Rupert Murdoch: 'Grim economy means rigorous cost cuts'

News International‘s advertising revenue fell 10 per cent in the last quarter of 2008, according to accounts released this morning – as parent company News Corporation announced a group loss of $7.6bn (£5.2bn).

Chairman Rupert Murdoch warned of a “grim economic climate, more severe and longer-lasting than previously thought”, and said the company was “implementing rigorous cost-cutting and reducing headcount where appropriate”.

Last month, it was reported that 100 journalists at News International, mainly in production, could lose their jobs.

Despite the advertising slump, News International’s profit – though not specified in News Corp‘s accounts – remained steady.

Last year, News International spent £650m on full-colour printing, meaning the accelerated depreciation of the old printing presse affected the balance sheet.

Circulation revenue in the last three months of 2008 “increased slightly”, mainly from price increases, according to the newly filed accounts.

In this quarter, The Times increased its price from 80p to 90p and the News of the World rose from 95p to £1.

Overall, News Corp made a $7.6bn loss – but this was due to an $8.4bn (£5.7bn) writedown on goodwill.

In real terms, the operating profit was $818m (£556m) – down 42 per cent from last year’s $1.4bn (£950m).

Murdoch said: “Our results for the quarter are a direct reflection of the grim economic climate.

“While we anticipated a weakening, the downturn is more severe and likely longer lasting than previously thought.

“As a result, we have been taking actions to preserve a solid level of operational profitability and a strong balance sheet without sacrificing future growth.

“We are implementing rigorous cost-cutting across all operations and reducing head count where appropriate.

“We believe our businesses are well positioned to withstand a lengthy downturn and to emerge stronger as the current economic situation improves.”

Overall, News Corp’s newspaper and publishing profit fell to $179m (£122m) in the second quarter of 2008, down from $196m (£133m) in the same period in 2007.

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