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News Corp profits soar but phone hacking scandal rumbles on

News Corp profits soar but phone hacking scandal rumbles on

The financial cost of the News of the World phone-hacking scandal may still be growing, but News Corp has seen its net profits grow by 65% between October 1 and December 31 2011 compared to the same period last year.

Yesterday News Corp published an earnings release, revealing that it made a net profit of $1.06bn in the last three months of 2011, compared profits of $624m in the same period in 2010.

Profits were driven by growth in the company's cable network programming, filmed entertainment and television divisions.

News Corp chairman and CEO Rupert Murdoch said in a statement that he was "particularly pleased with the success of our business strategies in spite of the uncertain economic conditions that we continue to face."

News Corp's cable division saw its operating income grow by 20% in the last three months of 2011, fuelled partly by the lower fees the company paid to broadcast NBA basketball. The corporation also benefited from profits from Fox News and growth in Latin American channels.

Profits from the company's filmed entertainment division more than doubled thanks to the success of films including "Alvin and the Chipmunks: Chipwrecked".

Murdoch stated that "the significant growth we reported in the quarter in the Cable Network Programming, Television and Filmed Entertainment segments clearly validates our strategy to develop and distribute superior wide-ranging content."

However, the news was not so sunny for the publishing division, where the company saw a 43% drop in operating income for the last three months of 2011, compared to the same period the previous year.

Part of these losses relate to the company's continuing woes following the News of the World phone-hacking scandal. Not only did the company lose the profits from the paper, which sold almost 3 million editions every Sunday. News Corp also revealed that the ongoing investigations relating to the scandal had cost the company $86 million in the last three months of last year.

Reuters reports that News Corp CFO David Devoe said that the cost of the investigations relating to the paper were "substantially higher" than the company had anticipated. Devoe stated that News Corp had paid out $104 million in the last six months of 2011 in relation to the investigations - 85% of this money was spent on legal fees, 15% on payouts to victims of phonehacking.

Yesterday details were released of new settlements between News Corp-owned News Group Newspapers and phone-hacking victims, including the former footballer Paul Gascoigne and the comedian Steve Coogan.

The Guardian reported yesterday that News International is facing now an additional 50 damages claims from alleged phone-hacking victims.

Sources: News Corp, Reuters, BBC (1) (2) Guardian (1) (2) The Wrap

Image by Niall Kennedy via Flickr


Hannah Vinter


2012-02-09 18:08

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