News Corp says Australian economy weak
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MELBOURNE, Feb 7 AAP
February 07 2013, 11:23AM
Global media giant News Corp has blamed a weak Australian economy for dragging down earnings at its troubled publishing business.
News more than doubled its overall first half profit after reaping the financial benefits of its purchase of a greater stake in pay TV broadcaster Fox Sports.
However income for the publishing arm, which includes News' stable of Australian, British and US newspapers, fell to $US291 million ($A283.25 million) in the six months to December 31 from $US328 million ($A319.27 million) in the previous year.
The group's Australian newspapers suffered from lower advertising revenue in the three months to December, raising questions about its future.
"In Australia we've been hammered by an economy that we keep hoping has hit bottom but seems to continue to find new lows," News Corp president Chase Carey told analysts in a telephone briefing on Thursday.
The disappointing performance in Australia, along with Sky Italia and Fox TV in the US, forced News to downgrade its full year earnings guidance.
Chief financial officer David DeVoe said News now expected operating income growth in the mid-to-high-single-digit range, instead of a high-single-to-low-double-digit rise.
News Corp shares were sold off on Wall Street following the results announcement.
The falls continued in early trade on the Australian market, with News' voting shares down $1.31, or 4.8 per cent, to $26.18 by 1119 AEDT.
The group reported a better-than-expected net profit of $US4.61 billion ($A4.45 billion) for the six months to December 31, up from $US1.8 billion ($A1.74 billion) in the same period in the previous year.
News Corp's operating income in the six months to December was $US2.96 billion, up from $US2.88 billion following improved performances by its cable network and television businesses.
News is preparing to spin off its troubled publishing business from its more successful pay TV and movie divisions.
The head of News Corp's media operations in Australia Kim Williams has admitted that the split, due at the end of June, will increase scrutiny of the newspapers' earnings, with domestic media and advertising struggling.
On a quarterly basis, News' net profit rose to $US2.38 billion ($A2.30 billion) from $US1.06 billion ($A1.02 billion).
It was during that period that News Corp took over Consolidated Media, taking complete ownership of Fox Sports and doubling its share in Foxtel to 50 per cent.
That deal, plus News Corp's increased stake in Fox Star Sports Asia, delivered $US1.4 billion in additional pre-tax income in the three months to December.
"The strategies we executed ... in the quarter continue to bolster News Corporation's competitive position and enhance our ability to benefit from global demand for content, especially sports programming," chairman and chief executive officer Rupert Murdoch said in a statement.