News Corp reports sky-high losses
The media giant has announced a loss of $3.4bn for last year as its advertising income plunged in the downturn
News Corp, headed by media mogul Rupert Murdoch and owner of BSkyB, Sun newspapers, 20th Century Fox and MySpace, made a $3.4bn net loss last year versus a $5.4bn profit last year, it said. The deficit came as it was forced to write down $8.9bn and saw advertising revenues decline sharply. Revenues at the group fell 7.8 per cent in the year.
Chief executive Murdoch blamed the economic downturn, saying "Our financial performance clearly reflects the weak economic environment that we confronted throughout the year." But like many other corporate leaders recently he made reference to future improvements and consigned the past year to being something of an annus horribilis.
The group's write downs came as a result of the drop in value of its assets, without which it made a $3.6bn operating profit, down by a third year on year. Most media areas, apart from its cable television offerings, were weaker in the period. Its UK newspaper group, which includes the Times, the Sun and the News of the World saw advertising revenues fall 14 per cent and profits at the global group, which includes the Wall Street Journal, all but halved to $466m.
The company's film business saw profits drop by a third to $848m, with the latest in the X-Men series disappointing, and its television arm suffered a collapse in earnings from $1.12bn to $174m. However its cable network division was a rare ray of sunshine, with profits gaining there by a third to $1.67bn.
Murdoch is currently at the centre of a storm over his plans to charge for online news content by the middle of next year. Although the move is part of a growing trend, some industry-watchers believe that it will mean plummeting advertising revenues.
WHAT THEY ARE SAYING:
RBC Capital Markets analyst David Bank on Reuters: "I think it looks reasonable. They gave a pretty realistic view of where the growth is coming from and where it is not going to come from, particularly the advertising-supported businesses."
Tim Arango in the New York Times: "The company, like its peers, has been cutting costs to weather the recession. News Corporation, for example, has cut hundreds of jobs at MySpace alone. But cost-cutting can only last for so long." 
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