News Corp. Posts Loss on Charge

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Media conglomerate News Corp. (NWS) on Thursday posted a quarterly net loss on a large accounting charge but beat analyst expectations, and revenue rose 10 percent on sharp advertising gains from Fox News and its 20th Century Fox movie studio.

The owner of the Times of London and the New York Post reported a fiscal first-quarter net loss of $433 million, or 13 cents per share, compared with a net profit of $625 million, or 21 cents per share, a year earlier.

Revenue rose 10 percent to $5.7 billion.

Excluding a $1 billion noncash charge on the value of its television station's licenses, News Corp.'s profit of 18 cents per share beat Wall Street projections of a 16 cents per share profit, according to a poll of 18 analysts by Reuters Estimates.

"Operationally, this company is succeeding in a very difficult environment," said Scott Benesch, research director at money management company U.S. Trust, which owns over 8 million shares of News Corp. stock.

"The numbers look really good," Benesch said. "You're not seeing those numbers at any of the other media conglomerates."

Wall Street analysts were surprised as much by the strength of the film studio's growth as they were by the weak television division results.

Operating income before depreciation and amortization rose 20 percent to $1.11 billion, led by a 26 percent jump in films division operating income from "Robots" and "Hide and Seek" DVD sales.

Television unit operating income fell 32 percent on the timing of the launch of the fall lineup and higher programing costs at its TV stations group.

"Television was substantially weaker than expected," said Richard Greenfield, an analyst at Fulcrum Global Partners. But overall, "The aggregate strength of that growth rate in the weakest quarter for News Corp is a very positive indication of how undervalued the stock is at current levels."

The company, controlled by media tycoon Rupert Murdoch, faces an investor lawsuit over charges the company had reneged on a promise to seek shareholder approval before extending a poison pill measure.

News Corp. enacted a poison pill that would make a takeover prohibitively costly if any one stakeholder exceeded a certain amount of ownership after Liberty Media quietly purchased 18 percent of News Corp.'s voting stake.

Concerns over Liberty's stake has driven News Corp. shares down 23 percent since the beginning of the year, making it one of the worst-performing stocks among big media peers and underperforming a 2 percent decline of the Standard & Poor's 500 index over the same period.