Just so you have no illusions, nobody’s going to get through this unscathed. Viacom just warned, and now News Corp. is getting its estimates reduced. Pali’s Rich Greenfield, who knows a thing or two about the company, has reduced his full-year 2009 estimates by $.10 to $1.16. Current consensus is $1.24. The issues: A local ad meltdown affecting the newspaper business and TV stations and a decline in filmed entertainment.
The greatest cut in our estimate is in News Corp’s Television segment, and primarily in the
O&O Station group, where trends appear to be deteriorating rapidly. Our forecast now
assumes a near 20% organic TV operating income decline in FY09 (the estimated reported
decline is a higher 27% given recent TV station asset sales).
But it’s not entirely bad news. News Corp. sits on a hefty $6 billion in cash, and it should have $9 billion by year-end 2009. At a time when cash is king (and in this environment, it’s definitely cash, not content, that is king), this gives the company a nice dose of security.
News Corp. shares are trading down almost 9% today to about $8.40. Its 52-week high was $24.95.