Fox DVD sales help News Corp. Q4 profit

Alvin pushes filmed entertainment into double earnings

By Danny King -- Video Business, 8/5/2008

AUG. 5 | News Corp. said sales of its 20th Century Fox Home Entertainment titles such as Alvin and the Chipmunks and Juno helped double the company’s filmed entertainment division’s fiscal fourth-quarter earnings.

The unit’s operating income for the quarter ended June 30 surged to $220 million from $106 million a year earlier as the division’s sales increased 4.7% to $1.52 billion, News Corp. said today. Filmed entertainment, whose earnings were cut by costs related to theatrical releases such as What Happens in Vegas, accounted for 15% of News Corp.’s fiscal fourth-quarter operating profit, up from 8.7% last year.

Fox, the No. 2 U.S. home entertainment company behind Time Warner’s Warner Home Video, gained ground in an industry where spending for the first half of the year was little changed at about $10.1 billion, according to data compiled by Rentrak and Video Business.

Fox accounted for about 16% of first-half DVD spending, with Alvin the best-selling DVD through June 30, while Juno and the studio's 27 Dresses finished at No. 8 and No. 13, respectively.

"Despite the recent handwringing about the health of the DVD business, the retail space has widened by 5% over the last 12 months," News Corp. president Peter Chernin said on a conference call with analysts this afternoon.

Chernin added that year-to-date U.S. Blu-ray sales have grown fourfold from a year earlier to about $200 million.

Home-entertainment sales also were bolstered by pay-TV demand for titles such as Night at the Museum and Borat: Cultural Learnings of America for Make Benefit Glorious Nation of Kazakhstan.

In response to an analyst's question, Chernin said the company wasn’t "in any rush" to expand its day-and-date pay-TV releases because of concerns over cannibalizing DVD sales, adding, "what’s paramount is protecting our overall margins."

Overall, News Corp.’s net income rose 27% to $1.13 billion, or 43¢ a share, from $890 million, or about 27¢, a year earlier, as revenue rose 17% to $8.59 billion.

In addition to the filmed entertainment jump in profit, the company's direct-broadcast satellite operations were boosted by SKY Italia’s earnings, while newspaper profit jumped largely on Wall Street Journal parent Dow Jones & Co., which News Corp. acquired last December.