News Corp has released Q4 operating profits of $145 million, down 21% on last year.
Like the majority of media companies, News Corp has suffered at the hands of a weak advertising environment. Operating profits fell from $184 million a year ago to $145 million, or 12 cents per American depositary receipt. However, the company is relatively optimistic about the year ahead, expecting earnings to pick up significantly. News Corp is predicting that operating income will increase by a fifth in 2002.
The results were slightly ahead of estimates, which averaged around 11 cents per share. Including sharply higher exceptional costs of $410 million and taxes, the company made a $625 million loss, compared to a $71 million profit in the same period a year ago. The one-off costs included a non-cash charge from a new film accounting standard and write-offs on investments such as One.Tel and ePartners.
News Corp’s television group was one of the divisions that showed lower profits, with operating income of $185 million compared to $241 million a year ago. This was attributable largely to higher sports programming costs stemming from the first season of Nascar as well as a slump in advertising. On a more positive note, the film unit made an operating loss of $4 million, up from a loss of $53 million last year.
The current quarter looks slightly better for News Corp. The company will benefit from a strong season at the box office, including hits such as Planet of the Apes, which has already taken $150 million in the three weeks since its US release, and Moulin Rouge. However, the key question for the company is when the advertising market is going to pick up. While News Corp described signs of the market strengthening during last quarter, the worst may not yet be over. There are a lot of companies out there that will need some convincing before they start pumping up their marketing budgets again.
