Fiscal Q1 (July-September) saw operating income decline 9% to $953 million at News Corporation, with gains from Sky Italia, cable networks and Fox Interactive Media offset by declines at the US television stations and the company’s newspapers around the globe. Looking forward, News Corporation has reversed direction on its guidance for the full fiscal year and has told Wall Street to expect a decline in operating income rather than growth.
Back in August News Corp. was predicting that the new fiscal year would see operating income grow 4-6%. But CFO David DeVoe noted a “market deterioration” in the marketplace since then. The company is now predicting that operating income will be down in the low to mid teens for the full fiscal year, which is currently in its 2nd quarter.
For fiscal Q1, operating income from the Television unit declined to $54 million from $183 million. Part of that was due to the sale of eight medium-market stations, but DeVoe said same station revenues declined 17%. Results were in-line with a year ago for the Fox Network and MyNetworkTV posted improved results.
The Cable Network operation boosted operating income for the quarter by 31% to $379 million. That was credited to Fox News Channel (up 27%), the Regional Sports Networks, the Big Ten Network and the Fox international channels.
CEO Rupert Murdoch says the current economic downturn is likely to last throughout the current fiscal year and be extremely challenging for the media sector. “But having weathered these down cycles in the past, and emerged even stronger, we have prepared ourselves well for this cycle,” he said pointing to the company’s strong balance sheet and strategic direction. “As a result, we are as well prepared as possible to face what may well turn into a prolonged economic slump,” Murdoch said. He noted that the company has made cost-cutting moves across all of its businesses, including layoffs, but he declined to give a number for headcount reduction.