The "X Factor" in News Corp.'s outlook for its soon-to-be-spun-off publishing division may be its fledgling for-profit education business.
Headed by former New York City schools chancellor Joel Klein, the unit called Amplify plans to kick off a pilot project in the coming school year that puts tablet computers in the hands of grade-schoolers. The unit will be lumped together with newspapers and book publishing in a planned spin-off.
News Corp. announced Wednesday during its fourth-quarter earnings call that it will boost investment in Amplify by another $100 million from a year ago to $180 million in the coming fiscal year through next June.
That prompted the question of when the "for-profit" part of the equation would kick in.
Chief Operating Officer Chase Carey addressed that.
QUESTION: On education, when would this become a contributor to profits? Is this a 12-to-18-month thing, or a 3-year initiative and will costs ramp up over time? So we're looking beyond 2013, that $180 million may grow another $100 million each year?
RESPONSE: The right way to give you some visibility, because we have it and it's a comprehensive plan, is to have Joel Klein do it, which we're going to plan for this fall, and he can give you some visibility. I will say that on the spending, we do probably look at 2013 as essentially being a peak year. And from there we start to develop the revenue side of it. And really invest in building the base. We still have a significant investment in 2014, but 2013 is probably the peak and I think Joel's better off to give a better sense of that and a better sense of what the products and plans are.
