Without the $8.4 billion charge, net income for the company's fiscal second quarter was $320 million, which missed Wall Street consensus and represented a 61% decrease from the $832 earned in the same quarter last year. Revenue fell 8% to 7.9 billion from $8.6 billion a year ago.
Operating profit for year expected to drop
In addition, News Corp. reduced its 2009 guidance, saying operating profit would be down 30% from 2008, down from the mid-teens percentage decrease it forecast in November.
"While we anticipated a weakening, the downturn is more severe and likely longer lasting than previously thought," Murdoch said, adding that the company is undertaking "rigorous cost-cutting across all operations and reducing head count where appropriate."
Hardest hit was network TV and local stations, the Fox film and TV studios, newspapers like the New York Post and Wall Street Journal, and Fox Interactive Media, which includes MySpace. News Corp.'s cable networks were a bright spot, and saw operating income increase 27% to $428 million, led by Fox News Channel, which was up 32% over the same period a year ago.
Fox network, local stations revenue down
The Fox network and local TV stations saw revenue down 20% and operating income down 93% due largely to the dearth of local automotive advertising. "In local stations, automobile advertising was at least 30% total revenue," Murdoch said.
President Peter Chernin said he expected network advertiser cancellations to run 11% in the current season, compared to an average of 7% in most years.
Operating profit at the newspaper segment, which includes Dow Jones, was down just 8% to $179 million from a year ago. Murdoch said the company has realized $100 million in cost savings since acquiring the Dow Jones a year ago by merging back-end operations with the New York Post, which now shares a building with The Wall Street Journal.
Separately, Wall Street Journal Managing Editor Robert Thomson announced today that the Journal would eliminate 14 newsroom positions due to "a precipitous decline in print advertising revenue."
Filmed entertainment was down 72% from last year due to slower DVD sales but also due to a DVD and home-video slate last year that included "The Simpsons Movie," "Live Free or Die Hard" and "Borat." The recent quarter included surprise hit "Slumdog Millionaire," which should boost film results in coming quarters.
Murdoch: Ready for end of recession
Fox Interactive Media, which includes gaming site IGN and MySpace, swung to a loss of $38 million, from an operating profit of $23 million a year ago.
Murdoch stressed that he believes the company is positioned well for when the recession ends, when it may be lucky enough to have fewer competitors than when the recession began.
"Historically, every time we have seen a recession, mild or major we have endured the panic and come out better," he said. "And every time the economy rebounds, advertising comes back, usually stronger than before. I recognize that we may never return to record levels. But we do believe we can recapture a large percentage of the advertising that does return."