Guest The Goose Posted February 6, 2009 Report Share Posted February 6, 2009 I'd be curious to see how 2smart4u rationalizes this bit of news: February 6, 2009 News Corp. Loss Shows Trouble at Dow Jones By TIM ARANGO It seems that even Rupert Murdoch isn’t immune to the downturn battering media companies. The News Corporation, the media empire controlled by Mr. Murdoch, said Thursday that it lost $6.4 billion in its second quarter as profit fell sharply at its television and movie units. The company also took a large write-down of $8.4 billion, about $3 billion of which reflected a decline in the value of the company’s newspaper unit, which includes Dow Jones, the publisher of The Wall Street Journal. Many media analysts believed that News Corp. overpaid when it bought Dow Jones just over a year ago for about $5 billion, and the write-down indicates that it lost significant value. The announcement followed a huge write-down at another conglomerate, Time Warner, last month and a sharp decline in earnings at the Walt Disney Company this week. Excluding the write-down, the News Corporation had income of $320 million, or 12 cents a share, significantly below the Wall Street expectations. Analysts had forecast earnings of 19 cents a share, according to Thomson Reuters. Total revenue was $7.9 billion, compared with $8.59 billion a year earlier and the $8.4 billion analysts expected. Mr. Murdoch, the chairman and chief executive, said the economy had deteriorated faster than anticipated in the last three months. “Our results for the quarter are a direct reflection of the grim economic climate,” he said. “While we anticipated a weakening, the downturn is more severe and likely longer-lasting than previously thought.” He also suggested job cuts were in the offing, saying, “We are implementing rigorous cost-cutting across all operations and reducing head count where appropriate.” Among the company’s assets are the Fox broadcast network, Fox News, the 20th Century Fox movie studio and newspapers like The New York Post and The Wall Street Journal, as well as the social networking site MySpace. Reflecting a sharp downturn in advertising across the broadcast television industry, the company had its steepest drop in the television unit, where income fell to $18 million, from $245 million a year earlier. The company’s television stations had a 44 percent decline, “reflecting a significant overall weakening of the local advertising markets despite increased political advertising revenues,” the company said in a statement. The film division had income of $112 million compared with $403 million a year earlier. One bright spot was cable networks, including Fox News. The division reported income of $428 million, up $91 million from the period a year earlier. Fox News increased its operating income by 32 percent. When times were better, Wall Street was more willing to ignore Mr. Murdoch’s affinity for newspapers and high-priced deals like the acquisition of Dow Jones. But the company has been punished by the market more than most of its peers. The News Corporation is down 52 percent over the last six months, and 70 percent off its 52-week high. The stock closed Thursday at $6.94, up 33 cents. (The earnings report was released after the stock market had closed.) Time Warner, Viacom and Disney are all down less than the News Corporation, while CBS is down more, off 65 percent over the last six months. Mr. Murdoch declined to comment on the status of talks over a new contract for Peter Chernin, the company’s president, whose deal expires in the summer. Mr. Murdoch said the talks were “private” and “confidential.” Last quarter, he described them as “constructive” and “friendly.” In recent weeks, some Wall Street analysts who cover the News Corporation have lowered their earnings forecasts for the company. For example, on Jan. 23 Anthony DiClemente at Barclay’s Capital dropped his estimate for the company’s 2009 earnings by 22 percent. Another analyst, Michael Nathanson of Sanford C. Bernstein & Company, suggested this week seeing the company in terms of good assets and bad assets. “The potential rescue of financial stocks by placing assets into ‘good banks’ and ‘bad banks’ has captured our imagination,” he wrote. “Why couldn’t media companies follow this strategy?” Rich Greenfield of Pali Research also picked up the theme, writing, “our fear is that News Corp. is so committed to its existing businesses that it will be willing to sustain businesses that slip into negative profitability for years.” The New York Post loses tens of millions of dollars a year. Mr. Murdoch remains sanguine about newspapers, saying, “I’m extremely happy with all our newspapers.” He is trying to cut losses at The Post and said Thursday that it would combine its back office with The Journal’s to save about $7 million a year. Also on Thursday, in a concession to sharply lower advertising, The Journal eliminated about 25 newsroom jobs — the paper declined to give a precise number — out of roughly 760. The cut is minor compared with the shrinkage at most newspapers. But it stands in contrast to Mr. Murdoch’s talk in 2007 of a significant newsroom buildup and his expansion since then in the ranks of Dow Jones Newswires. The Journal’s reduction includes 14 layoffs and an unspecified number of buyouts. The largest number of positions eliminated was in the group of reporters and editors who cover fashion and retailing. Quote Link to comment Share on other sites More sharing options...
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