News Corp (NWS) reported increases in both revenue and net in the last quarter. Net income hit $871 million, up from $820 million in the quarter a year ago. Revenue was up 21% to $7.53 billion.
But, many of the media company’s units did poorly. TV earnings fell 5% due to weakness at MyNetworkTV. Newspaper earnings rose only 2% to $156 million.
It was the company’s studio operations that were the engines of growth. Operating income was up 82% to $410 million. And, that is what investors should worry about.
News Corp is beginning to be viewed at a cable TV programming and new media company. Fox News has been highly successful with its conservative take on global politics. The channel’s No.1 show is the reactionary O’Reilly Factor. And, Wall St. is impressed by the company’s purchase of huge social network site MySpace. The company is also about to buy the world’s largest photo-sharing site, Photobucket.
But, those views of the company are largely mistaken. Without the improvement at the company’s film operations, News Corp would actually not be doing very well. And, the movie business is extremely fickle
The focus on Rupert Murdoch may center on his bid for Dow Jones (DJ) and his purchase of internet properties. But, it is the movie business that is the key to his success, of lack thereof.
Douglas A. McIntyre can be reached at [email protected]
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