NEW YORK (Reuters) - News Corp Chief Executive Rupert Murdoch said he has become “more pessimistic” in the past month about the U.S. economy as an advertising slowdown in local television and newspaper markets whips across the media industry.
Murdoch’s remarks are the strongest public acknowledgment of an imminent advertising recession among big media leaders and contrasts with remarks made by companies such as Viacom Inc CEO Philippe Dauman, who said threats of a recession have yet to show any impact on finances so far.
In February, Walt Disney Co also said its businesses grew despite a turbulent economy and painted an optimistic view for the year.
Media mogul Murdoch, who controls the MySpace Internet social network, Dow Jones & Co, and Sky Italia, said revenue at his local TV stations are 5 percent behind expectations. At the recently acquired Dow Jones & Co, which publishes the flagship Wall Street Journal newspaper, he expected at least another down year.
“We may be in for a temporary downturn for a year or so,” Murdoch said, referring to Dow Jones, at the annual Bear Stearns media conference in Florida.
However, he said News Corp, which also owns 20th Century Fox movies studio and Fox TV network, is well positioned to gird against an economic slowdown as its reliance on advertising has decreased to 23 percent from 41 percent.
Bucking trends, Murdoch repeated a commitment to invest heavily in the Wall Street Journal and Dow Jones to make it the globe’s preeminent news source as local newspapers, which are slashing costs and jobs to protect profits, look for sources for national and world news.
“We’re going to develop the paper,” he said. “It will really give you the greatest national and global coverage of any newspaper in the world.”
“Advertising will come along with it,” he added.
Beyond the paper, News Corp is also expected to expand its newswires operations, where split-second advantages can reap millions for its clients.
His statements come just hours after Dow Jones announced it had purchased Dutch newswires Betten Financial News BV for an undisclosed sum.
Longer term, News Corp sees big opportunities in financial news despite a strained economic climate. “You’ve got huge growth of business all over the world, with education and the Internet, 60-to-70 million people every year are coming up out of gripping poverty joining the world economy.”
Dow Jones also owns MarketWatch.com business news Web site, the Factiva electronics news archive and Dow Jones Newswires, which competes with Reuters Group Plc in providing business news.
Separately, Murdoch said News Corp would not get into a fight with Microsoft Corp over a link-up with Yahoo Inc.
News Corp shares closed down 29 cents, or 1.6 percent, to $17.87 on the New York Stock Exchange in a media-sector wide sell-off.
Editing by Mark Porter, Phil Berlowitz