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Another $2.8bn writedown of publishing assets and a further $57m in charges from UK newspaper scandals made headlines when News Corp reported fourth-quarter earnings this week, but analysts largely ignored the news.
Shares in Rupert Murdoch’s media group hovered around a five-year high, propelled higher by a buyback programme that has cut its shares in issue by 10 per cent, and by double-digit growth in fees for its cable television networks.
The group gave few details of its plan to split its publishing assets from its entertainment brands, beyond saying that it would file documents with regulators around the end of 2012, but the results showed stark performance differences between the two operations.
Cable network operating profits were up 25.5 per cent in the fourth quarter, while publishing profits halved amid restructuring moves, notably at its Australian newspapers.
The two arms of News Corp are expected to diverge further in the coming year. Nomura expects earnings before interest and tax to be up 12 per cent in 2013 at the entertainment business analysts call “good News”, while the “bad News” publishing company could be down 23 per cent.
Publishing is a small part of the total, however, and News Corp guided that group earnings before interest and tax would be up low double-digits to high single-digits in the coming year.
News Corp had total cash of $9.6bn in June. Even with more buybacks to come, Bernstein Research expects News Corp to end its coming fiscal year with $8bn-$10bn of total cash.