News Corp hit by $87m NotW costs

News Corp has reported a 43% hit on its publishing arm, which includes its UK national newspapers, reducing the unit's operating income to $218m (£138m) as it was hit by multimillion-pound costs relating to the phone-hacking scandal at the News of the World.

Rupert Murdoch: chairman and chief executive of News Corporation
Rupert Murdoch: chairman and chief executive of News Corporation

News Corporation's third-quarter results reveal that it has paid out $87m (£55m) in charges relating to the ongoing investigation into phone hacking and payments to police officers at its UK newspaper arm.

The $87m charge is in addition to the $91m (£57m) charge News Corporation announced three months ago relating to the closure of the News of the World.

Overall, the group – whose empire spans newspapers, film, TV and cable operations –reported net income up from $642m (£405m) to $1.057bn (£667m) in the three months ending December 31 2011, buoyed by the performance of its cable networks such as Fox Networks.

Rupert Murdoch, chairman and chief executive of News Corporation, said: "I am particularly pleased with the success of our business strategies, in spite of the uncertain economic conditions that we continue to face.

He said News Corporation would continue to focus on generating shareholder returns.

Across its divisions, TV reported  a 25% uplift in income from $151m (£95m) to $189m (£119m), bolstered  by advertising support for 'The X Factor' in the US and the strong viewing figures for Major League Baseball.

Income at its filmed entertainment unit more than doubled from $189m to $393m, swelled by the performance of big budget releases such as 'Rise of the Planet of the Apes' and 'X-Men'.

Its cable division – which accounts for nearly 60% of operating income – was helped by the performance of its flagship Fox channel, and its affiliate channels, which led to operating income rising from $735m to $882m.

The company's satellite division – which includes Sky Italia – shifted from the red to the black, reporting income of $6m (£3.8m), helped by increased advertising and subscription revenues.

News Corporation's publishing arm, encompassing UK newspapers, The Times, The Sunday Times, and The Sun, suffered because of last year's closure of the News of the World, reducing income from $380m (£239m) to $218m (£137m) in the period.

The group said its publishing division was also hit by lower advertising revenues at its Australian newspapers.

The Financial Times is reporting that News Corporation executives are expecting a fall of about $150m (£94m) in its full-year contribution from its UK newspapers.

Follow John Reynolds on Twitter @johnreynolds10

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