News Corp. Q4 loss hits $203M on MySpace write-down

By
Ryan Nakashima, AP Business Writer
August 5, 2009, 8:38 PM ET
2 min read

LOS ANGELES -- News Corp. NWS, the global media giant controlled by Rupert Murdoch, said Wednesday its fourth-quarter loss totaled $203 million due to huge charges at MySpace, while its operating profit for the year was slightly worse than it predicted because of the weak economy.

Results for the quarter narrowly beat analyst expectations.

Despite the loss, the sprawling New York-based media company that owns The Wall Street Journal, the Fox broadcast network, Sky Italia and newspapers in Britain and Australia said the economy was slowly turning around and predicted revenue growth in the current fiscal year.

"Advertising markets, while weak and particularly hurt by the slump in cars and finance, have shown some good signs of life," Murdoch said on a conference call. "I think the worst may be behind us but there are no clear signs yet of a fast economic recovery."

The quarterly loss of 8 cents a share compares with profit of $1.1 billion, or 43 cents a share, in the same quarter a year ago. The results included a $450 million impairment charge and $180 million for restructuring charges at Fox Interactive Media, which houses MySpace.

MySpace recently laid off 700 workers and broke the lease on bigger office space that it no longer needed.

News Corp. bought MySpace for $580 million in 2005, but reflecting the social networking site's stalled growth, the company recently shuffled its leadership team, ousting co-founder Chris DeWolfe in favor of Owen Van Natta, a former executive at rival Facebook, which has surged past MySpace in overall users.

Advertising revenue was down across a range of properties, including a 10% drop at its cable networks division, which contains the Fox News Channel.

Adjusted operating income fell 30% to $948 million, or 19 cents a share, just beating analyst forecasts of 18 cents a share.

For the year, adjusted operating income fell 33% to $3.56 billion, slightly worse than the 30% drop the company forecast. Revenue fell 11% to $7.67 billion. Analysts polled by Thomson Reuters expected revenue of $7.63 billion.

The company predicted that revenue would grow 4% in fiscal 2010 despite flat advertising revenue and that adjusted operating profit would grow by a high single-digit percentage from the fiscal year that ended in June.

Shares closed down 6 cents at $12.21 before the earnings were announced Wednesday.