News Corp posts $1.6bn loss
News Corporation has reported a loss in its fourth quarter as it continues to count the cost of the phone hacking scandal at the News of the World.
Rupert Murdoch’s company reported a net loss of $1.6bn (£1.2bn) in the three months to the end of June, compared with profit of $683m (£436m) in the same quarter the previous year. Revenue fell 7 per cent to $8.4bn (£5.4bn) in period.
News Corp took on a $2.8bn (£1.8bn) “impairment and restructuring” charge in the quarter as it announced a plan to split away its publishing assets, – which includes The Sun, The Times and The Wall Street Journal – from its more profitable film and TV arms, which includes its 39 per cent stake in BSkyB and the ownership of Fox. The separation is still subject to shareholder approval.
For the full year, legal costs related to the ongoing investigations into phone hacking at its UK publishing arm have amounted to $224m (£143), which included a $57m (£36.4m) charge in the last quarter, the company says.
The publishing business reported a 48 per cent drop in operating income to $139m (£88.7m), which News Corp attributed to advertising revenue declines at its UK and Australian newspapers and integrated marketing services businesses.
Operating income at the company’s film businesses, which includes Twentieth Century Fox, was down 42 per cent. This partly reflects tough comparatives with the successful cinema release of Rio in the same period the previous year and the home entertainment performance of titles such as The Black Swan and The Chronicles of Narnia: Voyage of the Dawn Treader.
News Corp’s television division reported operating income of $213 (£136m), a decrease of $20m (£12.8m) year on year. The company says this reflects lower national advertising revenues, primarily driven by lower ratings for flagship talent show American Idol.
Rupert Murdoch, News Corp’s chairman and chief executive, says the company is in a “strong operational, strategic and financial position” and that this will be enhanced by its proposed separation of the media entertainment and publishing businesses.
He adds: “Our company has continued to innovate, grow and consistently adapt to the rapidly changing media industry landscape. We find ourselves in the middle of great change, driven by shifts in technology, consumer behaviour, advertiser demands and economic uncertainty and change brings about great opportunity.”
For the current fiscal year ending June 2013, News Corp forecasts high single to low double digital percentage growth in operating income as costs related to the phone hacking scandal are likely to decrease and separation of its businesses should increase the value of its more profitable assets.
