Fox feels the pinch

Meager pic coin drops News Corp. profits

By JILL GOLDSMITH

News Corp.'s profits dipped in the latest quarter but still beat expectations, as Fox Entertainment's meager film slate of late was no match for last year's juggernaut of "There's Something About Mary," "Dr. Dolittle" and "Titanic" on video.

The media, entertainment and publishing giant saw net income fall 16% to $165 million on revenue down slightly to $3.16 billion for its fiscal first quarter ended in September. In filmed entertainment, operating income plunged to $49 million from $125 million and revenue dropped 26% to $789 million.

Peter Chernin, News Corp. president and co-chief operating officer, defended the studio, insisting it would be would be wrong to call the unit weak just because it had some smash hits last year. "Star Wars Episode I: The Phantom Menace," which Fox distributed, was its biggest revenue engine in recent months.

Chernin said Fox is looking at "what seems to be, on paper, the strongest slate in our history" over the next 12 months, pointing to films like "Anna and the King" with Jodie Foster, "The Beach" with Leonardo DiCaprio, the Jim Carrey starrer "Me, Myself and Irene" (by "Mary" team Bobby and Peter Farrelly), "X-Men" and Robert Zemeckis' "Cast Away" with Tom Hanks.

He promised that the film biz "will catch up with the rest of the company in terms of financial results" and predicted positive year-on-year comparisons by late this fiscal year or early in the next.

Twentieth Century Fox Television has a bevy of new programming spread among the various networks, including "Judging Amy," "Snoops," "Stark, Raving Mad," "Angel" and "Roswell."

At the station group and the Fox network, operating income rose 16% to $149 million compared with last year. The Fox O&Os saw operating income rise 14%. The network benefited from a new economic arrangement with its affiliates but the company said its overall season-to-date ratings are below a year ago due to the delaying of series' premieres until after the Major League Baseball playoffs were concluded.

The five-game American League Championship Series between the New York Yankees and the Boston Red Sox averaged a solid 9.2 rating, the company said.

Chernin acknowledged some "disappointments" in the network' ratings but said underperforming shows had been pulled and noted that some fall launches are still to come -- including the "X-Files" premiere. It looks like Fox will "be in pretty respectable shape" Saturday through Wednesday, he said, with some work to do on Thursday and Friday nights. "It's far too early to have any verdict on the network season," he said.

News Corp. execs also said the company is not currently in talks with broadcaster Chris-Craft for a station deal, although Fox is certainly looking at "any and all duopoly opportunities."

Cable network programming, comprised of the Fox News Channel, Fox Sports Networks, the Los Angeles Dodgers and other cable-related businesses, reported a jump in cash flow to $38 million from $13 million. Fox Sports Nets' cash flow nearly doubled. Fox News Channel reduced its first- quarter cash flow loss by more than 43%. It has 43 million subs now, with contracts to take it to 50 million.

As for operating income at News Corp.'s other businesses: Book publishing rose 45% to $32 million; Newspapers rose 14% to $99 million; Magazines and inserts fell 14% to $56 million.

The company said that at BSkyB, the conversion from analog to digital continues at a "breathtaking pace" with more than 1.8 million digital subscribers already enrolled.