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indiantelevision.com Team
MUMBAI: US media behemoth News Corporation has gained from its stake sale in Hathway Cable & Datacom while contributions from Star in India were essentially in line with the prior year, as higher revenues were offset by increased programming costs, including those from new channel launches.
Star exited from Hathway, selling its 17.3 per cent stake for Rs 3.58 billion. The News Corp. company had earlier held 26 per cent stake in Hathway.
The company reported third quarter revenue of $8.40 billion, a two per cent increase over the $8.26 billion of revenue reported a year ago.
The revenue increase is led by double-digit growth at the company?s cable network programming and filmed entertainment segments.
The company reported third quarter net income of $937 million compared to net income of $639 million in the year-before quarter, representing a 47 per cent change. This year?s third quarter results include a $111 million pre-tax gain from the company?s participation in British Sky Broadcasting?s share repurchase programme, which is reflected in equity earnings of affiliates, as well as $27 million of pre-tax other income, principally reflecting a gain on the sale of the company?s stake in Hathway Cable & Datacom.
Total segment operating income for the quarter jumped 23 per cent to $1.31 billion compared to $1.06 billion reported a year ago. This improvement was led by a $111 million or 15 per cent increase at the cable network programming segment.
The current quarter results include a $63 million charge related to the costs of the ongoing investigations initiated upon the closure of The News of the World. The prior year results include a $125 million charge at the company?s integrated marketing services business related to the settlement of litigation.
Excluding these charges from both years respectively, this year?s third quarter adjusted total segment operating income of $1.38 billion increased $187 million or 16 per cent from $1.19 billion in the prior year.
News Corp Chairman and CEO Rupert Murdoch said, ?We continue to pursue our share buyback programme, repurchasing nearly $4 billion worth of stock over the last nine months and have just increased the authorisation for future buyback purchases by $5 billion. In addition, we continue to opportunistically address non-core assets, as demonstrated by the announced sales of our ownership stakes in Hathway Cable and NDS in the quarter."
Cable Network Programming
Cable Network Programming reported third quarter segment operating income of $846 million, a $111 million or 15 per cent increase over the third quarter a year ago, driven by a 16 per cent increase in revenue, partially offset by a 17 per cent increase in expenses. Operating income contributions from the domestic channels increased 17 per cent, underpinned by double-digit growth at the regional sports networks, FX network and Fox News.
The company?s international cable channels grew earnings 9 per cent, led by a double-digit increase at the Fox International Channels resulting from strong growth in Latin America and Asia.
Contributions from Star in India were essentially in line with the prior year, as higher revenues were offset by increased programming costs, including those from new channel launches.
Affiliate revenue growth of 15 per cent at the domestic cable channels for the third quarter primarily reflects higher rates at all domestic networks, led by growth at the RSNs and Fox News. International cable channels? affiliate revenues increased 31 per cent over the year-ago quarter. Approximately half of this international increase was driven by organic growth at the Fox International Channels in Latin America and Asia, with the remaining portion of the international affiliate revenue growth attributable to the consolidation of the Fox Pan American Sports network.
Advertising revenue at the domestic cable channels grew 10 per cent in the third quarter of fiscal 2012 over the prior year period, reflecting growth at nearly all domestic networks led by double-digit growth at Fox News and the National Geographic Channels. The international cable channels? advertising revenue grew 7 per cent over the prior year, primarily due to improving advertising markets and viewership trends, led by particular strength at the Fox International Channels in Latin America and Asia.
Expenses at Cable Network Programming grew 17 per cent in the third quarter of fiscal 2012 over the prior year period, due to increased programming costs reflecting the timing of games resulting from the NBA lockout and rights fees for the launch of the Ultimate Fighting Championship, as well as increased expenses associated with the consolidation of the Fox Pan American Sports network and the launch of the new sports network in Brazil.
Filmed Entertainment
Filmed Entertainment reported third quarter segment operating income of $272 million, a $24 million increase over the $248 million reported in the same period a year ago. This year?s third quarter results included the worldwide theatrical and domestic home entertainment performances of Alvin and the Chipmunks: Chipwrecked and The Descendants, the worldwide home entertainment performance of Rise of the Planet of the Apes and the pay television performance of Rio.
Prior year third quarter film results included the worldwide home entertainment releases of The A-Team, Knight and Day and Unstoppable. The third quarter also benefitted from increased operating profit at the television production studios, reflecting higher digital distribution revenues, an increase in license fees for How I Met Your Mother and an increase in syndication revenue for Family Guy.
Television
Television reported third quarter segment operating income of $171 million, a decrease of $21 million versus the same period a year ago. The decline principally reflects the absence of advertising revenues and operating profit generated from the broadcast of the National Football League Super Bowl XLV in the prior year quarter. This decline was partially offset by a doubling of retransmission consent revenues. Excluding the absence of the Super Bowl, advertising revenues at the television stations and broadcast network were essentially in line with amounts reported in the prior year as higher national advertising pricing was offset by lower ratings, driven by declines at American Idol, now in its eleventh season.
Direct Broadcast Satellite Television
Sky Italia reported third quarter segment operating income of $40 million, an improvement of $23 million versus the $17 million reported a year ago. Local currency revenues increased 4 per cent, primarily related to increased advertising and subscription revenues. Sky Italia?s quarter-end subscriber base declined to 4.94 million due to the net reduction of approximately 86,000 subscribers during the quarter, reflecting the continued challenging economic environment in Italy.
Publishing
Publishing reported third quarter segment operating income of $130 million, a $94 million increase compared to the $36 million reported a year ago due to the prior year?s $125 million litigation settlement charge at the integrated marketing services business.
Excluding this charge, segment operating income decreased $31 million from last year?s third quarter driven by local currency advertising revenue declines at the Australian and U.K. newspapers, as well as the absence of contributions from the closure of The News of the World in the U.K. The decline was partially offset by improved contributions from Dow Jones, HarperCollins and the integrated marketing services business.
Other Segment
The Other segment reported a third quarter operating loss of $147 million, which is an $18 million improvement over the prior year. This improvement was due primarily to the absence of results from disposed businesses, including Myspace, partially offset by the inclusion of a $63 million charge related to the costs of the ongoing investigations initiated upon the closure of The News of the World.
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