News Corp: $1.2bn profit in last quarter 2009

Rupert Murdoch’s News Corporation has revealed that advertising income for its UK newspapers, including The Sun and the News of the World, saw no year-on-year growth in the last three months of 2009 as total revenue at the media giant grew ten per cent to $8.7bn (£5.4bn).

Operating income at News Corp was up 44 per cent year-on-year to $1.2bn in the period helped by income from its film division where “Avatar” has already set a new film industry record with global box office receipts of more than $2bn worldwide.

In the same quarter last year News Corp, which owns News International in the UK, reported a net loss of $6.4bn as it wrote down the value of its assets.

The operating income figure does not include a one off pre-tax charge of $500m relating to the settlement of litigation against the company’s integrated marketing services business.

Chairman and chief executive Rupert Murdoch repeated plans to begin charging online readers of his newspapers.

The Wall Street Journal is currently the only major News Corp title charging for online but Murdoch said: “We expect to expand to other titles in the coming months. We’ll be charging for online wherever we have publications.”

Speaking in the wake of the launch of the Apple iPad last week, he said that News Corp is holding “a very substantive conversation with device makers on developing a subscription model that will provide high-quality journalism to consumers whenever and wherever they want it”.

During a conference call with journalists, The Guardian’s correspondent asked Murdoch whether he had read Guardian editor-in-chief Alan Rusbridger’s speech rejecting the idea of “universal paywalls” for journalism online saying that if journalists rejected the open philosophy of the internet they would be “sleepwalking into oblivion” . Murdoch said he had not read it, adding “I think that sounds like B.S. to me.”

Despite the global advertising downturn, News Corp made $259m in profit from its newspapers and information services – including the Wall Street Journal, The Times, Sunday Times and The Sun. This compared with $200m in the same period last year.

Other sources of operating income included: filmed entertainment ($324m), television ($29m), cable network programming ($604m) and book publishing ($65m).

News Corp said that the growth in newspaper profits was partly driven by a 30 per cent increase in advertising revenues at the Wall Street Journal. The company revealed that costs had been cut at all its newspaper businesses and that it had benefited from the strength of the Australian dollar.

At News International it is believed that more than 100 journalists have been axed from the business since last year, mainly involved in production.

On the UK, it said that higher profits were fuelled by reduced promotional spending and cost cutting. It said that advertising income was flat year on year for the UK newspapers, a sign that the situation has at least flattened out compared to a year ago. It said that circulation revenues in the UK were down five per cent year on year.

The Australian newspaper group reported ad income down five per cent year on year.

At Dow Jones, advertising revenue was up five per cent year on year for the Wall Street Journal print edition and up 17 per on the Wall Street Journal Digital Network. Circulation revenue was also up while costs had been cut, the company said.

In a bullish statement, Murdoch said: “Our strong top-line revenue growth demonstrates that News Corporation is emerging from this recession with renewed vigour and strength.

“Moreover, our underlying operating trends this quarter far outpace those of the same quarter last year…

“News Corporation’s leadership position in news, sports and entertainment stems from our unique ability to produce the high quality content that consumers and distributors demand.

“We have a strong management team that knows how to nurture our core businesses, while taking prudent, creative risks like Avatar that lead the industry forward.”

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