Quarterly Profit Tumbles at Fox, but Revenue Growth Is Strong

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Business Briefing | Company News: Berkshire Reports 29% Jump in Quarterly Profit

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News Corp.’s Quarterly Profit and Revenue Rise

Its revenue rose 14 percent from a year earlier to $9.5 billion in the quarter, ended March 31, News Corp said on Wednesday. The company posted adjusted earnings of 36 cents per share, just beating the 35 cents expected on average by analysts, according to Thomson Reuters I/B/E/S.

News Corp shares rose 3.6 percent to $33.00 in after-hours trading, after closing at $31.86 on the Nasdaq.

One-time items, including the purchase of a controlling stake in German pay TV operator Sky Deutschland and the sale of an ownership stake in New Zealand's Sky Network Television, helped lift net income to $2.85 billion, a jump from $937 million a year earlier.

The New York-based company said it is on track to separate its cable channels, movie studio and other fast growing entertainment assets from its newspapers, including The Wall Street Journal, near the end of its fiscal year in June.

Its entertainment assets helped boost revenue and earnings for the quarter, led by its cable networks business, which includes the Fox News Channel, FX and regional sports networks.

Operating income at the cable network programming unit rose 17 percent from a year earlier to $993 million, as channels in the United States and abroad commanded higher fees from cable operators and more advertising revenue.

News Corp Chief Operating Officer Chase Carey said the company will invest to build new cable networks, with the launch in August of Fox Sports 1, a competitor to Walt Disney Co's ESPN, and FXX, aimed at young adults, in September. The company intends to spend "a couple hundred million and change" over the next year to build those channels and some international networks, Carey said.

The media company is also trying to improve the Fox broadcast network, whose ratings slid this fall as aging singing competition "American Idol" drew a smaller audience.

"We are clearly disappointed with this season's ratings at the Fox broadcast network, and are taking steps now to improve next season's lineup," Carey told analysts on a conference call.

Lower advertising revenue for "Idol" dragged down the performance of the television unit, whose operating income still increased 15 percent, the company said.

The 20th Century Fox movie studio gained from the success of Oscar-winning film "Life of Pi," which grossed $600 million at theaters worldwide, and home entertainment sales from thriller "Taken 2" and animated hit "Ice Age: Continental Drift."

Operating income at the publishing unit, which includes its newspapers and the HarperCollins book publishing business, declined to $85 million, from $130 million a year earlier.

The company recorded $42 million in the quarter for costs related to investigations of phone hacking at its newspapers in Britain.

(Reporting by Lisa Richwine; Editing by Steve Orlofsky)

Groupon’s Quarterly Revenue Tops Estimates, and Shares Jump

Shares in the company, one of the most feted Internet market debutantes of 2011 before daily deals mania cooled, climbed almost 10 percent in after-hours trade. They have gained about 40 percent since the February ouster of co-founder and former CEO Andrew Mason, who was criticized for lacking the experience to run an increasingly global, public company.

Wall Street was cautious ahead of Groupon's results, so the company's "solid" performance triggered a particularly big gain in Groupon shares on Wednesday, analysts say.

"Margins came in better and they are re-affirming their full-year income guidance. It could have been worse," said Ken Sena, an analyst at Evercore Partners.

Groupon has been trying to revive a sluggish European business, while juggling the fast-rising cost of ensnaring new customers, and merchants to partner on Internet coupons for everything from spa treatments to fine dining.

The Chicago-based company finally fired Mason in February after a string of disappointing results wiped out three-quarters of its market value since its 2011 IPO.

On Wednesday, it reported first-quarter revenue rose to $601.4 million from $559.3 million a year earlier, surpassing the $590 million analysts had expected, according to Thomson Reuters I/B/E/S.

Consolidated segment operating income, or CSOI, a closely watched measure of Groupon's profitability, came in at $51.2 million in the latest period. Mark Mahaney, an analyst at RBC Capital Markets, was expecting CSOI of $26 million.

Its North American revenue rose 42 percent, while international revenue fell 18 percent.

Groupon, which has lost several other key executives, is on the lookout for a new permanent chief executive. Interim co-CEOs Eric Lefkofsky and Ted Leonsis continue to grapple with its struggling European business, while expanding in the United States.

Lefkofsky, who co-founded Groupon with Mason and is chairman, led the earnings conference call with analysts for the first time, acknowledging missteps and announcing a "new chapter" focused on the company's local commerce roots.

Analysts expect a slimmed-down company under new leadership.

"At times as an organization we spread ourselves too thin and fail to focus on the things that will have the greatest impact," Lefkofsky said.

LOCAL MARKETPLACE FOCUS

Groupon has been building an online deal marketplace called Pull that lets people search for and buy deals in their area. This is a big change from Groupon's original business, which sent a daily email to subscribers offering one or two deals.

Emails accounted for less than 45 percent of North American transactions in the first quarter, suggesting the Pull marketplace is gaining momentum. A Groupon spokesman declined to say how many transactions came from online searches.

Lefkofsky said the marketplace approach has potential because more people are carrying smartphones and can search for what they want to do and buy locally as they move around.

About 45 percent of North American transactions came from mobile devices in March, up from about 20 percent two years ago, Lefkofsky noted.

That Pull marketplace however needs a lot of merchants to offer deals for longer periods, something Lefkofsky said the company was making progress on.

At the end of March, Groupon was offering almost 40,000 active deals from merchants in North America, up from about 1,000 when the company went public in late 2011.

Lefkofsky said that over half of Groupon's local transactions in North America came from this "deal bank" of longer-term merchant offers. In March more than 60 percent of the contracts Groupon signed with merchants were for longer-term deals, he said.

For now, Groupon's board of directors has formed a special committee that has begun a search for a new chief executive for the company, interim co-CEO Ted Leonsis said on Wednesday.

RBC's Mahaney said Lefkofsky did a "nice job" on the conference call and asked if he was interested in the full-time CEO role. The co-founder did not respond, asking Ted Leonsis, Groupon's other interim CEO, to chime in.

The current leadership team is "gelling very very nicely," giving the search committee more time to find "the ideal long-term CEO," Leonsis added.

Groupon spokesman Paul Taaffe said Lefkofsky has not put himself forward as a candidate and is not being considered by the committee for the role.

Leonsis is leading the search committee, which Lefkofsky will not be on. Groupon's Taaffe declined to say who else is part of the group.

(Editing by Carol Bishopric, Matthew Lewis and Eric Walsh)

Chrysler Quarterly Profit Jumps

DETROIT (AP) — Strong U.S. sales powered Chrysler to a healthy third-quarter profit.

The company on Monday reported net income of $381 million, up 80 percent from $212 million a year earlier. The profit was due mainly to a 13-percent sales increase in the U.S., where Chrysler does three quarters of its business. The company sold nearly 417,000 cars and trucks in the U.S. under the Jeep, Dodge, Ram, Fiat and Chrysler brands.

Under the ownership of Italy's Fiat SpA, the Detroit company has been transformed since its 2009 trip through bankruptcy protection. It has posted profits since early last year and is now propping up Fiat, which is struggling with dropping sales in Europe.

Unlike its Detroit rivals General Motors Co. and Ford Motor Co., Chrysler has few sales in Europe and its profits aren't being eroded by losses there.

Chrysler's sales have been helped by a series of revamped cars and trucks that began rolling out in 2010, including the Jeep Grand Cherokee SUV, the Ram pickup and the Chrysler 200 midsize sedan.

The company's quarterly revenue rose 18 percent to $15.5 billion as global sales increased 12 percent.

The company earned $1.29 billion in the first nine months of the year, and it reaffirmed a 2012 profit forecast of $1.5 billion.

Chrysler Group LLC also repeated estimates that it would ship 2.3 million to 2.4 million vehicles worldwide this year, as well as generate $65 billion in revenue.

CEO Sergio Marchionne, in an e-mail to employees, said the competition isn't showing any signs of vulnerability, so the company will have to keep fighting for its share of the market.

"We are going in the right direction, and I simply ask you to keep faith in Chrysler and in each other and keep working to shape this company," he wrote.

Chrysler plans 66 new, revamped or special-edition cars and trucks by 2014, Marchionne wrote.

Even though it had a good quarter, Chrysler's rapid growth is starting to slow. Its U.S. sales last quarter fell about 4 percent from the second quarter and it faces increased competition from Honda and Toyota. The two Japanese companies have recovered from last year's earthquake and tsunami that hobbled their factories and left them short of models at U.S. showrooms.