Earnings Preview: News Corp.

News Corporation (NWS) is expected to report Q3 earnings after market close Wednesday (May 7) with a conference call scheduled for 4:30 pm ET.

Guidance

Analysts are looking for a profit of 32c on revenue of $8.65B. The consensus range is 28c to 35c for EPS, and revenue of $8.13B to $9.07B, according to First Call.

Despite rumors of "cooling" talks between Yahoo! (YHOO) and News Corp as an alternate deal to Microsoft's (MSFT) takeover offer, it is a possibility that now that the Microsoft deal is off, News Corp and Rupert Murdoch will take advantage of the situation by his willingness to roll off MySpace and Fox Interactive.

In a separate matter, sources familiar with the matter said Tribune Co (TXA) has reached an agreement in principle to sell its Long Island newspaper, Newsday, to News Corp for around $580M, in what could be a joint venture. A deal could wipe out up to $50M in annual losses News Corp incurs on the New York Post, one source said.

Analyst Views

As for the quarter, Bernstein downgraded the stock to Market Perform from Outperform on April 14, because due to risk to the company's earnings in the near-term. The firm does not believe the stock can outperform the S&P's multiples, partially due to the company's business mix and is particularly concerned about the online division's ability to meet estimates.

News Corp's Dow Jones reported in April that at a time when most print newspaper subscriptions are dropping, paid subscriptions to the print version of The Wall Street Journal rose 1.6% during the six-month period that ended March 31.