News Corp.’s Murdoch: Worst is over for economy

Thursday, May 7, 2009 at 11:56pm
Sarah Rabil, Bloomberg News
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News Corp. Chairman and Chief Executive Officer Rupert Murdoch said the economy and the advertising market are showing signs of improvement.

“It is increasingly clear that the worst is over,” Murdoch said on the company’s first-quarter earnings conference call. “There are emerging signs in some of our businesses that the days of precipitous declines are done and that revenues are beginning to look healthier.”

Murdoch, 78, said companies were “in shock” after business and advertising started to plunge in October. Ad sales at News Corp.’s TV stations fell 30 percent in the fiscal third quarter ended in March, and 33 percent at the Wall Street Journal. Since then customers have begun to return, he said.

“It is not at any stage back to the boom days,” Murdoch said. “At the very least, we’ve hit a floor, and we seem to be getting some bounce off it.”

Murdoch, a pessimist in recent months, echoed comments made last week by Viacom Inc. CEO Philippe Dauman. Over the past several weeks, advertising sales have begun to stabilize, Dauman said on an earnings call.

“We are encouraged by Murdoch’s sharply reversed view that the worst of the economic crisis is over,” Anthony DiClemente, a Barclays Capital analyst who rates News Corp. ‘equal weight’ wrote in a report Thursday. “Investors will continue to debate future earnings power of the media names.”

Time Warner Inc., Walt Disney Co. and Viacom have reported quarterly profit that topped analysts’ estimates after tightening costs and eliminating jobs.

News Corp.’s fiscal third-quarter net income advanced to $2.7 billion, or $1.04 a share, from $2.69 billion, or 91 cents, a year earlier. Excluding a tax gain, an asset sale and restructuring charges in newspapers and book publishing, profit of 16 cents a share matched analysts’ estimates.

Sales declined 16 percent to $7.4 billion in the period ended March 31, short of the $7.7 billion average estimate of 15 analysts surveyed by Bloomberg.

Operating income fell 47 percent to $755 million, led by a plunge of 99 percent at broadcast television stations and the Fox network, and a 97 percent drop at the newspaper unit.