Through TheFLY's Eyes: News Corporation
from Theflyonthewall.com







Still Exceeding Expectations

News Corp (NWS), Rupert Murdoch’s cable television answer to the formerly Ted Turner-led CNN, continues to dazzle.

News Corp said Q3 profits more than doubled, boosted by higher earnings at its cable TV news network, Fox News. The company said Q3 2006 earnings rose to 26c per share, compared to 13c in Q3 2005. Q3 revenue increased to $6.20B, compared to $6.04B in Q3 2005.

In addition, News Corp doubled it share repurchase program to $6B from $3B over the next two years. The company has already purchased $2.5B in shares under its existing program, in place since June 3005.

One operation that was indicative of the quarter: the Fox News channel reported operating income growth of 24% compared to the third quarter a year ago, primarily from higher advertising on increased pricing and volume.

The market’s response to News Corp’s report was positive for the company. Despite a negative start for the market Thursday, in early afternoon trading News Corp shares were up more than 3% or 60c to $19.73.

What does a solid Q3 report and an increased share buyback program signal to investors?

It signals that Fox-lead News Corp is beating expectations on the entertainment front, continuing to impress analysts with its cable news network’s ratings, and is also very confident that better days are ahead. Further, it also signals that News Corp believes its shares are a bargain: frequently, companies will repurchase shares when they are very confident the market is undervaluing them.

And, CEO Rupert Murdoch spoke to this in a conference call with analysts: “We expect to continue to be active buyers of our shares as long as the market undervalues them,” Murdoch said.

Based on News Corp’s Q3 performance, it appears other investors may be thinking the same thing regarding NWS shares in the months ahead.