News Corp wrote down the value of its Australian newspapers, and its holding in Foxtel, by $A700 million as the global media business headed by Rupert Murdoch reported more losses.
The US-based company posted a loss of $US219 million ($A287 million) in the December quarter mainly due to $US537 million ($A704 million) of non-cash impairments.
There was also a gain of $US120 million ($A157 million) from the sale of the European online property classified business owned by ASX-listed REA, the operator of realestate.com.au.
News Corp’s newspapers, including the Wall Street Journal, the Times in London and The Australian, have been hit by declining print advertising spend.
The latest results were impacted by a change in the carrying value of Foxtel and an impairment of the print-related fixed assets at the Australian newspaper business.
The company wrote down by $US310 million ($A406 million) the value of fixed assets at the Australian newspapers.
And the value of News’ 50% stake in Foxtel dropped to $US1.2 billion ($A1.57 billion) from $US1.4 billion ($A1.84 billion) because of the competitive environment in the Australian pay TV market and management’s revised projections.
Here’s the Foxtel writedown from the filed papers:
The company said: “The current year’s quarter includes a pre-tax non-cash impairment charge of $US310 million, primarily related to the write-down of the fixed assets at the Australian newspapers, and lower equity earnings of affiliates, primarily driven by a $US227 million pre-tax non-cash write-down related to the adjustment of the carrying value of the Company’s investment in Foxtel to fair value.”
The impairments give News a tax benefit of $US121 million.
Foxtel’s net income in the six months to December included a $US21 million ($A27 million) loss resulting from the decision to stop Presto operations.
Overall revenue was $US2.12 billion ($A2.78 billion), flat against the $US2.16 billion ($A2.83 billion) for the same quarter a year ago.
CEO Robert Thomson says the Wall Street Journal now has more than 2.1 million paid subscribers and, for the first time, more than 50% of those are digital.
“We are especially confident in the value of our news brands, given growing consumer demand for accurate and timely journalism,” he says.
The December quarter results by segment: