiated” so “we’ll look at anything that comes from Dow Jones as gravy.” Murdoch said they are not negotiating a buyout of the CNBC contract. Murdoch said they’re debating whether or not to open, saying “in the long term it may be a wonderful thing” to do. When I asked if DJ execs would be included in the process or if it would be a News Corp. decision, Murdoch replied: “Dow Jones should not be separated from News Corp.; it’s part of News Corp. Our senior colleagues there with senior colleagues currently at News Corp. will talk this over and will come to a final decision but we’ll do it collectively.”

Factiva/Ottaway: It’s been suggested by outsiders that Factiva could be sold to help pay for DJ but Murdoch volunteered praise about its “vast and growing profits” so he may view it as an integral part of the company much the same way as DJ’s current management. A little later, in response to an analyst’s question about which DJ assets might be sold, Murdoch said, “We will probably be selling the local newspapers pretty quickly” (DJ Community Newspapers, the former Ottaway chain) but will be keeping the rest.

Fox Business Network Murdoch said the network will launch with a minimum 31.5 million households, calling it the largest cable network launch. He cited a CNBC valuation of $4 billion and with typical bravado said he expects FBN to surpass that.

European expansion: An amusing exchange between an FT reporter who wanted to know about UK and European expansion plans. She wondered if expansion of the WSJ in the UK could have an adverse effect on the Times of London; he replied, “I think it’s more likely on the FT.”

Update: A little more about MySpace from the call … Chernin said about 50 percent of the FIM increase was expected to come from the Google deal “because not that much of the Google deal was actually in fiscal ’07” and about 50 percent from the rest of the business.

One Response to “Earnings: News Corp.: First Profitable Year For FIM: $550 Million In Revenue, $10 Million Profit”

  1. most people in the uk are aware of the WSJ but would associate it with US financial markets. For that reason, it will take enourmous effort to topple the FT as the number one financial paper in the UK; it has been established for a long time and its influence in business circles is unparralled.