February 6, 2009 / 12:32 AM / 9 years ago

UPDATE 5-News Corp posts biggest quarterly loss on writedown

* $8.4 bln writedown of assets including Dow Jones

* Q2 EPS ex-items 12 cents vs Wall Street view 19 cents

* Q2 rev falls 8.4 pct to $7.9 bln vs Street view $8.4 bln

* Shares down 6.3 pct in after-hours trading (Adds details on local ad sales)

By Robert MacMillan

NEW YORK, Feb 5 (Reuters) - Rupert Murdoch’s News Corp (NWSA.O) posted its biggest ever quarterly net loss, after taking an $8.4 billion writedown for the value of its Dow Jones acquisition, broadcasting licenses and other assets.

Excluding the charge, the results missed Wall Street forecasts as the recession exacerbated the fall in newspaper advertising sales and hit the company’s other properties.

News Corp shares fell 6.3 percent to $6.50 in after-hours trading and have shed about 65 percent of their value in the past 12 months.

“It is the worst global economic crisis since News Corp was formed 50 years ago,” Murdoch, chairman and chief executive, said on a conference call with analysts.

He said it was impossible to be completely prepared for such a harsh economic downturn, but News Corp is cutting costs and staff where appropriate, as it expects advertising-supported businesses to weaken more.

Its Fox businesses have cut about 800 jobs, while its Wall Street Journal, which has seen ad revenue fall 20 percent, said it had eliminated 25 journalist jobs. The company also has slashed $100 million in costs at Dow Jones, though it said there were no plans for layoffs at Dow Jones Newswires.

The latest media company to report gloomy results as advertisers slash their budgets in the weak economy, News Corp said its net loss was $6.41 billion, or $2.45 a share, for the fiscal second quarter ended Dec. 31. That compared with a profit of $832 million, or 27 cents a share, a year earlier.

News Corp wrote down $3.6 billion in goodwill, much of which is likely because of Dow Jones. Murdoch bought Dow Jones for $5.6 billion in 2007, a 65 percent premium to its then market value.

It wrote down $4.6 billion in broadcast licenses from the U.S. Federal Communications Commission and $185 million in newspaper assets, which include the New York Post.

News Corp also owns the Fox television network, 20th Century Fox movie studio, the MySpace online social network, satellite TV network Sky Italia, and newspapers throughout the United States, Britain and Australia.

Excluding the impairment charge, News Corp’s December quarter profit was 12 cents per share, lower than the average analyst forecast of 19 cents, according to Reuters Estimates.

Revenue fell 8.4 percent to $7.87 billion, also below the average Wall Street forecast of $8.35 billion.

“It’s advertising and DVDs,” said Miller Tabak + Co analyst David Joyce. “They’re more exposed to advertising than you want to be in this kind of climate.”

CABLE BRIGHT SPOT

This week, Time Warner Inc TWX.N posted a $16 billion quarterly net loss because of a writedown, and Walt Disney Co (DIS.N) posted a sharply lower-than-expected profit in part because of poor TV ad and DVD sales.

Operating profit fell at nearly every division of News Corp, from filmed entertainment to local television, newspapers, books and information services.

“The big thing that really is killing us is a lack of automobile advertising,” Murdoch said.

Wall Street had readied itself for bad news on ad sales at News Corp’s local TV stations after publisher and broadcaster Meredith Corp (MDP.N) said last month that auto pacings, which indicate how ad sales are doing, are down nearly 70 percent.

Fox Interactive Media posted an operating loss of $38 million, in part due to the launch of MySpace Music.

One bright spot was cable network, whose operating profit rose 27 percent to $428 million on strength at the Fox News Channel, the Big Ten Network and Fox International Channels.

As expected, News Corp cut its fiscal 2009 operating income forecast to a decline of 30 percent versus its previous forecast for a fall in the mid-teen percentage. Murdoch forecast full-year operating income of $3.5 billion.

The outlook assumes that advertising or economic conditions do not worsen, News Corp said.

Murdoch did not say if the company would buy back stock, something Wall Street has hoped for as News Corp shares have fallen.

He also declined to comment on contract negotiation talks with Chief Operating Officer Peter Chernin, considered one of the best entertainment executives in the United States.

Murdoch has long said he would prefer one of his children to take over the media empire after he steps down.

When asked about acquisitions, Murdoch said there were few, if any, companies that would be worth buying, adding that eventually he would like to acquire Premiere AG PREGn.DE. News Corp owns about a quarter of the German pay-TV broadcaster.

Murdoch also said he does not want The New York Times Co (NYT.N), which is controlled by the Ochs-Sulzberger family. Journalist Michael Wolff, in a recently published book about Murdoch, said he is eyeing the struggling publisher.

"I've got no desire to be an even bigger public enemy," he said, joking about long-standing comments from detractors that he uses his papers to advance his business interests. (Additional reporting by Tiffany Wu; editing by Richard Chang) (robert.macmillan@thomsonreuters.com; +1 646 223 6012; Reuters Messaging: robert.macmillan.reuters.com@reuters.net) Click here to see Reuters MediaFile blog

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