A leading US media analyst has cut his 2009 earnings forecasts for Rupert Murdoch’s News Corporation. Analyst Doug Mitchelson of Deutsche Bank told clients in a note last week that he now expects News Corp to earn 89 US cents a share this week, down from the previous estimate of $1.06 a share. That’s a cut of 16% and is under the 96 cents a share consensus from a poll of News analysts by Thomson Reuters.
News Corp earned $US1.81 in 2008, the Deutsche Bank analyst is forecasting a profit fall of more than 50%. As News earned $US1.08 a share in 2007, this year’s result will be lower than that level. For the company’s fiscal second quarter, Mitchelson cut his profit estimate to 21 US cents from 29 cents per share. News earned 27 US cents a share in the second quarter of 2008.
“While it is tempting to suggest that the worst-case scenario is now fully reflected in our forecast, further risks remain to the extent the economy continues to weaken,” Mitchelson said in a client note. He said the downturn has hurt a wide swath of the company’s businesses, from television ads, to DVDs and theater releases, to retail book sales. — Glenn Dyer
Hollywood DVD anxiety. In fact the plunge in DVD sales is starting to worry Hollywood and big US media companies that have come to depend on them as their most important growth source of sales and profits. The Financial Times reported last week that “Hollywood has come to depend on DVDs, with many films only breaking even once they are released in the format. But a decline that started slowly at the beginning of last year accelerated from November, with sales of new titles falling 21 per cent, according to Nielsen figures seen by the Financial Times.
“Studios are going to have to renegotiate a lot of talent deals if new movies are going to get made,” he said. “There’s nowhere else to shave the money than with the talent.”
Media groups such as Time Warner, Sony, Viacom, News Corp and NBC Universal, are banking on the new Blu-ray format, which is growing in popularity, to offset the decline of the DVD. But The Financial Times says Blu-ray represents only a tiny fraction of the US home entertainment market, generating $US750m in 2008, compared with $US20bn on DVDs. — Glenn Dyer
Fairfax sells Southern Star. Fairfax Media has sold most of its remaining stake in the Southern Star TV production and distribution business to the Endemol production company now controlled by its original founder, John De Mol, Goldman Sachs and Mediaset, the big media company controlled by Italy’s billionaire Prime Minister, Silvio Berlusconi.
In doing so, Fairfax appears to have taken a loss of around $30 million on the Southern Star investment, which cost it $150 million when it bought it and the mostly AM radio stations of Southern Cross Broadcasting in the latter’s break up in 2007. Fairfax said in a statement to the ASX that it had sold Southern Star to “Endemol for $75 million plus an earn-out. The sale is conditional on obtaining regulatory approvals and certain other matters and is expected to be completed in Q1 2009.”
Fairfax Media said it would retain ownership of Southern Star Factual, the UK-based natural history, science and factual producer previously known as Oxford Scientific Films, and its 75% stake in leading UK children’s and interactive producer Darrall Macqueen.
The value of Southern Star was diminished last year by the cancellation of the Big Brother reality series by the Ten Network here: that cut around $A25 million in revenue a year from the Southern Star/Endemol joint venture which produced the program for eight years. Because of the assets being retained and the loss of Big Brother, the best you can say is that Fairfax hasn’t lost much on the Southern Star adventure. — Glenn Dyer
Meet the other agency who had the best job in the world idea. It’s the kind of big, campaignable idea that doesn’t come along every day. Offer a prize of the greatest job in the world — be a brand ambassador on a luxurious island. As Cummins Nitro’s’s Best Job in the World initiative for Tourism Queensland demonstrated last week, it was a PR-friendly idea that was written about all over the world, and generated the Internet traffic to go with it. But when news of the campaign broke last Monday night, the emotions experienced by Jules Hall were somewhat different. The owner of rapidly growing communications agency The Hallway, just before Christmas he won a breakthough new client — Malibu. His big idea? Win a year as a product taster on the Caribbean island of Barbados. — Mumbrella
Cut! Oscars trim price, take movie ads. ABC is slashing the price of an ad in the Academy Awards to $1.4 million — and for the first time the Oscars will accept ads for movies. What’s that? You thought the broadcast always ran ads for films? It might seem so, but motion-picture ads were always banned in the Academy of Motion Picture Arts and Sciences broadcast. But now, in an effort to boost ads in the broadcast — which saw ratings flag to a low of 32 million viewers last year, down from 39.9 million in 2007, according to Nielsen Media Research — the network is said to have lowered its price for the Feb. 22 telecast from $1.7 million this year. ABC declined to comment on its pricing. — Advertising Age
Somebody, anybody save the Times. So The New York Times Co. doesn’t have any money. This we know to the tune of $46 million in cash versus $1.1 billion in debt. We also know that it won’t stop publishing in May, no matter how many essays Michael Hirschorn writes. But what’s to save the Gray Lady? Two things: President-elect Barack Obama and a certain Mexican billionaire. — FishbowlNY
Conroy be warned: Vodafone’s child porn filter blocks innocent Czech tech blogs. Last summer, the British cell phone carrier Vodafone announced it would be offering a new filtering service for its Czech customers. “Child pornography and promotion of racism [are] such socially dangerous content that we have access to it automatically blocked for all of our customers,” said Philip Premysl, senior manager of corporate social responsibility of Vodafone in the press release. But six months later, that filter also blocked pages on tech blogs, a chat server and a transportation site all based in the Czech Republic. Tech bloggers Radim Hasalik and David Biksadsky started a Facebook group called Stop Internet Censorship (in the Czech language) to protest the poor filtering by the cell carrier. — Media Shift
Cindy speaks. In a conversation with her daughter (and blogger) Meghan, Cindy McCain opens up about subjects she couldn’t discuss before: anger at the New York Times, wardrobe malfunctions, and Obama’s inauguration. McCain complains there’s “very little difference now between journalism and gossip” and “I truly feel that unless the media goes back to unbiased reporting they are going to do a disservice to the youth of this country. The future of this country lies in the youth and we have to be good stewards of information and truth.”– The Daily Beast
The YouTube dilemma — users vs copyright protection. There is simply no denying that YouTube is still the most important video-sharing site, at least in the United States. It is not likely to see this position change much, at least not in the next year. As YouTube has grown it has been forced to decide if they want to side with the users who have made the site what it is or the rights-holders to a lot the material that users have posted. More and more, YouTube is siding with rights-holders, even in cases where fair-use can easily be argued. YouTube is trying to avoid a never-ending string of lawsuits (justified or otherwise) from RIAA, DMCA, et al. with pre-emptive actions against their users. — My Media Musings