Suddenly, you can see why News Corp is eager to split its news, TV and movie businesses in two…
Operating income in the group’s existing “publishing” division – comprising Dow Jones, WSJ, The Daily, New York Post, UK and Australian newspapers and HarperCollins – has halved in the last year, according to the group’s Wednesday disclosure of earnings for the fourth quarter ending June 30.
News Corp blames worsening advertising at overseas newspapers, the absence of income from the shuttered News Of The World and the unquantified cost of April’s e-book price-fixing settlement with the U.S. Department of Justice.
So poor is the outlook that News Corp is writing down the value of its publishing businesses by $2.85 billion in impairment and restructuring costs. That means News Corp as a whole swings to a $1.6 billion quarter loss, compared with a $683 million profit a year ago. The company says the write-off is mostly against its Australian businesses.
President Chase Carey told Wall Street analysts: “Our publishing business are clearly in a restructuring mode.” He forecast a flat outlook for 2013, when he said the company will cut news publishing costs. Cuts are more likely in Australia than in the UK, where some cuts and property savings have already been made, Carey said.
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Those publishing businesses were News Corp’s number-two profit earner in last year’s quarter. Perhaps notably, they are now listed only second from last in News Corp’s earnings disclosure, behind “other”…
Having sold loss-making MySpace, that “other” division should be faring much better by now. But News Corp is recording in this division $57 spent settling UK phone hacking legal claims during the quarter ($224 million over the last year). That dragged the division to an even greater loss.
Total company revenue of $8.4 billion (marginally down from a year earlier) came in below analyst estimates of $8.73 billion.
Carey said the publishing outlook knocked $0.07 off the company’s earnings per share. The company says it expects its split – announced in June – to be complete within a year…