At News Corp., Fox Is the Loser -- Not Newspapers!

Lest we forget just how immense Rupert Murdoch’s News Corp. is: “The company ended the quarter with $8.2 bn cash, up from $7.3 bn sequentially, and $13.5 bn debt, down from $15.3 bn sequentially.” Yowza! That’s from the new Goldman Sachs analyst paper on the giant. The cable networks are growing-and various newspaper wings are up significantly over last year-but it’s Fox that’s struggling.

Newspapers, you say? Why yes!

Newspaper operating income for the quarter was $131 mn, up about 340% yoy, on a 21% increase in revenue…. Ad revenue at the Wall Street Journal and UK papers increased 25% and 10%, respectively.

Who knew?

If you really care, here’s what Fox’s trouble is said to be:

For 3Q, television revenue was 3% below, and operating income 21% below, our estimates. Station revenue grew 18% yoy (versus commentary of up 19% yoy when News Corp. last reported) on advertising momentum (category strength in autos and telecom) and retransmission revenue (we estimate 3 point benefit from Time Warner Cable), and station revenue growth flowed through to OI growth. But FOX network revenue fell about 4% yoy, and FOX network costs rose mid single digits yoy. We attribute the FOX network revenue shortfall in the face of an improving advertising environment primarily to non- sports ratings; total FOX network ratings were up about 9% yoy because of NFL games, but non-sports ratings were down about 10% yoy because of weakness at shows such as Idol, 24, and Bones.

It’s always American Idol’s fault!