Star shows 22% Q1 revenue growth, but operating income down

MUMBAI: News Corp's Asian arm Star's first quarter FY 2006 operating income has declined versus a year ago as revenue growth of 22 per cent, primarily in India, was more than offset by higher programming and promotional costs from the launch of new channels and an expanded programming line-up at Star Plus.

The revenue growth was driven by increased advertising revenues at Star Plus from the re-launch of Kaun Banega Crorepati and from higher subscription revenues reflecting new channel offerings and the international distribution of several of Star's channels.

News Corp, which declared its fiscal first-quarter results yesterday, reported an overall net loss of $433 million, compared with a net profit of $625 million a year earlier. The Rupert Murdoch-controlled media conglomerate took the hit on a large accounting charge.

However, first quarter operating income jumped 19 per cent to $909 million on a revenue growth of 10 per cent at $5.7 billion.

Much of the growth was due to strong performance in News Corp's cable network programming division, including the Fox News Channel and Regional Sports Networks affiliates, which offset a 32 per cent decline in broadcast TV operating income.

Commenting on the results, Murdoch said: "Our first quarter results reflect yet again the fiscal and operational momentum we have enjoyed for quite some time. Indeed, this was our 15th consecutive quarter reporting year-on-year operating income and revenue growth, and we delivered strong gains across nearly all of our operating segments. The sustained revenue, profit and cash flow strength from our established asset base has afforded us the opportunity to invest in several non-traditional media businesses that are experiencing explosive growth.

"And we have opportunistically expanded into new media, acquiring several assets which complement our existing businesses and which we believe enable us to better monetize our vast library of popular content. With solid momentum throughout the Company and a strong foundation of new media investments, we believe we are ideally situated to deliver continued strong returns in the future."

Murdoch, meanwhile, has said News Corp's internet division was well placed to increase revenue growth after the global conglomerate had transformed itself into a "new kind" of media company.

"The company is nimble enough to leverage our existing strength into this new medium and, with a very rational amount of investment, transform ourselves into a digital powerhouse in our own right," Murdoch said. "We are positioned to grow revenue very quickly by targeting (internet) ads to specific users," he added.

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