News Corp. Profit Soars 67%; It Raises Dividend

Rupert Murdoch’s News Corp. saw quarterly profit soar 67% on Wednesday on the strength of cable networks such as FX and Fox News Channel and a turnaround at its Sky Italia satellite TV service.

Net income at the nation’s fourth-largest media giant increased to $717 million, or 23 cents a share, in its fiscal fourth quarter ended June 30, up from $429 million, or 15 cents, a year earlier. Sales rose 11% to $6.1 billion.

News Corp. owns Fox Television Network, 20th Century Fox movie studio, satellite broadcaster DirecTV and newspapers including the New York Post, among other properties.

But instead of celebrating Wednesday’s results, which were better than what Wall Street expected, Murdoch sounded testy during a conference call as reporters peppered him with questions about the circumstances surrounding the unexpected resignation last month of his son and heir apparent.

Lachlan Murdoch, 33, said he had resigned his post as News Corp.’s deputy chief operating officer to return to Australia with his wife and infant son. But sources said tensions between father and son had played a role.

In particular, Lachlan is believed to have opposed attempts by his father to change the structure of a family trust that holds stock that controls News Corp. Upon Murdoch’s death, the trust now would be controlled by Murdoch’s four adult children, including Lachlan and two others from his second marriage to Anna Murdoch.

Murdoch now wants his two young daughters from his third wife, Wendi, to have a position in the trust’s governance -- not that he was eager to say so Wednesday.

“There is no change” to the trust, Murdoch said. “I don’t think it’s appropriate to talk about.”

Then, in what appeared to be a reference to Anna Murdoch’s lawyer, who was quoted in the news last week, he curtly added: “I don’t think it’s wise to listen to loose-lipped lawyers.”

During the conference call, Murdoch denied reports that News Corp. would buy Skype for $3 billion as part of its Internet expansion strategy. Founded by the creators of the Kazaa file-sharing service, Skype allows users to make Internet-based calls worldwide at no cost.

“We’ve had conversations, but the founders do not want to sell,” Murdoch said, calling the company “not the only alternative.” Murdoch predicted that News Corp. would make several acquisitions at “modest prices” in the coming months to build a new type of portal under its newly created Fox Interactive Media Group.

For example, Murdoch said the company was in serious negotiations to buy a search engine. Last month, Fox Interactive agreed to buy the parent of the fast-growing MySpace.com social networking site and the Scout Media Inc. sports site.

News Corp. on Wednesday also raised its dividend in the wake of demands by John Malone, the chairman of Liberty Media Corp., News Corp.’s largest non-family shareholder. Malone last week called for the company to focus more on improving shareholder value and less on empire-building acquisitions.

Liberty Media’s 18% stake in News Corp. has been seen as a potential threat to the family’s nearly 30% interest. News Corp. said Wednesday that its board had extended by two years a “poison pill” takeover defense that caps Malone’s holdings.

News Corp. had been negotiating with Malone to unwind Liberty’s position, but Murdoch suggested Wednesday that those discussions were over. “We’ve, frankly, moved on.”

Investors responded to New York-based News Corp.’s results by driving up its Class A non-voting shares by 26 cents to $16.42.

Operating profit at the cable group rose 14% to $137 million on revenue of $831 million. Operating profit for the film business rose 15% to $109 million, propelled by the home-video releases of “Alien vs. Predator” and “Sideways.”

Operating profit at News Corp.’s broadcast television unit dropped 2% to $344 million, as programming costs at the Fox network rose and the company’s television stations sold less advertising.

Sky Italia, the fledgling Italian satellite TV service, posted its first quarterly operating profit, earning $74 million, contrasted with a loss of $26 million a year earlier.