News Corp. Numbers Ready for Prime Time

The media conglomerate prepares to move stateside with a 'robust' third-quarter performance.
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News Corp.

(NWS) - Get Report

is looking fit and rested for its big move across the Pacific later this year.

On Thursday, Rupert Murdoch's media titan posted quarterly earnings that showed its far-flung film and newspaper operations in robust good health. Quarterly earnings shot up 69% from a year ago on an 18% sales gain, overcoming a middling performance at the television unit.

The news comes just a month after the Australian conglomerate

rocked Wall Street by disclosing plans to reincorporate in the U.S. The move is part of an effort by News Corp. execs to boost their company's profile, and stock price, with an appeal to stateside investors.

On Thursday, the stock slipped 18 cents, to $37.20.

Worldwide Strength

For its third quarter ended March 31, the global media company earned $465 million, or 32 cents a share. That's up from $275 million, or 21 cents a share, last year. Revenue rose to $5.20 billion from $4.39 billion last year. Excluding special items, the company earned $460 million, or 31 cents a share, in the latest quarter.

On that basis, analysts surveyed by Thomson First Call were forecasting earnings of 27 cents a share in the latest quarter, on revenue of $5.04 billion.

The company's biggest grossing segment, filmed entertainment, saw revenue rise to $1.18 billion from $1.16 billion last year, while operating income rose to $214 million from $201 million. In television, revenue rose to $1.18 billion from $1.13 billion, while operating income rose to $259 million from $207 million. In newspapers, revenue rose to $914 million from $701 million, while operating income rose to $176 million from $115 million.

News Corp. said its movie results reflected strength in the worldwide home entertainment performance of films, including

League of Extraordinary Gentlemen

and catalog titles such as

Planet of the Apes

,

Moulin Rouge

and

Ice Age

. The company said

Cheaper by the Dozen

has done $190 million in revenue since it was released.

Television's 25% rise in operating income reflected double-digit earnings improvement at the Fox Broadcasting and Fox Television Stations, and higher contributions from Star. The 2004 quarter benefited from stronger primetime advertising revenue led by

American Idol

as well as higher sales for local news and the NFL playoffs. The year-ago period was hurt by pre-emptions caused by the Iraq war.

The 53% jump in operating earnings at the newspaper segment reflected a 22% improvement in the British segment, driven by circulation and advertising revenue gains partially offset by costs associated with the compact version of the

Times

of London.

"Circulation revenue growth was achieved across all titles, with the largest increase at the

Sun

, where reduced cover price initiatives during the third quarter a year ago adversely affected results," the company said. "The improvement in advertising was primarily driven by growth at the

Sun

on the strength of higher classified and color advertisements."

Mixed Bag

Merrill Lynch analyst Jessica Reif Cohen termed the quarter's performance "robust," pointing to broad-based growth in operating income -- $838 million for the quarter, compared with her forecast of $754 million. Filmed entertainment was impressive given the comparison to the successful home video release of

Ice Age

in the year-earlier quarter. Cohen has a buy rating and a $47 price target on News Corp.'s stock; her firm has done investment banking for News Corp. in the past year.

Both Cohen and Guzman & Co. analyst David Joyce said aspects of News Corp.'s television business performed below expectations. TV station revenue, up 6% to $490 million, fell below Cohen's $515 million estimate, while operating income, up 24% to $201 million, beat her $190 million estimate.

Operating income for the overall television business was a little below expectations, said Joyce. He has an outperform rating on both News Corp. and its U.S. Entertainment subsidiary,

Fox

(FOX) - Get Report

, and respective price targets of $37 and $43.

Fox fell 64 cents, to $27.86.