News Corp posts loss on restructuring charge

Aug 09, 2012, 8:17 AM EDT
REUTERS/Olivia Harris/Files

* Fiscal 4th-quarter adjusted EPS $0.32 vs Street view $0.32

* Fiscal 4th-quarter revenue down 6.7 pct to $8.4 bln

* $2.85 bln charge related mainly to Australian publishingunit

* Sees high single to low double-digit op income growth inFY 2013

By Yinka Adegoke

Aug 8 (Reuters) - Rupert Murdoch's News Corp posteda quarterly loss on Wednesday after taking $2.85 billion ofnon-cash restructuring and impairment charges that overshadowedgrowth at its cable networks, the company's only major brightspot.

All of its other main divisions performed less well than ayear ago.

After adjusting for the charges related to a writedown ofits publishing operating business - mainly in Australia - NewsCorp earned 32 cents, down from 35 cents a year ago.

The company's adjusted profit met analysts' expectations,but its shares were off 3 percent in after-market trading.

News Corp posted a fiscal fourth-quarter net loss of $1.55billion, or 64 cents per share, compared with a profit of $683million, or 26 cents per share, a year ago.

Revenue fell 6.7 percent to $8.4 billion during the quarter.

Chief Financial Officer Dave Devoe said the company expectshigh single to low double-digit percentage growth in operatingincome in the current fiscal year, ending June 30, 2013.

The company forecast double-digit growth in fiscal 2013 fromits cable networks offsetting weaker performance at such unitsas Sky Italia.

In an interview Chief Operating Officer Chase Carey said heexpects his company's local and national TV networks tooutperform a relatively flat market by low to high double digitsupfront. "And I'd say our cable networks' (advertising revenues)are much stronger than that."

The company is set to make significant investments in itsfledgling education unit, called Amplify. The unit, headed byformer New York schools Chancellor Joel Klein, is budgeted torack up around $180 million in operating expenses in the fiscalyear, up from around $80 million in 2012.

"Some key numbers in the quarter and the outlook they gavewere a small miss for us due to the struggles they have with SkyItalia in a troubled economy and the costs with the neweducation unit," said Evercore Partners analyst Alan Gould.

At its cable networks, operating profit rose 26 percent on a16 percent increase in affiliate fee revenue from cable, phoneand satellite TV distributors. Advertising revenue at itsdomestic cable channels rose 5 percent.

Operating income at the company's movie unit fell 43 percentto $120 million.

Fox Broadcasting saw operating income drop 8.5 percent.

News Corp owns Fox Broadcasting in the United States, the FXand Fox News cable networks, and such newspapers as The WallStreet Journal and The Sun in the UK. It is also parent of theTwentieth Century Fox studios.

The publishing business reported a 48 percent drop inoperating income to $139 million due to lower advertisingrevenue at its UK and Australian newspapers as well as itsintegrated marketing business. It was also affected by the alitigation settlement charge at its Harper Collins bookpublisher.

The company said in June it would separate its publishingand entertainment assets by next year in move to satisfyshareholders who had been pressing News Corp to rid itself ofits troubled newspapers business, especially after a phonehacking scandal at its British tabloids forced the company todrop its proposed acquisition of pay-TV group BSkyB.

It took a charge of some $224 million related to the hackinginvestigation in fiscal 2012.

News Corp shares have risen more than 14 percent since theplan for the split was revealed on June 26, touching their highest price for five years.