RUPERT MURDOCH has flagged more job cuts at News Corp and a 30 per cent slide in profits this year, warning the company is witnessing "the worst global economic crisis" since he started building his global media empire more than 50 years ago.
News reported a $US7.6 billion ($11.7 billion) operating loss for the second quarter after it was hit by a sharp downturn in advertising sales and booked an $US8.4 billion write-down for television licences, goodwill and the value of newspapers assets.
The loss, after a $US1.4 billion profit the previous year, was a "direct reflection of a recession that's deeper than anyone predicted", Mr Murdoch said.
"While we anticipated a weakening, the downturn is more severe and likely longer lasting than previously thought."
The dramatic advertising slump prompted News to issue its second profit warning in three months after years of record growth. The company now expects operating earnings will fall about 30 per cent in 2008-09 from last year's $US5.1 billion, twice as much as the declines it estimated in November.
The latest forecast assumed "no further weakening in the advertising markets and economic conditions", said its chief financial officer, David DeVoe.
"And I want to stress again that we still have less than perfect visibility into the markets."
News Corp's shares closed 4.1 per cent lower at $10.67 yesterday, taking their losses this year to 21 per cent. Analysts said the result was worse than expected. "It was not a pretty picture," said Alex Pollak, a media analyst at Macquarie Equities.
But the shares did not fall further as investors had already priced in write-downs and a bleak earnings outlook, albeit not to that extent, he said.
In the US, Time Warner last week reported a $US16 billion quarterly loss after booking a $US24.2 billion goodwill write-down. Locally, media companies including Fairfax Media and Prime Media Group have also said they will review their asset values.
Excluding the multi-billion write-down, News Corp's operating earnings slumped 42 per cent to $US818 million in the quarter, with falling contributions from film, television and newspapers wiping out a double-digit percentage gain from its subscription television services.
Profits from 20th Century Fox fell 72 per cent to $US112 million as the company lacked any big box office hits. News's commercial TV stations turned in a meagre $US18 million, down $US227 million from a year earlier, as advertisers such as car makers and fast food companies cut their spending.
Profits from newspapers and Dow Jones fell $US17 million to $US179 million.
In Australia, where the company publishes The Australian and The Daily Telegraph, operating earnings fell 18 per cent in the second quarter as classified sales plunged and the company incurred expenses for an undisclosed number of job cuts.
"The downturn in Australia hit very late," Mr Murdoch said. "It is beginning to hit now, but we're not yet feeling it the way we felt it" at the British newspapers.
The 77-year-old mogul pointed out that News Corp had about $US4.5 billion in cash after privatising its pay TV encryption technology company, NDS, yesterday, giving it enough reserves to cover its upcoming debt repayments for the next seven years.
"Times may be tough right now but if our forecast is correct, we'll make in excess of $US3.5 billion" in operating profit this year.
