News Corporation (NWS) reported financial results for its second fiscal quarter ended December 31, 2008 with adjusted operating income of $818 million. This was a decline of 42% as compared to operating income of $1.4 billion reported a year ago. In addition to this News Corp recorded an $8.4 billion pre-tax non-cash impairment charge related to goodwill and identifiable intangible assets. As a result of this write down of goodwill the Company reported a net loss in the quarter of $6.4 billion ($2.45 per share) as compared to net income of $832 million ($0.27 per share) in the second quarter a year ago. Excluding the impairment charge, second quarter net income was $320 million ($0.12 per share).
Commenting on the results, Chairman and Chief Executive Officer Rupert Murdoch said:
“Our results for the quarter are a direct reflection of the grim economic climate. While we anticipated a weakening, the downturn is more severe and likely longer lasting than previously thought. 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. We believe our businesses are well positioned to withstand a lengthy downturn and to emerge stronger as the current economic situation improves.”
FILMED ENTERTAINMENT
The Filmed Entertainment segment reported second quarter operating income of $112 million as compared to $403 million reported in the same period a year ago. The decline primarily reflects the comparison to the prior year’s exceptionally strong results.
TELEVISION
The Television segment reported second quarter adjusted operating income of $18 million, a decline of $227 million versus the same period a year ago, driven by decreased operating results at the Fox Television Stations, FOX Broadcast Network, STAR and MyNetworkTV.
CABLE NETWORK PROGRAMMING
Cable Network Programming reported second quarter operating income of $428 million, an increase of $91 million over the second quarter a year ago. This 27% growth reflects increased contributions from Fox News Channel, the Big Ten Network and the Fox International Channels, partially offset by costs associated with the continued development of the Fox Business Network.
DIRECT BROADCAST SATELLITE TELEVISION
SKY Italia reported second quarter operating income of $10 million, a decrease of $52 million versus the results reported a year ago, as local currency revenue growth of 6% was more than offset by increased operating expenses associated with higher subscriber volume, increased marketing and sports rights costs.
MAGAZINES AND INSERTS
The Magazines and Inserts segment reported second quarter operating income of $86 million, in line with the prior year. Higher revenue was offset by higher paper costs.
NEWSPAPERS AND INFORMATION SERVICES
The Newspapers and Information Services segment reported second quarter adjusted operating income of $179 million, down $17 million from the same period a year ago, as lower depreciation expense and the inclusion of Dow Jones & Company adjusted operating income contributions of $59 million in the quarter were more than offset by lower advertising revenues in the U.K. and Australia.
BOOK PUBLISHING
HarperCollins operating income decreased $44 million versus the same period a year ago due to lower sales driven by the weakening retail market.
OTHER
The Other segment reported a second quarter adjusted operating loss of $38 million, a $61 million decline from the operating results of a year ago, primarily due to lower contributions from Fox Interactive Media (FIM) and NDS.
PRE-TAX NON-CASH IMPAIRMENT CHARGE
The Company recorded a non-cash impairment charge of approximately $8.4 billion. The charge consisted of a write-down of the Company’s indefinite-lived intangibles (primarily FCC licenses) of $4.6 billion, a write-down of $3.6 billion of goodwill and a write-down of Newspapers and Information Services fixed assets of $185 million.
REVIEW OF EQUITY EARNINGS (LOSSES) OF AFFILIATES’ RESULTS
Second quarter earnings from affiliates were $30 million as compared to losses from affiliates of $50 million in the same period a year ago.
