News Corp grip on costs helps beat Street
By Jennifer Saba (Reuters) - News Corp, publisher of the Wall Street Journal, reported a 4 percent decline in quarterly revenue on weaker advertising at its newspapers, but cost cuts helped push profit well ahead of analysts forecasts. Shares in News Corp rose 4 percent in after-hours trading after closing at $16.02 on Thursday. This is the second quarter that News Corp, whose chairman is Rupert Murdoch, has reported results as a stand-alone company after separating from its entertainment and TV properties now known as 21st Century Fox. While News Corp beat expectations, it faces challenges besetting other newspaper publishers as advertisers pull back spending and readers favor smartphones over print. "We are determined to be disciplined about costs, determined to be leaders in an increasingly digital world, and determined to take carefully calculated risks," News Corp Chief Executive Robert Thomson said during a call with analysts. Thomson and other executives shed some light on the abrupt departure of former Dow Jones CEO Lex Fenwick in the wake of a sharp drop in sales at its enterprise business. Dow Jones institutional revenue, which includes its products like Newswires and news database Factiva, fell $17 million in the quarter from a year earlier. Executives did not break out the total number. Thomson noted that Dow Jones, publisher of the Wall Street Journal, is reviewing its strategy after Fenwick took a risky bet on a new product called DJX, a Web-based platform that bundled Dow Jones products with a rigid pricing structure. "These decisive actions were taken following an intensive assessment of the state of the business which made quite clear to us the need for prompt action," Thomson said, later noting that enterprise segment is "core" to News Corp. Thomson Reuters, which reports earnings on February 12, competes with Dow Jones in providing news and financial data. Along with the Journal, News Corp also publishes newspapers including the Times of London and The Australian, and owns book publisher HarperCollins, Australian pay-TV and digital real estate stakes, as well as education company Amplify. News Corp said that revenue at its News and Information Services fell 9 percent to $1.6 billion on soft advertising and subscription sales. Australian newspaper properties have been especially challenged; their advertising revenue plunged 20 percent in the quarter. But News Corp said those declines were moderating. Advertising revenue at the Wall Street Journal declined in the low to mid single digits. By comparison the New York Times, which reported earnings earlier on Thursday, saw a 1 percent drop in ad revenue. For the quarter ending December, News Corp said revenue was $2.24 billion, in line with analysts' estimates of $2.22 billion, according to Thomson Reuters I/B/E/S. Net income fell to $151 million, or 26 cents per share, from $1.4 billion or $2.42 per share. The year-ago quarter included a gain related to its acquisition of Foxtel and Fox Sports in Australia. Adjusted EPS of 31 cents was well above analysts' forecast of 20 cents. (Reporting by Jennifer Saba in New York; Editing by David Gregorio and Matthew Lewis)
