News Corp. Takes $8.4 Billion Hit, Cites Economy
News Corp. took an $8.4 billion charge against earnings as the declining economy continues to take big bites out of media company valuations.
As a result of the pre-tax, non-cash, impairment charge related to goodwill, News Corp. reported a second-quarter net loss of $6.4 billion, or $2.45 a share. That compares to net income of $832 million, or 27 cents per share, a year ago.
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The company said adjusted operating income fell 42% to $818 million.
“Our results for the quarter are a direct reflection of the grim economic climate. While we anticipated a weakening, the downturn is more severe and likely longer lasting than
previously thought,” said News Corp. Chairman and CEO Rupert Murdoch in a statement. “As a result, we have been taking actions to preserve a solid level of operational profitability and a strong balance sheet without sacrificing future growth. We are implementing rigorous cost-cutting across all operations and reducing head count where appropriate.”
News Corp said its television segment, which includes Fox Broadcast Co., the Fox TV stations and MyNetwork TV posted operating income of $18 million, down from $245 million a year ago. The company said results at Fox Broadcasting dropped because of higher programming costs for returning series and higher sports costs. Operating income at the local stations declined 44%.
At the same time, News Corp.’s cable network group reported a 27% increase in operating income to $428 million. The numbers reflect increased contributions from Fox News Channel, the Big Ten Network and Fox International Channels. Those contributions were partially offset by costs at Fox Business Network.
Fox News Channel’s operating income rose 32% thanks to higher affiliate revenues and ad-revenue growth. The Big Ten Network achieved its first quarter of profitability because of new carriage deals made in time for football season.