News Corp swallows $87m cost of News of the World closure

The ongoing investigations into the closure of the News of the World cost News Corporation $87m (£55m) in the final three months of 2011, but Rupert Murdoch's media giant still increased net income by 65% over the quarter.

The loss of the paper, which was shut down in July 2011 at the height of the hacking scandal, has cost News Corporation $104 million in total in the final six months of last year. The cost was mainly in lawyers' fees relating to the various investigations against the paper.

Waving goodbye to the News of the World also contributed to a 43% decrease in operating income at the media firm's publishing division, to $162m in the quarter.

Alongside the cost of scuttling the News of the World, which was News Corp's most profitable paper and sold almost 3m copies every Sunday, the firm also blamed lower advertising revenues at its Australian newspapers.

The results were released as News Corp paid out more settlements to victims of the phone hacking scandal, including Steve Coogan, Pete Doherty and Paul Gascogine. It has also emerged that singer James Blunt is considering launching legal action against the firm.

Despite the troubles in its publishing group, News Corp made $1.06bn (£888m) in net profit in the final quarter of 2011, up from $624m in 2010. This was mostly fuelled by fees from its cable television networks and a growth in advertising revenue.

Income at News Corp's cable TV networks rose 9% as the company was boosted by the lower cost of broadcast rights to the NBA national basketball league. Fox News reported an 8% rise in revenues.

On television, News Corp sold 25% more advertising around its flagship US programmes, such as The X Factor and New Girl, and benefited from its baseball and American football coverage.

The firm also saw a 100% increase in the wholesale fees it charges other networks to broadcast its content, as part of a strategy to further monetise content across all channels.

News Corp's film division also performed well, generating income of $393m for the quarter, up from $189m in the same period a year ago.

It was boosted by various hit films, including Rio, Rise of the Planet of the Apes and X-Men: First Class, while Alvin and the Chipmunks: Chipwrecked made over $300m in worldwide sales. Revenues from digital sales via Amazon and Netflix were $200m for the last six months, said News Corp.

In a statement, Murdoch said that the funds set aside for purchase of UK pay-TV firm Sky, which was aborted at the height of the hacking affair, were diverted into a share buying scheme.

"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," said Murdoch, the chairman and chief executive of News Corp.

"I am particularly pleased with the success of our business strategies in spite of the uncertain economic conditions that we continue to face.

"News Corporation's commitment to delivering value to our stockholders is unwavering and we will continue to focus on generating superior shareholder returns, as evidenced by our strong year to date earnings and the successful completion of over half of our previously announced share repurchase programme."