Poor quarterly results trigger News Corp share price slide
NEW YORK - News Corporation has unveiled a bleak set of quarterly results including an 8.3% drop in revenues and a $6.4bn net loss after a massive writedown of its broadcasting, newspapers and interactive assets.
With the company also lowering its guidance for operating profits for the year to June 30 2009 from around 15% less than the previous year to around 30% less, its share price fell 7.4% in after-hours trading to $6.90.
Rupert Murdoch, News Corp's chairman and chief executive, said "the downturn is more severe and likely longer lasting than previously thought" and he was implementing "rigorous cost-cutting".
This includes the reduction of 800 positions in its Fox businesses including the 20th Century Fox movie studios and around 24 newsroom jobs at the Wall Street Journal.
The $8.4bn writedown includes a $4.6bn charge relating to its TV broadcasting division, where operating profit dropped from $245m in the last quarter of 2007 to $18m in the last quarter of 2008.
There was also a $3.1bn charge relating to its UK, US and Australian newspaper division, where operating profit dropped from $196m to $179m.
The UK newspaper group, which includes The Times and The Sun, reported 10% lower advertising revenues, but slightly improved circulation revenues compared with a year ago.
Finally, News Corp wrote down $832m at the division housing its interactive assets, such as MySpace.com, and pay-TV technology company NDS. The division swung from a $23m operating profit to a $38m operating loss.
The company's total operating profit fell 42.3% to $818m and factoring in the writedown meant it registered a net loss for the quarter of $6.4bn.
Murdoch had grim words for all during a conference call with analysts, saying this was the "worst global economic crisis since News Corp was formed 50 years ago", but said the company had enough cash to make debt payments for seven years.
When asked about his interest in buying The New York Times, he indicated it was unlikely because of the criticism he received when he bought The Wall Street Journal. He said: "I have no desire to be a bigger public enemy or target."
The bad news at News Corp came on a bad day for the US media industry as Time Warner's cable business, Time Warner Cable, said it planned to cut nearly 3% of its workforce, 1,250 jobs, to reduce costs, but still managed to forecast a 2009 profit near the high end of expectations.
More jobs are to go at Bloomberg. It said it planned to cut 100 television and radio jobs, including jobs in the US and UK, and close all of its non-English language television operations, including those in Japan, Spain and France.
The New York Post reported on Wednesday that Bloomberg's TV and radio operations are losing an around $20m a year.
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