Murdoch vs Murdoch as news Corp profits up 8%

Rupert Murdoch looks very much still in charge as News Corp posts profits of $2.7bn, but son James may have to take a back seat as a result of the phone hacking scandal.

by Emma Haslett
Last Updated: 19 Oct 2011
News Corp’s share price might have taken a bit of a battering lately - but it’s making headlines for the right reasons this morning, after it published end-of-year results showing annual profits had risen to $2.7bn (£1.7bn) in the year to June 30, up 7.9% from $2.5bn last year. Revenues are up, too, by nearly 2% to $33.4bn. And although the effects of the phone hacking scandal won’t be felt until its next quarterly results (News of the World’s final issue came 10 days after the end of this results period), Rupert Murdoch, the company’s CEO and chairman, said he was confident it will have ‘no material impact’ - although given his son James' position is looking a lot less strong than it was, he might be inclined to disagree...

While its television business saw strong growth, profits at its film division rose by a whopping 53%, thanks to blockbusters like the Black Swan and the Chronicles of Narnia. Even its publishing arm saw operating income rise to $864m, up from $467m the year before, which News Corp said was down to lower costs, higher ad revenues at the Wall Street Journal and ‘favourable’ currency movements. The only slight blot on its copybook was the sale of MySpace for $35m (small change, compared to the $580m it paid for it in 2005), which depressed its final-quarter profits by 22%.

But despite News Corp’s impressive financial performance, the phone hacking scandal is nonetheless at the forefront of many investors’ minds - which Murdoch was clearly all too aware of, given this was the first results presentation he had appeared at for nearly a year. He told journalists that News International (the division of News Corp that owns its British newspapers) is ‘acting decisively in this matter and will do whatever is necessary to prevent something like this from ever occuring again’. Although it’s worth pointing out that as News Corp has fingers in pies including 20th Century Fox, Fox Broadcasting, publisher Harper Collins, the Wall St Journal and that 39% of BSkyB, News International contributes relatively little to its overall revenues.

Murdoch also reaffirmed that he has the full support of his board - although he did suggest that ‘if I went under a bus’, then the man to take over would not be his son, James (News International chairman, BSkyB chairman and deputy COO of News Corp), who is still implicated in the phone hacking scandal. Instead, he hinted that his COO Chase Carey would probably be the one to take the reins (despite the fact that Carey looks like he’d be more at home in a Wild West saloon bar than in a board room).

That’s got to be pretty devastating to James, who until recently was the one expected to be Murdoch’s successor. In fact, things in the Murdoch family might not be pleasant at all, at the moment - even daughter Elisabeth (founder of TV production company Shine) has got involved, turning down a seat on the News Corp board earlier this week on the grounds that it would be 'inappropriate'. Nevertheless, that Murdoch even asked suggests that Daddy may well have a new favourite...

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