News Corp warns of less robust ’09

NEW YORK: Rupert Murdoch’s News Corp reported a 27% increase in its fiscal fourth-quarter net income, but said it faces a “much more difficult economic environment” in its current year that will continue to hurt local television advertising, but not national TV ad sales for now.

Operating income for News Corp is expected to rise by a more moderate 4-6% in FY09, compared with a mid-teens percentage range for 2008.

Revenue at Fox Interactive Media, which includes the popular MySpace Internet social network, is expected to rise by about 30% in 2009, executives said.

“Although we clearly face more challenging macro-economic conditions in FY09, we’re well positioned to deliver continued, if somewhat less robust, growth,” Murdoch said in a statement.

Christopher Marangi, an associate portfolio manager at News Corp investor Gabelli & Co, said News Corp’s film and cable results looked strong but had expected the company’s operating income would rise by 9% in fiscal 2009.

Both Viacom Inc and CBS Corp were battered by lower local and national advertising sales when they reported quarterly earnings last week, stoking fears that the ad slump would bleed over to national advertising sales for other media companies.

News Corp executives said during a conference call admitting weakness in automotive, telecommunications and movies advertising categories. However, they said such trends had not yet hurt sales on its national networks.

“We are seeing real strength in national, and particularly in some of the cable up fronts, but also ...on our broadcast network business,” News Corp chief operating officer Peter Chernin said.

Speaking from Beijing, Murdoch said on the conference call that the difficult economic environment would send “economic shocks” that would affect “the vast majority of consumers in the US, as well as in Europe.”

He has sought to invest more heavily in faster growing regions such as Germany, Eastern Europe and India.

“The growth there (in India) is really extraordinary and we will be doing more and more there,” Murdoch told reporters. “We would like to be doing more in China.”

He confirmed reports that News Corp aims to sell off its assets in Bulgaria and said he was undecided over the News Corp’s assets in Poland, saying they were more difficult to operate than expected.

“We don’t quite know if we scale back a bit in Poland, which is proving more difficult than we expected... or a diversion of those resources elsewhere,” Murdoch said.

Addressing questions about sales of News Corp’s assets in Russia, including its stake in an outdoor advertising business, he said, “The sale of (assets in) Russia is a different matter all together. We have great growing business there, but ... This is purely me, I’m sorry, the more I read about investments in Russia, the less I like the feel of it.”