News Corp. closes the books on a down year


A year of reduced operating income is a rare thing for News Corporation and the company is predicting future growth after seeing operating income for fiscal 2009, which ended June 30th, drop to $3.6 billion from a record $5.3 billion the previous year. Full year revenues declined 8% to $30 billion.

“I think that the worst may be behind us, but there are no clear signs yet of a fast economic recovery,” said CEO Rupert Murdoch, although he did cite some recent improvement in some ad sectors, including automotive.

News Corporation reported a Q4 net loss of $203 million, or eight cents per share, compared to net income of $1.1 billion, or 43 cents per share, a year earlier. The quarter included special charges that totaled $680 million, primarily write-downs related to Fox Interactive Media.

Television division operating income fell to $95 million in Q4 from $279 million a year ago. Operating income was down 67% for the Fox Television Stations, with station ad revenues down 27%, excluding the eight markets that the company divested last year. Fox network operating income declined due to higher license fees (absent the writers’ strike), higher NASCAR costs and lower ad revenues.

Cable Network division operating income increased to $434 million from $313 million. Fox News Channel operating income increased 50% for both the quarter and full year.

As for other divisions, operating income fell sharply for newspapers and was down for both the movie studio and satellite TV, while book publishing dipped into negative territory, losing a million bucks for the quarter. Magazines and inserts were up a bit.

Enough with declines. News Corporation is telling Wall Street to expect a return to growth in the current fiscal year, although that will be primarily in the second half. The company’s guidance is for operating income growth in the high single digits for the full year.

We close with Murdoch’s comments on the TV Upfront: “ On the Upfront, we’re quite happy with the progress that we’re making. All I can say is that we’re doing well – we think we’re doing well on the pricing, but we’ll probably keep more for spot later in the year. The spot market at the moment is very active.”