News Corp. Earns $239 Mil.

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By: Lisa Singhania, AP Business Writer

(AP) News Corp. reported second-quarter results slightly ahead of expectations Wednesday, as gains in its film entertainment and cable networks businesses offset mixed results in its television and newspaper divisions and continuing losses related to its Gemstar investment.

For the three months ending Dec. 31, the media conglomerate earned $239 million, or 24 cents per U.S. share, compared with a loss of $606 million, or 50 cents per share, at the same time in 2001 when results were hurt by a $909 million write-down of the company’s sports contracts.

The results exceeded by a penny the forecast of analysts surveyed by Thomson First Call.

News Corp. increased its growth estimates for the rest of the year, saying it expected operating income to grow in the low to mid 20% range. The company’s previous estimate had been for growth in the high teens to low 20% range.

Wall Street’s reaction was cautious, however. U.S. shares of the stock fell $1 to $25.56 in morning trading Thursday on the New York Stock Exchange. The company had reported its earnings Wednesday after the market closed, and regular trading had ended.

Quarterly revenues were $4.68 billion, compared with $4.12 billion at the same point in 2001.

The company said second-quarter income at its filmed entertainment division more than doubled to $255 million from $115 million in 2001, reflecting the strong performance of home entertainment sales of movies including Ice Age, Star Wars Episode II: Attack of the Clones, and Behind Enemy Lines. Income was also higher at its cable network business.

The TV division was more mixed, despite reporting second-quarter operating income of $165 million, compared with $113 million during the same period a year ago. Improving advertising revenues helped the company’s Fox Television Stations report a $60 million increase in second-quarter operating income. But second-quarter operating losses increased at its Fox Broadcasting Co., reflecting the cancellation of several new series and increased promotional spending.

“Although we were disappointed with the performance of the Fox network in the second quarter, the worst is clearly behind it. Indeed, the unprecedented ratings surge we have delivered following the quarter positions us to end this television season equal to or better than last year’s numbers — a remarkable turnaround,” chairman and chief executive Rupert Murdoch said in a statement.

The company’s newspaper business had operating income of $102 million, a 10% decrease from a year ago, due in large part to circulation revenue declines in the company’s U.K. holdings. In the United States, News Corp. owns the New York Post.

The company reported an $81 million quarterly loss from other items, including an additional write-down related to its Gemstar investment. News Corp. owns 42% of Gemstar.

Year-to-date, the media conglomerate has earned $401 million, or 36 cents per U.S. share, up from a loss of $533 million, or 45 cents per share. Total revenues during the first half of the fiscal year were $8.49 billion, compared with $7.52 billion at the same point in 2001.

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