News Corp., the media conglomerate controlled by billionaire Rupert Murdoch, Wednesday said quarterly profit doubled with strong advertising at its cable and network television businesses.
The owner of the 20th Century Fox film studios and the Fox News Channel also said Wednesday it would increase its share buyback program to a total of $6 billion from the $3 billion announced in June 2005.
“We expect to continue to be active buyers of our shares so long as the market undervalues our company,” Murdoch, the company’s chairman and chief executive, said during a conference call with analysts.
Analysts said that results, excluding special items, were mostly in line with their expectations, but showed the company was able to sustain its core operating growth.
“News Corp continues to grow its business organically at high levels given the superior asset base it has in place, without the need for future material acquisitions,” said Aryeh Bourkoff, analyst at UBS, who rates the share a “buy.”
News Corp. said net profit for the fiscal third quarter rose to $820 million, or 26 cents a share, from $400 million, or 13 cents a share, a year ago. The 2006 figure included a $206 million gain from the sale of a stake in Mexican satellite operator Innova.
Analysts, on average, had forecast earnings per share of 20 cents, according to Reuters Estimates.
Excluding the one-time gain, News Corp.’s earnings were closer to 21 cents on a comparable basis, according to analysts cited by Reuters Estimates.
Richard Greenfield, analyst at Pali Research, said News Corp. stood apart from its media peers by presenting a clear case for earnings per share growth apart from special gains.
“This is rapidly becoming an EPS story in terms of valuation and (the share) increasingly looks attractive” based on a forecast for 2007 earnings, he said.
Revenue rose to $6.2 billion from $6.04 billion, but was slightly below Wall Street estimates of $6.3 billion.
Sky Italia IPO?
Strong ratings for its Fox News cable channel and the Fox broadcast network helped drive profit higher. Operating income from cable network programming rose 23 percent while its television business grew 29 percent.
News Corp.’s movie segment saw operating profit drop, however, to $225 million from $251 million a year ago, when the company was boosted by home video sales of its popular “Alien Vs. Predator” and “Napoleon Dynamite” releases.
Newspaper income fell by $33 million following the company’s sale of its TSL Education business, though circulation revenue for UK newspapers such as “The Sun” rose with a rise in cover prices.
The company’s Sky Italia satellite broadcaster posted an operating profit of $69 million versus a year-earlier loss. News Corp. executives deflected speculation on whether an initial public offering of the company was in the works, but did not entirely dismiss the idea.
“We’re a long way from making a decision” on Sky Italia, Murdoch said.
Bourkoff said Sky Italia could be valued at about $1,500 per subscriber. The company reported on Wednesday a customer base of 3.7 million at quarter’s end.
“We think [an IPO] is something the company would consider in order to gain a local presence” with investors, Bourkoff said.
News Corp. also said it remained comfortable with a forecast for operating income growth of 12 percent for fiscal 2006 that was issued in February.
Shares in News Corp., one of the fastest-growing media companies, have gained 15 percent since the start of the year, outperforming the S&P 500 Index by 9 percent.