News Corp. Posts Loss Of Over One Billion Dollars
Rupert Murdoch’s News Corporation has posted a fourth quarter net loss of $1.6 billion or 64 cents a share, in part because of the weakness of its publishing business which includes the British newspapers The Sun and The Times and, in the US, the Wall Street Journal, the New York Post and the Harper Collins publishing house. Profits at these were $597 million, far less from revenues of $864 million a year ago.
Poor performance at News Corp.’s Australian publishing division was said to account “most significantly” for the losses. But the 7 percent dip in revenues — in the same period a year ago, News Corp. posted a profit of $683 million — was also because audiences for its television shows including American Idol are now “sagging.” In addition, films including Prometheus and Ice Age: Continental Drift from the company’s Twentieth Century Fox studios have not done as well at the box office as predicted. The film business’s operating income in this quarter was $120 million, compared with $210 million in the same period last year when Rio was a big hit.
Legal costs related to the phone hacking scandal that has engulfed News Corp.’s British newspapers have risen to $224 million for the 2012 fiscal year.
News Corp. also posted a $2.9 billion pre-tax restructuring charge related to its plan to spin off its publishing division. The company’s shares fell in after-hours trading.
A conference call with analysts seems to have been carefully structured. News Corp. president Chase Carey said that the split of the company into a media division and a publishing one was proceeding well and was “all about bringing focus and alignment to our business.” Murdoch’s younger son James, who stepped down from senior executive positions at BSkyB Media and at News Corps in the UK last year in the wake of the hacking scandal, was present on the call but did not speak.
Rupert Murdoch himself was not on the call, issuing a press release containing a purposefully positive statement: “News Corporation is in a strong operational, strategic and financial position, which should only be enhanced by the proposed separation of the media and entertainment and publishing businesses.”
The plan to split News Corp. into two divisions still requires shareholder approval; it is expected to go through as the Murdoch family holds just under 40 percent of the company’s shares.
Earlier this week, the Church of England sold all of its News Corp. shares (worth £1.9 million or about $2.97 million) due to “fears that the media group has not learnt lessons from the phone-hacking scandal.” The Church acted on the advice of its ethical investment advisory group.
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