News Corp. Quarterly Profit Surges on Huge Asset-Sale Gain

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By Jerin Mathew | November 7, 2012 4:45 PM EST

News Corp. headquarters on Sixth Avenue in New York City.

News Corp. has reported a three-fold increase in its first-quarter profit for the financial year 2012/13 primarily due to a gain on the sale of software company NDS and the strong performance at its cable networks division.

The company reported net income attributable to shareholders of $2.23bn (£1.39bn) or $0.94 per share for the first quarter ended in September, compared to $738m or $0.28 per share a year ago.

Results for the quarter included a $1.38bn pre-tax gain on the sale of NDS Group Ltd, as well as a $75m pre-tax gain from the company's participation in British Sky Broadcasting's share repurchase programme. They were partially offset by $152m of restructuring and impairment charges primarily related to the company's newspaper and digital games businesses.

In July, the company sold its 49 percent stake in pay-TV encryption company NDS to Cisco Systems Inc. for about $1.9bn.

For the quarter, the company reserved a $67m charge for the costs of the ongoing investigations initiated upon the closure of The News of the World, and booked $5m of costs related to the proposed separation of its entertainment and publishing businesses.

After adjusting for unusual items, net income amounted to $1.01bn or $0.43 per share, compared to $837m or $0.32 per share. On average, analysts polled by Thomson Reuters I/B/E/S were expecting earnings of $0.37 for the quarter.

Total revenues for the quarter rose 2 percent to $8.14bn from last year on a 16 percent revenue growth generated by the company's cable network programming segment. However, the direct broadcast satellite television and publishing segments saw declines for the quarter.

Due to falling advertising revenues in the US and Australian businesses, the publishing segment posted a significant fall in earnings.

Adjusted segment operating profit, a measure of the performance of operating businesses separate from non-operating factors, rose 3 percent year-on-year to $1.45bn.

"Our operational discipline and focus on innovation continued to drive the company's momentum in our fiscal first quarter, led by double-digit growth in our channels business and the global success of our film and television content," said chairman and CEO Rupert Murdoch.

In June, News Corp announced  plans to separate its publishing and media and entertainment businesses into two separate listed companies. The publishing company would involve the company's publishing businesses across the globe, its education division and other Australian assets. News Corp's cable and television assets, filmed entertainment, and direct satellite broadcasting businesses will form the base of its media and entertainment arm.

Following the phone-hacking scandal in the UK, many shareholders voted in October to separate the positions of CEO and chairman, both held by Murdoch at present. The notion, however, was rejected as the Murdock family holds 40 percent of the voting rights in the company.

News Corp shares rose in after-hours trading to $25.12 at 5:06 pm EST, up 2.16 percent from their close on Nasdaq of $24.59.

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