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Monday, February 9, 2009

Oh Rupert, Say It Ain't So ...

Straight from the Melbourne Sun in Oz:

"Every time the economy rebounds, advertising comes back, usually stronger than before.

NEWS Corp is experiencing the worst conditions in its 50-year history but will emerge from the financial storm better placed than its rivals, chairman and chief executive Rupert Murdoch said.
Mr Murdoch (pictured) vowed the company would mount a strong recovery after reporting a $US6.41 billion ($A9.84 billion) loss, the company's first quarterly loss in three years.

The result compared with a profit of $US832 million in the same quarter the previous year.

Mr Murdoch said the recession was wreaking havoc on advertising revenue.

"Historically, every time we've seen a recession, mild or major, we've endured this panic and come out better," he said.

"Every time the economy rebounds, advertising comes back, usually stronger than before.

"I'm not being flippant. I recognise that we may never return to record levels, but we do believe we can recapture a large per cent of the advertising that does return.

"When this recession ends, we'll be better positioned than anyone else because we've been aggressively building market share in these businesses, and we will make no compromise in that sector.

"I can tell you we're doing everything we possibly can, strategically, operationally, financially, to position ourselves to emerge stronger when the economy returns to some semblance of normalcy."

The loss followed $US8.4 billion in write-downs including $US3.6 billion in goodwill, part of which is likely to have been for Dow Jones, the publisher of The Wall Street Journal, which Mr Murdoch bought in 2007 for $US5.6 billion.

"While we anticipated a weakening, the downturn is more severe and likely longer lasting than previously thought," Mr Murdoch said.

"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."

But measures undertaken last year meant the company would pull through the financial crisis, he said.

"We've never been a company that tolerates fat so in times like these we are better positioned to weather this cycle than most of our competitors."

Despite the overall downturn, cable television profits surged to $US428 million, $US91 million more than the previous quarter.

"People are spending more time at home, they're watching more television and they're enjoying wonderful choice," Mr Murdoch said.

The News Corp television segment saw operating profit fall to $US18 million, a decline of $US227 million.

Newspaper profits overall fell $US17 million to $US179 million.

In Australia, newspaper group profits were down 18 per cent compared with the previous year, primarily due to lower classified advertising revenue linked to decaying jobs and car markets.

Overall advertising revenue for Australian newspapers was down 4 per cent but circulation revenues held firm.

Mr Murdoch said conditions in Australia remained stronger than in Britain.

"The downturn in Australia hit very late," Mr Murdoch said. "It's beginning to hit now.

"We're not yet feeling it the way we're feeling it in Britain."

On the ASX yesterday News Corp shares fell 54, or 4.9 per cent, to $10.58.


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