Murdoch sees major internet expansion
Rupert Murdoch, the chairperson and CEO of News Corporation, said he plans to make several more acquisitions of online businesses in the coming months as his global media conglomerate makes the internet a “major part” of its future growth.
Murdoch said on Wednesday that News Corporation is in advanced talks to buy a controlling interest in an online search company, though he declined to say which one.
Last month News Corporation’s newly formed online business division agreed to pay $580-million in cash to acquire the online company Intermix Media, owner of the popular social networking site MySpace.com.
Murdoch said he expected other investments to be made, though he did not think the total amount would go far past $1-billion.
“This is not something that we’re putting tens of billions in here, or need to,” Murdoch said.
Murdoch spoke on a conference call with analysts and reporters to discuss the company’s earnings report for its fourth fiscal quarter. Profits jumped 67% to $717-million in its fourth fiscal quarter on gains in cable programming, home entertainment, and the inclusion of full results from an Australian newspaper group.
The earnings were equivalent to 23 United States cents per Class A share, compared with $429-million or 15 cents per share in the same period a year ago. Revenues rose 11,7% to $6,11-billion from $5,47-billion.
Murdoch called the acquisitions of MySpace and a separate online sports business called Scout Media a “major development” for News Corporation, a major media conglomerate whose holdings include the Fox News Channel, the Fox broadcast network and Twentieth Century Fox studio.
“Make no mistake,” Murdoch said.
“Our commitment to this space will constitute a major part of this company’s growth, profits and asset building over the next several years.”
Responding to an analyst’s question on his plans for online acquisitions, Murdoch said: “We’re in very advanced negotiations to buy a controlling interest in what we think is a wonderful search engine at what you will think is an insignificant price.”
The company also announced that it had extended a defensive “poison pill” measure, a step intended to thwart attempts to gain control of a company, for another two years.
News Corporation adopted the measure last autumn after media investor John Malone, a longtime friend and occasional rival of Murdoch, unexpectedly began accumulating a significant stake in News Corporation’s voting stock, which is now equal to about 18% of voting control.
News Corporation said in a statement that it decided to extend the poison pill until the company and Malone’s Liberty Media Corporation reach a “favourable resolution” of Liberty’s stake.
Malone’s unexpected manoeuvring comes at a delicate time for News Corporation. Last month Murdoch’s 33-year-old son Lachlan suddenly quit the company, apparently ending his father’s hopes that he would one day take over as CEO.
Even though such a move would have been years away, the departure of Murdoch’s son clouded the picture of who would lead News Corporation over the long term after Rupert Murdoch, who is 74, eventually leaves or is no longer able to run the company. For now, chief operating officer Peter Chernin is the clear candidate to lead the company should Murdoch no longer be CEO.
On the conference call, Murdoch declined to comment regarding the departure of his son or on the company’s succession plans, saying that was an issue for the board of directors.
The income results were released after the close of regular stock trading, during which the company’s widely held Class A shares gained 26 cents, or 1,6%, to close at $16,42 on the New York Stock Exchange. The stock added 2,9%, or 48 cents, in after-hours trading.
By division, gains in the company’s cable networks group—which includes the Fox News Channel, FX and several regional sports networks, as well as the Twentieth Century Fox studio—outweighed a weak showing in broadcast television.
Profits from cable networks rose 14% on higher advertising sales as well as the absence of costs from the NHL season, which was cancelled due to a lockout. The company also said it benefited from no longer having losses from the Los Angeles Dodgers, which it sold.
Gains in home entertainment sales also led to a 15% profit increase from its Twentieth Century Fox studio on strong sales of films including Alien v Predator,Sideways and Napoleon Dynamite.
Profits from broadcast television, which includes the Fox television network, fell 2%as gains from advertising were offset by higher fees for returning TV shows.
Newspaper segment profits more than doubled on strong advertising gains in Australia and the inclusion of results from the Queensland Press Group. The company acquired the outstanding 58% controlling interest in the unit. The company also reported gains in its UK newspapers, which include The Times of London.
For its full fiscal year, News Corporation earned $2,13-billion (â,¬1,72-billion), up 39% from $1,53-billion a year ago, as revenues rose 15% to $23,86-billion (â,¬19,28-billion) from $20,8-billion. - Sapa-AP