With News Corporation set to report its 2008 first half results tomorrow (with Rupert back in Oz to conduct the analyst briefings) two of his company’s major rivals have reported big falls in sales, earnings or huge losses.
The results from Time Warner and Disney put pressure on Murdoch and News Corp to cut asset values and own up to slumps in earnings from films, cable networks, Network and local TV stations, as well as lower returns from his global newspaper and magazine chains.
Reports in London say News is on the verge of revealing job cuts on its US and UK Newspapers — the Financial Times said the Wall Street Journal will remove 25 positions, or 3%, of its editorial staff and News International, whose papers include The Times, Sunday Times and The Sun, is in the final stages of an efficiency review conducted by Boston Consulting. It could cut up to 50 jobs, or some 2.5% of its staff.
The results from Time Warner and Disney, however, were not the only major results globally: besides lower profits from BHP Billiton and Qantas, Panasonic reported a $US4 billion loss and plans to chop 15,000 jobs globally. Hitchachi reported a big loss, as did US mobile phone giant Motorola.
Get Crikey FREE to your inbox every weekday morning with the Crikey Worm.
The world’s second biggest whitegoods group, Electrolux of Sweden (which dominates our shrinking industry here), also revealed a quarterly loss and scrapped its dividend as sales of vacuum cleaners, fridges, washers and dryers all fell in Europe, the US and other markets after a slump in sales.
Time Warner reported a $US16 billion loss, its first in 14 quarters, because of plunging advertising sales and write-downs in asset values revealed last month.
Sales dipped to $12.3 billion for the quarter, $500 million under market expectations and Time Warner said it saw little change this year with earnings remaining under pressure.
Rising revenue from its cable systems and cable-TV networks including TNT and CNN helped offset a sharp fall in ad sales at the AOL Internet unit and Time’s magazines unit.
Last month, the company said that it would record in the fourth quarter a $US25 billion goodwill write-down to reflect the declining value of cable-system, publishing and Internet assets. That’s where analysts will be looking for a decision from Murdoch and News..
Meanwhile, Disney revealed a near one third fall in first quarter earnings following steep declines at its television network, theme parks and film studio businesses. In short, nearly everything in its portfolios did badly.
CEO Bob Iger was quoted as saying Disney had been hit by “the weakest economy in our lifetime” and said the group was taking steps to cut costs and position itself for the future. Revenues for the quarter fell 8%
Disney last week chopped 400 jobs from ABC, around 200 from ESPN and a similar figure from theme parks. More losses will follow. Mr Iger said the company would also lower costs in other areas, namely its studio business.
Along with its Hollywood peers, Disney was hit by a sharp fall in DVD sales in the last three months of 2008. The fall and weaker movies in cinemas, saw studio earnings tumble 64%.
Disney’s ABC TV network reported a 60% in operating income after a slump in advertising revenues and a bad debt charge. Its cable networks saw earnings down 12%; at its parks division, first-quarter operating income fell 24 % on lower attendances (the impact of high petrol prices and then the recession) and mark-to-market adjustments on fuel hedge contracts.
Footnote: Murdoch’s BSkyB is 20 years old today. It wasn’t the strongest of starts on 5 February, 1988, but when a Sam Chisholm-led Sky took over BSB and forcefully merged the two groups, it was well on its way to broadcast dominance. Chisholm and Murdoch only sealed the deal after an audacious bid for all of the Premier League TV rights. BSkyB was secure and it’s therefore ironic that this week, Sky has just paid another motza for exclusive rights to much of the Premier League games from 2010 to 2013.
Sky bought four out of the six available packages for live TV rights in the UK for an undisclosed amount, rumoured to be around 1.3 billion pounds, or about what it paid for its current package. Sentana holds the current remaining two packages and is bidding again with ESPN (part of Disney).