Perpetual: The news at News Corp - Matt Williams

Recently there's been a lot of bad press about News Corp and the phone-hacking scandal that's embroiled its UK newspapers. However despite this, we continue to favour the stock as the UK newspapers represent only a fraction of its overall business.

Matt Williams at Perpetual has noted that in the recent company reporting season, News Corp announced solid second quarter results. The company's revenue over the three months to the end of December 2011 was US$8.98 billion, a 2% increase compared to a year ago, while its operating income was US$1.50 billion, a 16% increase compared to a year ago. These results were led by strong contributions from the Filmed Entertainment segment and Cable Network Programming and Television segments, which more than offset declines in the Publishing and other segments.

News Corp also has a superb balance sheet. It currently has around US$11 billion cash on hand, with US$2.3 billion slated to go into the current share-buyback program. We estimate the share buyback to be worth more than 10% of issued capital each year.

We believe these results indicate that management are not being overly distracted by the bad press and this has been reflected in the share price which has recovered strongly since the phone-hacking scandal reached a crescendo in August last year.

As we believe the company's earnings growth is largely structural, rather than dependant on a US economic recovery, we are comfortable with our positions in the stock.

This information has been prepared by Perpetual Investment Management Limited (PIML) ABN 18 000 866 535, AFSL 234426. It is general information only and is not intended to provide you with financial advice or take into account your objectives, financial situation or needs. You should consider, with a financial adviser, whether the information is suitable for your circumstances. The views expressed in this article are the opinions of the author at the time of writing and do not constitute a recommendation to act. Any information referenced in the article is believed to be accurate at the time of compilation and is provided by Perpetual in good faith. To the extent permitted by law, no liability is accepted for any loss or damage as a result of any reliance on this information.

No company in the Perpetual Group (Perpetual Limited ABN 86 000 431 827 and its subsidiaries) guarantees the performance of any fund or the return of an investor's capital.