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News Corp. Prez: 'Digital Arena Important to Our Future'

8 Aug, 2012 By: Erik Gruenwedel

Recent investments in Roku, Google Fiber and ongoing co-ownership of Hulu underscore News Corp.’s desire to be at the forefront of rapidly evolving digital distribution of entertainment, Chase Carey, president and COO, told analysts.

Speaking Aug. 8 in a conference call, Carey said News Corp. is following Google’s rollout of a fiber-optic broadband network in Kansas City, adding that the recent $45 million investment in Roku is partially intended to help facilitate the streaming media player manufacturer’s expansion into European markets.

Roku in 2008 help launch the subscription video-on-demand market with a Netflix-branded media player sold over the Internet.

“The digital arena is going to be important to our future,” Carey said. “You don’t want to be spending ahead of the [technology] curve as a lot of business models have yet to evolve, but we think it’s important for us to be active in this place and try and get insights to it.”

He said Hulu gives News Corp. one path into digital distribution, adding that “very small investments” into YouTube channels have broadened its digital awareness.

“Roku gives a little different window in the digital experience … adds some value to our satellites overseas … whether it’s Sky Go or Sky On Demand … and how do you develop that TV Everywhere concept as a satellite player,” Carey said.

News Corp. is a minority stakeholder in British satellite TV operator BSkyB.

Meanwhile, 20th Century Fox Studios reported fourth quarter (ended June 30) operating income of $120 million, down 43% from operating income of $210 million during the previous-year period.

The studio, which includes 20th Century Fox Home Entertainment, cited the decline in part on unfavorable comparisons with the successful worldwide theatrical performance of Rio (released at the beginning of the fiscal 2011 fourth quarter) and the home entertainment performances of Black Swan and The Chronicles of Narnia: Voyage of the Dawn Treader.

In addition, the quarter was impacted by theatrical release costs for Prometheus, which has grossed over $300 million in worldwide box office to date, and of Ice Age: Continental Drift, which was released domestically after fiscal year end and has grossed over $715 million in worldwide box office to date, setting records for highest opening weekend ever in many international territories.

Studio revenue dipped nearly 20% to more than $1.7 billion compared to $2 billion last year.

For the full fiscal year, studio operating income increased $205 million, or 22%, over the prior fiscal year to $1.1 billion. The growth was driven by a strong release slate including the successful worldwide theatrical and home entertainment performances of Rise of the Planet of the Apes, Alvin and the Chipmunks: Chipwrecked and The Descendants, and home entertainment performances of Rio, X-Men: First Class and Mr. Popper’s Penguins.

The year also benefitted from increased operating profit at the television production studios led by the growth of digital distribution revenue from the licensing of content to Netflix and Amazon, as well as an increase in license fees for “How I Met Your Mother,”  among other programs.

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