UK operations a bright spot for News Corp
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Rupert Murdoch, king of the media moguls, showed yesterday why the UK's media businesses are looking to emulate his combined television and newspaper empire.
Half-year profits at News International, whose interests stretch from the Times and Sun to BSkyB television, rose to pounds 168.9m despite a pounds 42.1m charge for the closure of the Today newspaper.
This compared with last time's pounds 561.9m profit, but that figure included a one-off pounds 400.4m gain on the sale of 20 per cent of NI's shares in BSkyB.
The UK operations were among the few bright spots at NI's parent company, News Corporation, whose interim profits slid 14.5 per cent to A$702m (pounds 352.6m).
Leslie Hinton, NI's executive chairman, said he was very pleased with the results, given the fierce price competition in the British newspaper industry and higher newsprint costs.
The closure of Today, with the loss of more than 400 jobs, was a disappointment but would mean more resources channelled into the other papers, he said. BSkyB's profitability had continued to rise, and the number of subscribers rose from 4.16 million to 5.18 million.
NI's results, and improvements in US television operations, helped to offset a downturn in NewsCorp's films, books and magazines divisions.
The half-year result, which came despite an 11 per cent rise in sales revenue to A$6.8bn, compared with a net profit of A$821m last time.
Analysts said the lacklustre performance was no surprise following comments by Mr Murdoch in December that second-quarter and half-year earnings would fall.
Earnings at News Corp's film division dipped 16 per cent to A$84m due to a dearth of lucrative films and one expensive flop, Strange Days, in the first quarter.
But the analysts said they were surprised at the strength of the group's second quarter, where film earnings doubled to A$44m following the release of Waiting to Exhale, a melodrama about four women in Arizona.
Second quarter profits in Mr Murdoch's film operations were also supported by brisk sales from a number of Twentieth Century Fox video titles, including Mighty Morphin Power Rangers, the Die Hard sequel and the Star Wars trilogy.
Profits at fast-growing Fox Television rose 14 per cent over last year despite weak advertising demand in the fourth quarter, the company said, adding that the stations also generated record market shares. Operating income at the television division edged up 8.1 per cent to A$281m.
News Corp confirmed that its Asian satellite broadcaster Star TV would lose US$80-85m for the year but would not comment on the Hong Kong-based group's half-year loss.
All the company's newspapers were reaping higher advertising revenues, although profits at its Australian papers fell as gains in advertising rates and cover price increases were not enough to offset higher newsprint costs.
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