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28 March 2024

Time Warner, News Corp bounce back

Time Warner, News Corp bounce back on ad recovery. (GETTY IMAGES)

Published
By Reuters

Media conglomerates News Corp and Time Warner posted improved quarterly results on Wednesday, riding a recovery in advertising sales and several quarters of cost cuts.

The results, which came a day after CBS Corp's strong quarterly report, sent media shares higher even as analysts pointed to an uncertain outlook due to the possibility of a dip in the global economy.

"The general theme we've been seeing at media companies is strong advertising demand at all various assets because of previous cost-cutting and now it's coming through to the bottom line'' said Miller Tabak analyst David Joyce.

News Corp, which owns the Twentieth Century Fox movie studio, Fox TV network and newspapers including The Wall Street Journal and Britain's The Sun, posted a profit of $875 million for its fiscal fourth quarter ended June 30. That compared with a loss of $203 million a year ago.

Revenue rose 5 percent to $8.11 billion, with its Fox cable networks showing a strong performance and its newspapers reporting increased advertising revenue. Analysts, on average, had been expecting revenue of $8.05 billion.

"I'm very, very confident (about the global economy) over the next six months,'' News Corp Chief Executive Rupert Murdoch told analysts on a conference call. But he cautioned that he sees some ``fragility'' in the medium to long term.

Its Fox cable networks also posted strong revenue growth, helping to push operating income in the unit up 31 percent.

Growth in profits at cable and newspapers was offset by declines at its satellite TV and marketing services, as well as losses at News Corp's digital unit, which MySpace.

Time Warner on Wednesday raised its full-year outlook after quarterly revenue grew at the fastest pace in two years, thanks to a surge in advertising sales at its cable networks and strong turnouts for movies like "Clash of the Titans'' and `"Sex and the City 2''.

Time Warner said second-quarter revenue rose 8 percent to $6.4 billion, beating the average analyst estimate of $6.2 billion.

Still, investors are cautious about 2011 as media companies begin to face tough year-on-year comparisons.

This year, advertising was bolstered by the Winter Olympics, and analysts expect political ads to pick up heading into the U.S. mid-term elections this November.

"We wouldn't think one should get overjoyed just yet,'' warned Benchmark Co analyst Fred Moran about media companies being able to keep pace with growth next year.

 `There remains a question of sustainability of the state of the overall economy and consumer demand.''