News Corp stages double digit rebound

Profits at Rupert Murdoch's News Corp media empire staged a double digit rebound in the three months to September 30, with 85 per cent of its operating income now coming from cable channels including Fox News and the Hollywood studio behind the Ice Age animated films.

Mr Murdoch said significant cost cuts taken in the last year "to ensure stability during the downturn" had offset revenue declines in its television stations and newspapers.

"The economies in which we do business are clearly in better shape than they were a year ago," he added, in the latest sign of returning confidence in a sector hit hard by declining advertising spending.

Net income for News Corp's fiscal first quarter rose 11 per cent to $571m or 22 cents per share, beating consensus expectations of 18 cents. The figures were helped by the absence of write-downs a year earlier on its investment in Premiere, the German pay-television service since rebranded as Sky Deutschland.

Group revenues fell 4 per cent in the quarter, dragged down by a $300m top line decline in its newspaper portfolio, which stretches from The Sun in London to The Wall Street Journal in New York. Operating income from the newspaper and information services division fell from $134m to just $25m, or 2.4 per cent of total profits.

The cable networks division secured its place as News Corp's biggest profit engine, raising operating income by 41 per cent to $495m. Fox News Channel, home to commentators such as Glenn Beck and Bill O'Reilly, logged its highest quarterly profit to date, rising 79 per cent year on year.

Profits from the Fox film studio rose 56 per cent, driven by the box office success of Ice Age: Dawn of the Dinosaurs and home entertainment sales of X-Men Origins: Wolverine.

News Corp's television stations lost more than half of their profit, reflecting the US-wide decline in local advertising and higher primetime programming costs at the Fox network. A restructuring at Harper Collins, the publisher of Where The Wild Things Are, helped the book division's profit jump from $3m to $20m.

Mr Murdoch again highlighted "the security of a strong balance sheet" as News Corp ended the quarter with $7.8bn of cash and cash equivalents.