Fox network and O&Os income is up 20% from year-ago quarter, while cable networks are up 26%. Company as a whole post operating income of $851 million, down from $909 million.
In News Corp.’s 2007 fiscal first quarter, ended Sept. 30, 2006, advertising growth at the Fox network and television station group drove television operating income up 20%, to $192 million, from $160 million in the year-ago quarter.
In figures released Wednesday afternoon, News Corp. also reported that its cable network programming operating income was up 26%—to $249 million from $197 million—on affiliate and advertising growth at the regional sports networks and FX. It added that “Fox News ratings dominance continues, maintaining its position as the No. 1 cable news network for nearly five years.”
For the company as whole, consolidated operating income for the first quarter of $851 million was down 6% versus the $909 million reported a year ago, primarily due to a drop from the record filmed entertainment operating income in the first quarter of fiscal 2006 of $368 million to this quarter’s $239 million. The decline at filmed entertainment more than offset double-digit improvements from the television, cable network programming and direct broadcast satellite segments.
Commenting on the results, Chairman and Chief Executive Officer Rupert Murdoch said: “The operational momentum we exhibited throughout our record fiscal 2006 continued during the first quarter of fiscal 2007. Sustained market-leading positions at our cable networks and television stations, along with stronger advertising at the Fox network, produced double-digit operating income growth in the cable network programming and Television segments.
“We have also begun to capitalize on the rapid growth at our new media assets, where News Corp. Web sites now rank second in the U.S. in total page views and fifth in unique visitors. Our recently announced landmark deal with Google for textual search is expected to generate $900 million over three and a half years, signifying our ability to monetize our traffic in ways that make sense for our audience and quickly moving our new media properties toward profitability.”
At the Fox Broadcasting Co. (FBC), first quarter operating results increased 65% compared to a year ago as increased pricing drove higher advertising revenues. Additionally, lower primetime programming costs also contributed to the year on year growth.
Fox Television Stations (FTS) first quarter operating income increased 7% as FTS garnered higher political advertising revenues while also increasing its market share on Fox primetime ratings strength and the continued success of local news. Advertising revenue growth was partially offset by costs associated with the further expansion of local newscasts and by development spending to redesign local station Web sites including the offer of Fox on Demand.
Cable Network Programming
Cable Network Programming reported first quarter operating income of $249 million, an increase of $52 million over the first quarter a year ago. The 26% growth reflects affiliate and advertising strength primarily at the Regional Sports Networks (RSNs) and FX. Fox News Channel (FNC) reported operating income in line with the first quarter a year ago as revenue growth, primarily from higher affiliate and licensing fees, was offset by increased programming and marketing costs. During the quarter, viewership at FNC was more than 60% higher than its nearest competitor in primetime and nearly 60% greater on a 24-hour basis, reflecting FNC broadcasting the top five shows in cable news.
At its other cable channels (including the RSNs, FX and Speed) operating profit increased 31% versus the first quarter a year ago. The largest growth was at the RSNs where revenue gains were primarily driven by higher subscription revenues from additional subscribers. These revenue gains were partially offset by costs associated with broadcasting additional major league baseball games. At FX, double-digit revenue growth in the quarter was driven by increased affiliate revenues from higher rates and additional subscribers, as well as by increased advertising revenues on higher volume and pricing. These revenue gains were partially offset by increased programming costs for new syndicated series.
Direct Broadcast Satellite Television
Sky Italia reported a first quarter operating loss of $13 million, an improvement of $48 million versus a loss of $61 million a year ago on local currency revenue growth of 20%. This improvement primarily reflects subscriber additions, with 434,000 net new subscribers added over the past 12 months, bringing SKY Italia’s subscriber base to 3.83 million at quarter end. Additionally, average revenue per user increased versus the first quarter a year ago largely due to a rate increase during the second quarter of fiscal 2006. The revenue growth was partially offset by increased programming spending associated with the larger subscriber base as well as costs associated with broadcasting the FIFA World Cup and additional Series A and Series B soccer matches.