$6.42 Bil. Loss at News Corp. | Adweek $6.42 Bil. Loss at News Corp. | Adweek
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$6.42 Bil. Loss at News Corp.

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NEW YORK News Corp. has reported a loss of $6.42 billion in the final three months of 2008, as the media conglomerate was forced to take an $8.4 billion write-down on its TV and newspaper assets.
 
Speaking to analysts during News Corp.’s FY Q2 earnings call, chairman and CEO Rupert Murdoch said the results “are a direct reflection of a recession that’s deeper than anyone could have predicted,” adding that the global economic climate is the worst he’s seen since the company was formed 50 years ago.

Adjusting for the impairment charge, Q2 net income was $320 million, or 12 cents per share, well below the average analyst forecast of 19 cents per share.

Operating income at the TV unit plummeted 93 percent in the quarter, dwindling from $245 million a year ago to $18 million, as a result of continued erosion of the local advertising business, as well as higher programming costs at the Fox broadcast network. According to News Corp., ad revenue at Fox TV stations declined 19 percent in the quarter compared to the year-ago period.

“The big thing that really is killing us is the lack of automobile advertising,” Murdoch said. “In local stations, automobile advertising was at least 30 percent of total revenue and there’s precious little of it around at the moment. Other categories are down too, but nothing like that.”

The lone bright spot in the company’s portfolio was its cable networks unit, which includes FX, Fox News Channel, the regional sports nets and National Geographic Channel. In the quarter, operating income at the cable nets rose 27 percent to $428 million, thanks in large part to gains at FNC, which enjoyed its highest-rated quarter and was the beneficiary of higher CPMs and a boost in affiliate revenue.

Meanwhile, the broadcast net is holding its own in the current quarter, as Fox continues to cut scatter deals. “In the current quarter we’ve written about $50 million in scatter at upfront pricing or better,” president and COO Peter Chernin said. “I think a lot of that is due to a ratings shortfall in the marketplace, and I think we’re doing better than our competitors.”

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