Net loss at News Corp hit $1.7 billion for the fourth quarter, up considerably on the $265 million loss of the same period the previous year; full year loss rose from $45 million to $6.3 billion. Net profit fell by 8.0% to $636 million for the year. Excluding write-downs, revenues increased 10.0% to $15.2 billion.
The weak figures are largely the result of the costs experienced by the company’s Gemstar division. Gemstar’s heavy investment in interactive television (iTV) services has resulted in its share price plummeting from $90 to less than $4 in under two years. As a result, News Corp has taken a $1.9 billion charge against earnings.
“Obviously, we were disappointed by the write-downs of our investment in Gemstar, which we took during the year due to that company’s declining share price. Nonetheless, we are working closely with Gemstar’s management to take the necessary steps to restore the value of that important asset,” said Rupert Murdoch, News Corp’s chief.
Murdoch also confirmed that he will not be seeking to bid in the auction for Kirch Media, the insolvent broadcasting division of German media group Kirch, as expected. News Corp’s BSkyB has already lost the value of its 22% stake in Kirch Media, costing the company in the region of $1.7 billion.
News Corp has also take a write down in its investment in Italian pay-TV operator Stream, which is half-owned with Telecom Italia. Murdoch says that he is still potentially interested in combining Stream with Italy’s other main pay-TV group, Telepiů.
Such a merger had been set to go ahead but the deal stalled over ownership regulations and investment issues. If a merger were not to go ahead News Corp would be faced with the decision of continuing to run Stream in unprofitable competition with Telepiů, or closing it down altogether, say analysts.
News International News Corp’s UK newspaper publishing division, News International, saw operating income decline by 5.0%, on advertising revenues down by 12.0% across the full year. More recently, slightly higher ad revenues at the Sun and News Of The World were offset by circulation revenue declines, due to cover price cuts at the Sun.
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