Looks like a real good quarter for News Corporation. Results for 1Q08 are ahead of expectations. This should be very comforting for shareholders as the year was supposed to backend loaded. Revenues grew 19%, well ahead of the 9% gain expected. The revenue upside translated to profits as operating income rose 23% vs. expectations for 14%. Guidance for low teens growth in operating income for the year looks awfully conservative given that some cost pressures evident in 1H08 will dissipate. I guess when Peter Chernin said that all businesses were above budget we should have listened.
It is hard to argue against News Corporation as a core media long. I’ll be looking to buy shares in the next few days….

….Revenues of $7.1 billion were $500 million better than expected. As much as $350 million upside came form the move studio thanks to a strong summer box office performance led by The Simpsons Movie. Newspapers were a little better than expected on reveues while Other, which is mostly Fox Interactive was at least $100 million better than expected. There were no material shortfalls in revenue as far as the stock price is concerned.
Operating income of $1.047 billion are about $90 million, or almost 10% better than expected. Filmed Entertainment was the driver, accounting for almost all the upside. Sky Italia and Cable Networks also contributed meaningfully to the upside. Book Publishing looks a little low. Other losses improved but fell a little short given the upside in revenue. Ongoing investment in MySpace also held back results.
Cash continues to build and the DirecTV sales is still set to close soon. On the call, Rupert would not commit to an accelerated share buyback. This is a little disappointing but it seems impossible to assume that a large repurchase is not coming. Rupert did sya that the weak dollar makes acquisitions difficult given that his interest would be mostly outside the US.
Guidance was reaffirmed with a statement that “we are comfortable.” I think that leaves upside. Some will complain that upside this quarter was largely form the movie studio and that is not worth paying for. I say that News Corporation is a conglomerate so we should n’t complain about where growth comes from. The fact that Cable Networks and Sky Italia are also performing very well and MySpace and Newspapers will improve as the years goes leaves News shares in very good shape with more good earnings news to come in the next twelve months.