News Corp. Earnings Preview: Lower Revenue From Cable, Film

Rupert Murdoch's News Corp. (Nasdaq: NWSA), the world's third-largest media company by market capitalization, is expected to have lower fiscal fourth-quarter earnings as its cable television and film revenue declines.

New York-based News Corp. reports earnings after market close on Wednesday. The company's earnings per share are expected to fall to 32 cents, down from 36 cents in the prior year's same quarter, according to analysts polled by Reuters. Revenue is expected to drop to $8.73 billion from $8.96 billion in the previous year.

The company's Fox News Channel had lower ratings during the fiscal fourth quarter, although it maintained its lead over Comcast Corp. (Nasdaq: CMCSA)'s MSNBC and Time Warner Inc. (NYSE: TWX)'s CNN. Fox News' weekday prime time viewership for the 25-to-54 age group, a key advertising demographic, fell around 14 percent compared the prior year. Its overall viewership was down slightly to 2.14 million viewers from 2.15 million in the previous year.

News Corp.'s film division, 20th Century Fox, also had a weaker quarter compared to the previous year. Its most successful film, the science fiction title "Prometheus," had revenue exceeding $300 million, according to Box Office Mojo. But "Abraham Lincoln: Vampire Slayer" made only $73.3 million worldwide and "The Three Stooges" grossed around $46 million. Last year's hits, "Rio" and "X-Men: First Class," grossed more than a combined $735 million worldwide during the fiscal fourth quarter last year.

News Corp. continues to deal with the phone-hacking scandal at the now-shuttered News of the World in Britain, and print advertising has been weak in its Australian and British newspapers, while Dow Jones and the Wall Street Journal have performed better. But the media properties have less effect on the company's bottom line than film and television, analysts say.

Despite the expected dip in profit, analysts view the company favorably. "News Corporation owns a vast collection of media enterprises," wrote Michael Corty, an analyst with Morningstar Inc., in a May research note. "We believe the company has a strong competitive advantage based on its global cable network business as well as a film studio which generates TV and movie content and owns a vast library of programming."

During the past quarter, News Corp. announced that it will split its entertainment and news divisions into separate companies next year, a move cheered by most investors. The entertainment company is expected to have a higher stock price on its own, while the news assets face potential downsizing and budget cuts. "We believe the move is a positive for shareholders, and view the split as another sign that controlling shareholder Rupert Murdoch is giving outside shareholders more of a voice," wrote Corty in a June research note.

Shares of News Corp. rose 13 cents, or 0.55 percent, to $23.60 at Monday's market close.