News Corp. beat earnings expectations, but shares reversed their move upward and headed into negative territory on the media giant's lowered outlook on concerns about the European economy. CEO Rupert Murdoch sat the call out, with COO Chase Carey taking his place, fielding analyst questions. But Wall street quickly ignored the fact that adjusted earnings of 44 cents came in a penny better than expected and a nickel better than last year and focused on the lowered outlook. Now the company expects operating income in the current fiscal year, which ends this summer to grow by "mid-to high single digits" down from the outlook given in November of "high single to low double digit percentage growth."
The biggest disappointment this quarter was at Sky Italia, which suffered from economic weakness in Italy, driving a decline in subscribers. Operating income at the Satellite TV division swung to a loss of $20 million. Carey says they "do not expect the economy to improve in the short term," so the company is working to reduce programming costs, by not renewing some agreements, and modifying others. Carey says that the company "needs to get to a double digit profit margin without progress in the economy."