News Corporation, the parent company of The Times, swung to an operating loss of $7.6 billion (£5.2 billion) in the fiscal second quarter, down from earnings of $1.4 billion a year earlier, as the media group was battered by the worst recession in its 50-year history.
The group took an $8.4 billion pre-tax charge from writing down the value of television, newspaper and other assets depreciated by the economic downturn.
Record profits in New Corp’s cable network division failed to offset the slump in advertising across the group in the three months to December 31.
Rupert Murdoch, chairman and chief executive of News Corp, described the economic climate as “grim” and said that the recession was more severe and longer lasting than experts had predicted. Advertising revenue might not return to its peaks of recent years even when the current recession finished, he said.
However, shares in News Corp were up by 2 per cent at $7.60 in late trading in New York as Mr Murdoch vowed to continue to make cost savings. “We’re taking costs out everywhere,” he said.
The Wall Street Journal, acquired by News Corp last year when it paid $5 billion for Dow Jones, will lose more than 20 newsroom jobs.
Excluding the assets writedown, News Corp reported adjusted second-quarter operating income of $818 million, down 42 per cent on a year earlier.
News Corp’s filmed entertainment business made operating income of $112 million in the second quarter, down 72 per cent. Releases had not been as strong as in 2007, when The Simpsons Movie topped the box office.
Operating income in the television division dropped 92 per cent to $18 million because of a fall in advertising across the channels. The cable network programming division reported a 27 per cent increase in operating income to $428 million, as Fox News Channel increased its advertising rates and drew more viewers. Operating income in the magazines and inserts business was flat at $86 million. SKY Italia made $10 million in operating income, down 83 per cent in part because of the cost of adding new subscribers.
HarperCollins, the mainstay of News Corp’s book publishing business, saw operating income fall from $67 million last year to $23 million because of lower sales in a tougher retail market and fewer high-profile book launches.
News Corp will pay a dividend of $0.06 per share.
Mr Murdoch said that he had no acquisitions planned, unless he were approached with a “screaming bargain”. He said: “I really haven’t seen any business that I’d want to buy.”
Source: http://business.timesonline.co.uk/tol/business/industry_sectors/media/article5672107.ece
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