NewsCorp has warned that profits will be hit by the fallout from last month’s devastation in the US.
Chairman/chief executive Rupert Murdoch revealed that operating income for its fiscal 2002 would probably register “single-digit to low double-digit” growth, well down on previous forecasts of 20%–26%.
“The tragic and senseless events of September 11 exacerbated an already weakening advertising environment, not only in the US, but in the UK and Australia as well,” explained Murdoch, adding that NewsCorp’s revised projections assumed the ad market would remain weak for the rest of 2001.
However, earnings will be helped by “stringent cost-cutting” – NewsCorp froze new hirings at the end of last year [WAMN: 07-Dec-01] – and the recent acquisition of TV stations from Chris-Craft Industries [WAMN: 23-Jul-01].
Separately, the media giant’s president/chief operating officer Peter Chernin said NewsCorp had lost “many tens of millions in ad revenue” following the attack. “We had anticipated some firming up of the ad business in the fourth quarter and the first and second quarters [of 2002], but we just don’t see that now.”
Consequently, forecast underlying profit growth at its Fox Entertainment division has been slashed from between 31% and 37% to somewhere in the low to mid-teens.
News source: The Times (London)