News Corp posts $1.6bn loss as restructuring costs bite
The Murdoch empire is about to be divided in two - and new losses hint at fate of newspapers
RUPERT MURDOCH'S News Corporation has posted a net $1.6bn loss for the three months to the end of June this year. The gloomy figures are down to $2.9bn in pre-tax costs arising from a plan to split the business in two.
The last-quarter losses compare to a $683m profit for the same three months of 2011, with revenue down 6.7 per cent as movies and TV shows including American Idol performed disappointingly, reports The Guardian.
The severity of the loss took analysts by surprise and led News Corp's shares to fall 3.5 per cent last night in after-hours trading. Legal fees from the phone-hacking scandal also hurt the company's profits over the 12 months to the end of June, costing $224m.
The publishing side of the business reported a quarterly operating income of $139m, down from $270m a year before, dented not only by the closure of the News of the World but also by the general sustained slide in readership in the UK and Australia.
Murdoch said in a press release: "News Corporation is in a strong operational, strategic and financial position, which should only be enhanced by the proposed separation of the media and entertainment and publishing businesses."
Media expert Emily Bell took to Twitter to express her surprise that the costs associated with splitting the business could be as large as $2.9bn, implying that Murdoch was playing up the loss as a preliminary to splitting the firms and perhaps dropping the unprofitable publishing half.
She wrote: "News Corp has clearly kitchen-sinked its fourth quarter results to record a loss but nearly $3bn as a restructuring cost is *huge*."
Murdoch has pledged that he will carry on as chairman of both halves of the company after they have been separated but many believe his decision to step down as director of News International is an indication he plans to drop the newspapers.