Scandal-hit News Corp posts big loss
Rupert Murdoch’s embattled media giant News Corp posted a net loss of $1.51 billion in its fiscal fourth quarter Wednesday, as the firm prepared for a major restructuring.
The company’s bottom line was hit by a $2.85 billion charge apparently related to a plan to split its entertainment division from its struggling publishing business, hit by tabloid phone hacking scandals in Britain.
News Corp described the charge as “a write-down of $1.5 billion of goodwill and a $1.3 billion write-down of the company’s indefinite-lived intangibles, principally related to the company’s publishing businesses, most significantly the Australian operations.”
News Corp also wrote off $57 million it said it spent during the quarter on an “ongoing investigation” into the British phone hacking scandal, bringing the total cost for the year to approximately $224 million.
On Tuesday, police arrested a journalist from Murdoch’s top-selling British tabloid The Sun and a policeman for alleged corruption, Scotland Yard and the journalist’s employer said.
The pair were detained under Operation Elveden, one of three investigations sparked by the phone-hacking scandal that closed the News of the World, The Sun’s weekly sister paper, last July.
There has been a string of recent arrests of Sun journalists.
Australian-born Murdoch was forced to shut down the 168-year-old News of the World over revelations that its staff had hacked into the voicemail messages of a murdered teenager and dozens of public figures.
Scotland Yard has made a total of 43 arrests under Operation Elveden, which is investigating journalists’ alleged bribery of public officials, and 24 under Operation Weeting, its probe into phone hacking.
A further nine people have been arrested as a result of an investigation into alleged computer hacking and privacy breaches by journalists.
Andy Coulson, former media chief to Prime Minister David Cameron, and former top Murdoch aide Rebekah Brooks are among those who have been formally charged with phone hacking.
Brooks previously edited both the News of the World and The Sun while Coulson formerly edited the News of the World.
Murdoch credited the company’s cable and film divisions with playing starring roles in financial growth achieved during the fiscal year.
“Our company has continued to innovate, grow, and consistently adapt to the rapidly changing media industry landscape,” Murdoch said in a release.
“We find ourselves in the middle of great change, driven by shifts in technology, consumer behavior, advertiser demands and economic uncertainty and change brings about great opportunity.”
During the past year, News Corp increased it bet on sports programming by buying Fox Pan American Sports and making plans to purchase remaining stakes in ESPN STAR Sports. News Corp also bought back $4.6 billion in stock.
A plan to split of Murdoch’s massive News Corp which was unveiled in June would create separate companies for the huge entertainment division and the struggling publishing business.
The publishing arm has some of the most prestigious names in the industry, including The Wall Street Journal and Times of London, but has been hurt by a move away from print.
Some analysts portray the news operations are an “albatross” dragging down the value of the empire.
Murdoch says he would be chairman of both companies after the split, insisting that the news business would not be an unloved stepchild.
The Australian-born magnate, who built his empire from a single newspaper in Adelaide, said he still believes the news business can be profitable.
“People are buying fewer papers but they are equally getting their news in many other forms,” he said when announcing the split.
“People will pay for news, it’s the most valuable commodity in the world. People need to know what’s going on.”
Deputy chairman Chase Carey will be the chief executive of the entertainment arm, led by the 20th Century Fox studios and Fox television properties.
News Corp shares slid 2.55 percent to $23.28 in after-hours trading on the Nasdaq.