Hacking scandal costs help send News Corp spinning into the red

By PERRY GOURLEY
Published on 10/08/2012 00:00

ONE-off costs, including charges related to the phone-hacking scandal at the News of the World, saw Rupert Murdoch’s News Corp media group plunge to a quarterly loss yesterday.

A $2.85 billion (£1.81bn) restructuring and impairment charge pushed the business to a net loss of $1.6bn for the three months to the end of June, compared with a net profit of $683m in the same period last year.

Although the group saw growth at its cable networks during the fourth quarter, all its other main divisions were
weaker than a year earlier.

The publishing business reported a 48 per cent drop in operating income due to lower advertising revenue at its UK and Australian newspapers, as well as its integrated marketing business. It was also affected by a litigation settlement charge
at its Harper Collins book
publishing arm.

News Corp chairman and chief executive Rupert Murdoch said the company was in a “strong” position which would be enhanced by plans to split the company into two parts, separating its entertainment businesses from publishing
assets including the Sun and the Times.

“Our company has continued to innovate, grow and consistently adapt to the rapidly changing media industry landscape. We find ourselves in the middle of great change, driven by shifts in technology, consumer behaviour, advertiser demands and economic uncertainty and change brings about great opportunity,” said Murdoch.

The company said it expects “high single to low double-digit” percentage growth in operating income in the current financial year. It also said it plans to make significant investments in its fledgling education unit,
Amplify.

As well as the Sun and the Times in the UK, News Corp owns Fox Broadcasting, Twentieth Century Fox studios and the Wall Street Journal.