NewsCorp Facing Record Loss, Warns Deutsche Bank

28 March 2002

Rupert Murdoch’s News Corporation may post a loss for its financial year larger than any ever reported by an Australian business, due to a write-down at one of its units.

In a research note, Deutsche Bank warned the media giant may face net losses of between A$5 billion and A$9bn ($2.7bn–$4.8bn; €3.1bn–€5.5bn; £1.9bn–£3.4bn), following the merger of interactive television programme guide Gemstar with NewsCorp’s TV Guide.

As a result of the combination, Gemstar has warned that it may be obliged to write off $5bn (A$9.39bn) in the first three months of 2002. Since NewsCorp owns 42% of Gemstar, this translates into a A$4bn write-down for the Murdoch empire.

However, there is light at the end of the tunnel. Deutsche Bank also predicted robust earnings growth for the group over the next two to three years on the back of an improved US ad market.

Nevertheless, the report warned that poor American TV ratings and regulatory delays in the sale of Italian pay-TV unit Stream to Vivendi Universal may hamper NewsCorp’s performance.

Data sourced from: BrandRepublic (UK); additional content by WARC staff