News Corp. Writes Down Value Of Assets By $8.4 Billion
Records a $6.4 billion loss in fourth quarter on TV
By Claire Atkinson -- Broadcasting & Cable, 2/5/2009 4:40:27 PM
News Corp. announced a net loss of $6.4 billion in the final quarter of the year, the company's second fiscal quarter, as it wrote down the value of its TV operations, newspapers and information services to the tune of $8.4 billion.
Commenting on the results company Chairman and CEO, Rupert Murdoch, said the results were a “direct reflection of the grim economic climate.” He said the downturn had been more severe than expected and would likely last longer than predicted. The company would continue its efforts to cut costs across the business.
In the television segment second quarter operating income was down $227 million to $18 million as a result of decreased earnings at Fox TV stations, Fox Broadcast Network, Star, the company’s Asian pay-TV company and MyNetworkTV. Operating income at the stations fell 44% against the year ago period. Local TV advertising in the quarter dropped an estimated 19% in the quarter. The company sold eight of its stations last year, however.
Fox also saw lower ad revenue, a precise number wasn’t given in the earnings release, as a result of lower ratings from Major League Baseball and fewer games. The quarter is typically weak for the network, ahead of the arrival of hit shows “American Idol,” and “24.”
The final quarter of the year (News Corps’ fiscal second quarter) saw cable network programming delivering double digit profit increases however. Operating income was up 27% thanks to contributions from Fox News Channel, the Big Ten Network and Fox International Channels.
Commenting on the extent of second quarter cancellations at Fox, Chernin, president and chief operating officer, said at Fox; “We expect to end up in [fiscal] fourth quarter at 11%, in the third it was in the 7%-8% range, we’re seeing an increase but not all that dramatic.”
“National cable networks are a mixed bags in general. National cable are running fairly similar to broadcast networks.”
Discussing TV stations, Murdoch predicted revenue in News Corp’s fiscal second half could be down as much as 30%. “The big thing that’s killing us is the lack of autos. It was at least 30% of revenue. There is precious little of it at the moment.”
When asked by an analyst if News Corp. might look for any purchases, Murdoch responded, “If they come to us and they’re screaming bargains, we may well do that. We haven’t seen any sign of that.”
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