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News Corp Q4 Earnings: Company Undervalued?

news corp chartWednesday, News Corporation, the media empire of Rupert Murdoch and newly minted owner of the Wall Street Journal, reported their fiscal 4th quarter and year end financial results.  The numbers were impressive and suggest, at present stock prices, that the company, which is trading at about 15times projected 2008 earnings per share, is undervalued.

By the numbers, News Corp. reported net income for the period ended June 3oth of $890m (28c/share) up from a year ago return of $852m (27c per share or 23c/share less one time gain from sale of Sky Radio Ltd.)   Revenue was in at $7.37b, up from $7.78b.  Consensus analyst expectations were for revenue of $7.27b and earnings of 28c per share.

The Fox Interactive division reported its first full year in the black.  The division earned $550m in revenue for the  year and $183m for the 4th quarter.  In the analyst’s conference call, in which Mr. Murdoch participated, the company said MySpace was on pace to earn $800m in revenue in 2008.  The web property has added an average of 2b page views per month.

In other operating divisions, results were also solid.  Fourth-quarter cable-network revenue was $1.1 billion from $934 million/  Operating income climbed to $284 million from $194 million. Revenue at the Fox network was up to $1.43 billion from $1.34 billion though income was off slightly to $385 million from $403 million.

At the film and television studios (which includes 20th Century Fox), absent major blockbusters, revenue fell to $1.45 billion from $1.79 billion, and 4th quarter income fell almost 50%, to $106 million from $200 million.   For the full year, operating income of $1.2b was a 12% gain of the prior year.

Newspaper revenue, increased to $1.2 billion from $1.06 billion.    Book publishing revenue rose to $295 million from $256 million.  The Harper Collins label had 128 books on the New York Times Best Seller list for the year with 16 titles reaching a number one position.

The Magazines and Inserts segment reported 4th quarter income of $81m (25% gain over the same period in the prior year) and full year income of $335m (9% gain)

In the conference call Mr. Murdoch noted this was the company’s fifth consecutive year of record profits.  They had strong performances from their traditional asset lines as well as from future-focused developmental assets like Fox Interactive and Sky Italia.

More detailed press discussion on News Corporation’s finances can be found at:

Yahoo Finance
Google Finance
News Corporation Investor Relations

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