News Corp. lost about $100 million covering the terrorist attack due to
lost advertising and added news expenses covering the tragedy, said company
chairman and chief operating officer Peter Chernin.
"We are now looking at a greatly altered advertising
landscape," Chernin told attendees at the Goldman Sachs Communicopia media
conference in New York Tuesday Oct. 1.
"It's a tough environment with limited visibility, great volatility and recessionary pressures."
Earlier Tuesday morning, News Corp. issued downwardly
revised earnings guidance for fiscal year 2002 for both itself and Fox
While the bar is lowered, the fact that News Corp. is still anticipating profits at all in this environment "is testament to the underlying strength of our business," Chernin said.
To help the bottom line, News Corp. and Fox will be
reducing costs by many millions, including personnel and other overhead costs,
plant costs and renegotiating vendor deals, Chernin said.
The cost cutting will be "pretty broad," although he stressed that layoffs
would be kept to minimum where possible.
Chernin did say that News Corp.'s "global presence" coupled with
the fact that more than half of its businesses are not advertising-dependent
should help the company weather the current economic downturn.
Fox Broadcasting sold 80% of its inventory at flat prices and is therefore
"protected" in the scatter market regardless of how it shapes up, he said.
The TV syndication unit will deliver $1.2 to $1.8 billion in profits over the next five to six years, he said.
This year alone, King of the Hill, The Practice, Buffy the Vampire Slayer and Ally McBeal all launch in syndication.
The company's cable networks added a combined 100 million in subscribers last year, he said.
Those results have bolstered cable sales: FX did $105
million in business in this year's upfront versus $69 million last year; Fox
News Channel did 70% more business with 4% price hikes.
And the tough environment hasn't caused News Corp. to rethink its bid for Hughes-negotiations continue to drag on and News Corp. still sees great upside in doing that deal if it can, said Chernin.
"The efficiencies of having 20 million direct-to-home subscribers around the globe excites us today as much as it did a year and a half ago," when the company first started talking to General Motors about acquiring its Hughes subsidiary, which operates DirecTV. - Steve McClellan