Another week of losses, but outlook remains mixed

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Agencies and media companies continued to focus on damage control as they announced second-quarter results.

The outlook remains mixed, with officials at News Corp. declaring improvement in ad trends while Publicis Groupe's CEO said his company's planning for next year assumes zero growth in advertising due to "low visibility."

News Corp. posted a net loss of $1.74 billion for the quarter, due to a writedown on its 42% stake in Gemstar-TV Guide, even as hit films and strong results for cable channels helped revenue rise 11.2% to $3.83 billion. The Fox broadcast network posted a loss of $55 million for the quarter due to increased sports programming costs and higher promotion costs for "American Idol," offsetting an 11% growth in revenue.

News Corp.'s TV station group has seen stronger advertising demand in auto, retail and entertainment sectors, and Fox-TV expects to show improved results in the fall, said Peter Chernin, president-chief operating officer. Upfront contracts are holding and the fourth-quarter scatter market looks strong, he said.

"No one here is brimming with overconfidence about the ad outlook, but we're also not seeing any weakening," said Mr. Chernin.

Vivendi Universal posted a loss of $12.1 billion for the first half due to an $10.8 billion write-off to adjust the value of its holdings. The company showed a 13% increase in revenue for the first half despite weakness in music and Internet units.

paying for binges

In a call with analysts, management said the troubled media conglomerate plans to raise $10 billion through asset sales in the next two years, with half that total in the next nine months. The money will be used to pay down debt from a '90s acquisition binge. CEO Jean-Marie Messier exited early last month.

Among agencies, Publicis reported $586.6 million in revenue, up 0.3% for the second half. After factoring out currency effects and acquisitions, revenue dropped 4.8% from the same period in 2001. In North America, Publicis posted flat revenue for the first half and a 6.2% drop in organic revenue. Publicis Chairman-CEO Maurice Levy noted the company brought in $684.4 million in net new business. Advertising markets have continued to deteriorate in the first half, said Mr. Levy, but the new business gains will convert into revenue growth in the fourth quarter.

Mr. Levy reaffirmed the company's target to close its $3.2 billion acquisition of Bcom3 Group in September. He said the two companies are in "final discussions" with the Securities and Exchange Commission and anticipate final regulatory approval this month. Mr. Levy said he is "very confident" the two companies will lose no clients from merger conflicts. Bcom3 reported second-quarter net income of $33.7 million, up from $4.4 million in 2001. Factoring out changes in accounting in 2001, income was up 75.5%, from $19.2 million in 2001. Revenue increased 1.4% to $486.7 million; after factoring out new accounting regulations, revenue would have risen only 0.1%.

Grey Global Group posted a 31.2% drop in net income during the second quarter to $1.67 million, from $2.43 million in 2001. Revenue was down 7.7% for the quarter, to $290.1 million. Grey said deals it made for previous acquisitions will require it to pay about $60 million in coming years in the form of earn-outs and additional investments in acquired companies.

Fast Facts

Reporting this week:

Aug. 19: Lowe's Cos.

Aug. 20: WPP Group

Aug. 22: Limited, TiVo

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