Murdoch Declares ‘Worst Is Over’

May 6, 2009  •  Post A Comment

Rupert Murdoch says, “The worst is over.”
The News Corp. CEO, noting he has been uncharacteristically pessimistic on recent earnings calls, now says “the days of precipitous declines are over” and that “we are beginning to see a number of bright spots.”
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The advertising market may have hit bottom, Mr. Murdoch said, speaking on the company’s quarterly earnings call Wednesday.
In both cable and broadcast, advertising volume and prices are holding up well, Mr. Murdoch said. Prices in the scatter market are at or above upfront pricing, he said.
But Mr. Murdoch said that whatever recovery might be emerging was still in its early days.
“Now we are seeing people come back into the advertising market and spending. I think they realize they have to keep their brands in front of people,” he said, noting that even a domestic automaker such as Chrysler was in the market looking to buy $5 million worth of advertising time.
“There is a lot of activity, but it is not back to the boom stage,” he said. “But at least we’ve hit the floor and we’re getting some bounce off it.”
News Corp. on Wednesday reported that its net income was flat for the third quarter, but operating income was down 47% to $755 million.
“Our third-quarter results directly reflect the continuing weakness of the global economic climate,” said Mr. Murdoch. “Despite this tough environment, we have proven resilient in several key areas this quarter. Our cable network programming segment showed remarkable growth, led by the Fox News Channel, which nearly doubled its operating income over the year-ago quarter.
Revenue for the company fell to $7.4 billion from $8.8 billion a year ago.
Income at the News Corp. cable network programming group rose to $429 million from $330 million in the year-ago quarter. Leading the growth was a record quarter for Fox News Channel.
Ad revenues for the cable group were down 6% for the quarter, mostly because of weak local sponsorships at local Regional Sports Networks, Mr. Murdoch said. He expects that for the year, revenues will be up 2% at the cable unit.
By contrast, at the company’s television group, which includes the Fox network and its owned stations, net income fell 99% to $4 million from $419 million a year ago.
The television group was affected by a weak local television market—ad sales were down 30%—and higher programming costs at Fox after the Writers Guild of America strike a year ago.
Revenue at the station group was down 28% in the quarter, Mr. Murdoch said, but since then, he’s seen improvement.
“A month ago, I would have said the pacing looked frighteningly bad, but we’ve already in this month improved by 15% and the next two months look much the same,” he said.
He said he expects the local stations to finish with a 23% drop in revenues and that Fox Broadcasting Co. would be down 6% in revenue for the year.
The News Corp. earnings call was the last for Peter Chernin, who is stepping down as chief operating officer.
Mr. Murdoch noted that the company would miss Mr. Chernin, whom he had seen advance from a young executive to a trusted deputy.
“He helped nurture and support the strongest management team in the business. I look forward to working with him in a new film and television venture,” he said, adding that he was looking forward to Mr. Chernin bringing News Corp. a couple of hits a year.
Mr. Chernin said, “I’ve had the ride of my life and I leave knowing the company is in great shape.” He added that the transition “couldn’t have gone more smoothly” and lauded Mr. Murdoch as the “best leader in the industry.”
(3:50 p.m.: Updated throughout)

One Comment

  1. Mr Murdoch misses the current trend analysis of television spot sales. There is no one who has actually reviewed fourth quarter projections who sees a return of robust buying by key categories: beer; cars; fast food. The worst maybe over for him, but for the average station owner, there is no light yet,anywhere.

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