News Corp. Loses $3.4 Billion in 2009
Earnings show broadcast revenues down, cable results up
By Claire Atkinson -- Broadcasting & Cable, 8/5/2009 5:55:42 PM
News Corp.'s fiscal 2009 is sure to go down as an annus horribilis. The firm recorded a $3.4 billion loss for the fiscal year, which ended June 30. Last year the company recorded a $5.4 billion profit. Advertising difficulties at newspapers and TV coupled with lackluster digital operations all contributed to a particularly tough 12 months.Fourth quarter operating income was $268 million. Earlier this year the company took a near $9 billion write-down on the value of its assets and recorded operating charges of $312 million.
The television segment-which encompasses broadcast television operations, the station group and Asian TV operation Star-reported a $4.4 billion loss in operating income in 2009, compared with a $1.1 billion gain the year before. The earnings released showed an impairment charge of $4.5 billion in the TV segment. The local TV station ad market was down 27% for the quarter and 21% for the year. Television revenue was $1 billion for the quarter and $4.6 billion for the year.
For the three months prior to June 30, the television segment took in $75 million, down from $279 million. The company also recorded a $20 million impairment charge in the segment.
Cable programming was again a company stalwart, with operating income of $434 million. Operating income was $1.67 billion for the year, up from $1.2 billion in 2008.
In a statement, News Corp. Chairman and CEO Rupert Murdoch said: "The past year has been the most difficult in recent history, and our 2009 financial performance clearly reflects the weak economic environment that we confronted throughout the year." Murdoch highlighted progress in cable programming and added, "I am certain that News Corp. is poised to profit, and deliver strong returns as the economy rebounds."
Both Murdoch and newly appointed COO Chase Carey rammed home the need to revamp current business models in broadcast TV. Both executives emphasized that the ad-supported broadcasting business no longer worked and there was a need to rapidly adapt.
Commenting on Time Warner's initiative to offer programming online to cable subscribers, Carey told analysts on the company earnings call, "TV Everywhere has some benefits. It is a little bit about defending existing models. It's an important step. We need to develop more offensive ways, windows for availability-there are other business models to create. I think TV Everywhere has a benefit; I don't think that is the answer. It needs to be a broader strategy."
On the upfront, Murdoch gave little news, saying, "We're quite happy with the progress we are making. All I would say is that we're doing well on pricing but will keep more open for scatter.... There is money around. I'm not saying there's a vast recovery in the process of reaching understandings with our advertisers, and I can't be more specific than that."
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