Media giant swings into loss
August 6, 2009
Washington - Global media giant News Corporation said on Wednesday it ended its business year with a net loss of 3.4 billion dollars due to hefty charges of 9.2 billion dollars.
The sprawling US media empire headed by Rupert Murdoch had posted a net profit of 5.4 billion dollars a year earlier.
The swing into loss was driven by 8.9 billion dollars in charges for new acquisitions, notably Dow Jones, the parent of The Wall Street Journal, which mostly had been previously announced.
The company also said it took 312 million dollars in charges, principally for restructuring activities.
Adjusted operating income fell to 3.6 billion dollars in the 2009 fiscal year ended June 30 from a record 5.3 billion dollars a year ago, the company said in a statement.
That was in line with the company's guidance over the past six months, Murdoch, chairman and chief executive of News Corp, said in the statement.
News Corp reported a net loss per share of 1.29 dollars. But calculated by another accounting method favoured by analysts for forecasting, the company had earnings per share of 1.16 dollars, double the 66 cents expected.
Murdoch said the past year had been "the most difficult in recent history" as the company confronted a weak economic environment amid the worst global recession in decades.
"We streamlined all our businesses and continue to do so, at the same time adjusting to the revolutionary changes taking place throughout the media industry," the Australian-born US magnate said.
Murdoch said that restructuring measures had positioned the company to reap the benefits of a recovery from the global recession when it materialises.
"We have strengthened all our franchises and are particularly well-placed for the coming recovery," he said. "I am certain that News Corporation is poised to profit, and deliver strong returns, as the economy rebounds."
Annual revenue slipped eight percent, to 30.4 billion dollars from 33 billion in the 2008 fiscal year.
In the final quarter, News Corp. lost 203 million dollars, compared with net profit of 1.1 billion dollars in the same period a year ago.
Fourth-quarter earnings per share were 19 cents, slightly better than the 18 cents expected.
The quarterly results were impacted by a 180-million-dollar charge for the buyouts of 700 employees.
In a conference call with analysts, Murdoch said the company's diverse businesses recently have shown signs of life. "The worst may be behind us," he said.
The company's chief financial officer, David DeVoe, noted that the economic crisis had not begun to hurt News Corp. until the end of 2008.
The current first quarter could prove "fairly challenging" in comparison with the 2008 July-September period, DeVoe said.
Murdoch said that July had been "very good," with some signs of recovery in the international advertising markets, but that the company expected "very tough months ahead."
Earlier Wednesday, News Corp. announced it had increased its stake in ailing German pay-television network Sky Deutschland, the new name for Premiere, to 39.96 percent from 30.5 percent.
The company did not disclose financial terms of the transaction or provide other details in its brief statement, notably its impact on profitability.
The loss-making network has never recovered from the 2005 loss of exclusive transmission rights to German first-division football matches.
In the conference call, Murdoch reaffirmed his support for a pay model for Internet access.
He noted that The Wall Street Journal had been the only US newspaper to increase its subscriber base, on paper and online, during the recession.
The company announced the financial results after the New York stock market close. In electronic trading, shares were down 0.49 percent at 12.21 dollars. - AFP
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