One of the world’s biggest media companies, News Corporation, today revealed that fourth-quarter operating income had slumped by over 30pc to US$3.6bn, a US$1.7bn decline from the record US$5.3bn in operating income reported during the same quarter a year ago.
The Chairman and Chief Executive Officer Rupert Murdoch (pictured) also warned in a conference call following the results that the group is planning to charge for news.
News Corp, whose assets include TV station Fox, social-networking website MySpace, newspapers such as the Wall Street Journal and the New York Post, and the 20th Century Fox film studio, reported a fourth-quarter net loss of US$203m (US$0.08 per share) compared with net income of US$1.1bn (US$0.43 per share) reported in the fourth quarter a year ago.
Current year revenues of US$30bn were down 8pc from the US$33bn reported in 2008, the group said.
For the full year, the company reported a net loss of US$3.4bn (US$1.29 per share) as compared to net income of US$5.4bn (US$1.81 per share) reported in fiscal 2008.
The full-year decline was the result of lower contributions at the majority of the company’s businesses, with only one of the eight, cable network programming, reporting a significant rise in operating income.
Matters were also not helped by News Corp having to absorb charges of some US$680m during the quarter, primarily related to Fox Interactive Media, the division of News Corp that houses MySpace.
Fourth-quarter operating income in News Corp’s TV business for the three months to June 2009 plunged to US$95m from US$279m during the same period in 2008. Q4 operating income in the Newspaper and Information Services division also slumped from US$263m to US$96m, results that reflected lower advertising revenues and the strengthening of the US dollar against the Australian dollar, the group said.
"The past year has been the most difficult in recent history, and our 2009 financial performance clearly reflects the weak economic environment that we confronted throughout the year. We streamlined all our businesses and continue to do so, at the same time adjusting to the revolutionary changes taking place throughout the media industry," said Murdoch.
"This has presented us with many challenges and also opportunities. We have strengthened all our franchises and are particularly well placed for the coming recovery. Nearly all our businesses have improved market share. Particular progress has been made in cable network programming. I am certain that News Corporation is poised to profit, and deliver strong returns, as the economy rebounds."
As reported in the New York Times, Murdoch also indicated in a conference call with Wall Street analysts following the results that the days of free news online may soon be over.
While he noted that the internet had created opportunities to distribute news cheaply, he said that "it has not made content free. We plan to charge for all our news websites." This would include news from the Wall Street Journal, which already has a subscription plan in place and is one of the few news websites that has managed to successfully implement a payment system to charge for news.