Murdoch calls last year 'most difficult' in recent memory
News Corp. chairman-CEO Rupert Murdoch said that his company plans, perhaps by as early as next summer, to charge for all of its news websites and stop the hemorrhaging of revenue that’s been draining publishers on both sides of the Atlantic.He said the company’s plans would include the Fox News Channel website as well. “Quality journalism is not cheap, and an industry that gives away its content is simply cannibalizing its ability to produce good reporting,” Murdoch said on a conference call Wednesday to discuss the conglom’s quarterly earnings. The results showed profit from newspapers and information services slumping to $96 million from $263 million for the year-earlier quarter. For the full year, income in those categories fell to $466 million from $786 million, with declines across the board at U.K., Australian and U.S. papers, including the Wall Street Journal. Murdoch’s comments were some of the most aggressive yet as publishers fret that stories they’ve paid to produce are free for a click, and furnish a global army of websites, blogs and other online destinations. The Wall Street Journal Online, which requires a paid subscription, is one of the few successful models of its kind. Murdoch said he’s not sure of the exact timing of moving to a pay model, “but we’re thinking of this fiscal year.” News Corp.’s fiscal year ends June 30. The company said it swung to a $203 million loss last quarter, including a steep $680 million writedown at MySpace parent Fox Interactive Media. That compares with a profit of $1.1 billion in the year-earlier period. Excluding the Fox Interactive hit, adjusted operating income fell to $948 million from $1.4 billion. Revenue for the quarter ended in June fell to about $7.7 billion from $8.6 billion. For the full fiscal year, the company swung to a net loss of $3.4 billion vs. a $5.4 billion profit the year before. Revenue was down 8% to $30 billion. “The past year has been the most difficult in recent history,” Murdoch said. While he said there are no clear signs of recovery yet, he feels pretty sure “the worst is well behind us.” The 2009 figures included more than $9 billion in writedowns and restructuring charges. Cable networks were the standouts, with profits jumping to $434 million from $314 million. For the year, cable earnings rose 32% to $1.7 billion. Growth was driven by the Fox News Channel, where income surged 50% for both the quarter and the year on higher affiliate revenues. The Fox international channels, the Big Ten Network and FX were also strong. The regional sports nets, however, were hard hit by lower advertising revenue. Broadcast television profits plunged to $95 million from $279 million, with tough times at the Fox network, the stations and Star. Station profit fell 67% year on year. Advertising revenue slumped 27% for the quarter and 21% for the year on weak auto, financial and entertainment spending, the company said. The network was squeezed by higher programming costs, including increased fees for returning series, higher NASCAR costs and lower ad revenue. Costs for the prior-year quarter had been unusually low due to the writers strike. Twentieth Century Fox filmed entertainment saw profit dip 8% to $203 million on lower library product contribution from Twentieth Century Fox Television and hefty launch costs for films including “X-Men Origins: Wolverine,” “Night at the Museum: Battle of the Smithsonian” and “Ice Age: Dawn of the Dinosaurs.” Studio profit for the full year fell to $848 million from $1.2 billion. Sky Italia saw profit fall to $155 million from $212 million for the quarter on higher marketing and sports rights costs. For the year, Sky’s profit fell to $399 million from $419 million. The platform had 4.8 million subscribers at the end of June. Book publisher HarperCollins swung to a $1 million loss last quarter from a $28 million profit the year before, largely due to the weak retail market. Publishing profit for the year fell to $17 million from $160 million. In “Other,” where News Corp. lumps its online and miscellaneous businesses, losses widened to $136 million for the quarter and to $363 million for the year. The declines were due mainly to lower contributions from Fox Interactive Media. The company cited lower ad revenue from social networking site MySpace and costs associated with the launch of MySpace Music. The $400 million-plus writedown at MySpace was largely lost in Murdoch’s talk of saving the newspaper business. News Corp. paid $580 million for the red-hot MySpace in 2005, to the great chagrin of rival moguls like Sumner Redstone. But times change fast these days, and Facebook has grabbed market share from MySpace and started to overtake it on certain measures. However that contest plays out, Murdoch’s take seems to be that MySpace has already made a bundle of money for News Corp., including a three-year, $900 million contract with Google.
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