News Corporation vowed to reduce costs by at least $200 million over the next year and did not rule out job losses, as continued weakness in the ad market saw operating income fall for its fiscal first quarter.
Reporting results for the three months ending September 30, the media mammoth said that strong growth at its movie arm had helped offset contraction at its TV and newspaper units. Overall operating income fell from $390m last year to $362m, on a 5% revenue rise to $3.4 billion.
However, at the TV and newspaper divisions, there were respective falls in operating income of 37% to $52m and 24% to $74m. Revenues rose, however, at the Fox News Channel and FX Cable business thanks to strong subscriber growth.
Advertising remained weak across the board and was worsened by September 11 – NewsCorp lost “$100 million in ad revenue in just one week after the terrorist attacks,” stated Rupert Murdoch. The company’s British newspapers all registered circulation gains, but posted a 13% fall in ad revenue.
Murdoch revealed that although US television ad prices had become firmer in October, it was unclear when the ad market would improve. “Advertising is running at quite a lot less than during the bubble, but at fairly satisfactory levels at the moment,” he continued.
The group stuck by forecasts that operating income growth for the full fiscal year would be in the high single digits or low double digits.
Murdoch also spoke for the first time about the “excruciatingly difficult negotiations” over the failed attempt to buy US satellite giant DirecTV. He did not reveal whether he would oppose the successful bid from EchoStar, but opined that the merger of the two largest satellite operators in the US was “against the public’s interest.”
News sources: NewsCorp; Financial Times; Wall Street Journal; New York Times; The Times (London)