Murdoch’s News Corp reports biggest quarterly loss of $6.41 billion

Rupert Murdoch's News Corp has posted its biggest ever quarterly net loss, after taking an $8.4 billion write-down 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 per cent to $6.50 in after-hours trading and have shed about 65 per cent of their value in the past 12 months. The company cut its fiscal 2009 forecast yesterday to a drop in operating income of about 30 per cent.

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 31 December. That compared with a profit of $832 million, or 27 cents a share, a year earlier. Revenue fell 8.4 per cent to $7.87 billion, also below the average Wall Street forecast of $8.35 billion.

"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.

Murdoch bought Dow Jones from the controlling Bancroft family for $5.2 billion in December 2007, acquiring the Wall Street Journal and Dow Jones Newswires as part of the purchase. About $4.3 billion of the price was to reflect goodwill, the excess paid above fair market value for the assets, according to today's filing.

Dow Jones said today in a statement that it has saved more than $100 million in operating costs through moves including consolidating back-office functions, freezing non-union employees' salaries for a year and cutting jobs. Dow Jones said it will save another $40 million annually in the fiscal year ending June 2010.

Its Fox businesses have cut about 800 jobs, while the Wall Street Journal, which has seen ad revenue fall 20 per cent, 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.

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 US, Britain and Australia.

"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 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 per cent to $428 million on strength at the Fox News Channel, the Big Ten Network and Fox International Channels.