News Corp posts $2.5b net profit

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Global media giant News Corporation has reported net profit of $A2.


74 billion for 2009/10, helped by blockbuster hit movie Avatar, and says the company is well positioned for growth.

Despite the result News Corp chairman and chief executive Rupert Murdoch is still wary of the global economy deeming the current climate ‘fragile’.

The result is a turnaround from the net loss of $A3.72 billion in the prior year, which included $US9.2 billion in pre-tax impairment and other charges.

The 79 year old, Murdoch avoided being drawn into the federal election debate when interviewed by the ABC about the results, Mr Murdoch remained quiet on his preferred PM, but has been vocal about the performance of his media empire.

“I think I have no comment at all,” Mr Murdoch said when asked if he would prefer Labor’s Julia Gillard or the coalition’s Tony Abbott to win the August 21 poll.

“Just read our newspapers and see what our editors think. They have the freedom to decide that.”

The company’s Australian newspapers suffered a decline in operating income in 2009/10 in local currency terms, News Corp said, due to a three per cent reduction in revenues primarily from classified advertising.

Australian newspapers operating income in the fourth quarter was higher in local currency terms, on a ten per cent increase in advertising revenue offset by lower circulation revenue and higher newsprint and other costs.

The media group owns news agency Dow Jones, MySpace, 20th Century Fox movie studios, Sky Italia and newspapers in Australia and elsewhere, among other properties.

The company reported operating income, or earnings before interest and tax (EBIT) of $A4.38 billion for 2009/10, up 11 per cent from the adjusted EBIT of $A3.77 billion achieved in 2008/09.

Excluding one-time litigation charges and contributions from NDS Group plc, which was not consolidated in 2009/10, News Corp said operating income growth was 30 per cent.

The market consensus was for EBIT to be around $A4.64 billion for the 12 months to June 30, 2010, according to Reuters data.

The full year result was due to double digit growth at the majority of the company’s business segments, News Corp said, but offset by lower contributions from direct broadcast satellite television and other segments.

Mr Murdoch said there was “significant” opportunity to expand the scale of News Corp’s franchises, “including through taking advantage of the continual technological advances that will broaden the reach of our core content and distribution businesses”.

“So as we turn to fiscal 2011 and beyond, I am confident in our businesses and in our people to deliver superior results,” Mr Murdoch said.

News Corp said fourth quarter operating income, or EBIT, came in at $A1.02 billion, down slightly from $US948 million in the prior corresponding period.

At its third quarter earnings presentation in May, the company warned of a soft finish to 2009/10 due to the timing of movie releases due out in the three months to June 30 and higher marketing costs.

News Corp’s filmed entertainment division reported operating income, or EBIT of $US137 million in the three months to June 30, 2010, down from $A222.36 million in the prior corresponding period.

This was due to lower contributions from worldwide movie releases compared with the prior year, the company said, as well as lower pay and free TV revenues due to timing.

For the full year, operating income rose to a record $US1.349 billion ($A1.48 billion), up 53 per cent from the prior year.

News Corp’s newspapers and information services division booked operating income of $A580.54 million in 2009/10, up $A70.1 million from the prior year.

In the fourth quarter, newspapers and information operating income was $A125.97 million, up from $A105.15 million.

News Corp’s television division operating income rose 15 per cent to $A240.98 million 2009/10, driven by improved advertising markets.

Local US television stations reported an eight per cent increase in advertising revenue in the year, which News Corp said reflected strength in the vehicle and telecom sectors.

News Corp declared a dividend of 7.5 US cents per class A and class B share, payable on October 13, 2010.