Recession 'Really Killing Us,' Murdoch Admits

09 February 2009

NEW YORK: A decline in GDP for two consecutive quarters is the official definition of recession. But in the real world, beyond the fevered ids of financiers and economists, the true meaning of the term is a period in which News Corporation fails to turn a healthy profit.

For example, the $6.4 billion (€5.0bn; £4.35bn) Q4 loss announced Friday by Clan Murdoch's money machine. The deficit was driven by a 30% plunge in operating income during the firm's fiscal to date.

NewsCorp also took an $8.4bn non-cash writedown to reflect the deteriorating outlook for its Fox Network, other TV channels and Dow Jones

The family-controlled empire also slashed its earnings forecasts for the second time in three months.

It warned that ad revenues and consumer confidence had taken a further dive since November, when NewsCorp's corporate seers predicted a percentage fall in net income for the current fiscal year to between "low- to mid-teens".

But, reassured the lusty septuagenarian, NewsCorp is acting "when things are bleakest" to cut costs and improve margins so that it would emerge stronger when markets turn.

He had instigated "rigorous cost-cutting across all operations" and lopped  $100m from Dow Jones' costs since its acquisition; and cut almost $400m from Fox.

Then a reality check. Admitted Murdoch : "I recognise that we may never return to record levels, but we do believe we can capture a large proportion of the advertising that does return." 

The patriarch also admitted that so far as the group's TV assets are concerned, the lack of car industry advertising on local television stations is "really killing us".

Data sourced from Financial Times; additional content by WARC staff