Phone hacking cost News Corp. $224 M; company crack-up on schedule
News Corp. is "on course" to separate its publishing and entertainment holdings into two distinct, publicly-traded companies, according to president and chief operating officer Chase Carey.
But when he addressed Wall Street analysts and the press on a quarterly earnings call Wednesday afternoon, Carey didn't have much to add about the recently-announced split, which he said was "all about bringing focus and alignment to our business."
The split is good news to investors who have grown tired of suffering a loss leader in the print operations just to have a piece of Rupert Murdoch's consistently successful cable-news, entertainment, and satellite-TV assets. (As usual, growth in these businesses, such as Fox News and 20th Century Fox, partially offset the overall losses reported in today's earnings results.)
It also presumably insulates those interests from any fear of government interference as British Parliament and police continue to rifle around News Corp.'s closet for skeletons in the wake of the massive phone-hacking scandal that claimed the life of top Murdoch tabloid News of the World last summer.
But the same principle means that Murdoch's sentimentally favored print operations, including The Wall Street Journal, the New York Post and The Times of London, will no longer have the luxury of drawing on profits from the TV and entertainment side when they're looking to expand or cushion the blows of the punishing print-newspaper industry.
As for the timing of the breakup, Carey said the company was "targeting to make its initial regulatory filings around the end of the calendar year with operating details to follow."
Otherwise, Carey's prepared remarks and the subsequent Q&A session with analysts were an anodyne affair.
These calls used to be fun when Murdoch, known to make candid and unscripted comments that would get gobbled up by reporters, was a fixture on them. But the 81-year-old chairman has thought better of participating ever since the U.K. scandal really caught fire last year.
At the beginning of today's session, it seemed like there was potential for some news to be made when it was announced that Rupert Murdoch's son, James, was on the line. But the younger Murdoch, whose influence in the company has been significantly diminished as a result of the phone-hacking saga, remained silent, except for when he briefly responded to an analyst's question about the satellite TV platform Sky Italia.
What's more, reporters were not given the opportunity to ask questions this time around.
News Corp. today posted a fourth-quarter net loss of nearly $1.6 billion, while quarterly revenue declined to $8.4 billion from $9 billion a year earlier. The results included a $2.9 billion restructuring charge "primarily related to the Company's publishing business." Operating income for the publishing segment slid to $139 million from $270 million a year earlier, a loss that the company attributed in part to "lower advertising revenues at the international newspapers ... as well as the absence of contributions from the closure of The News of the World in the U.K."
The company also disclosed that in the fiscal year ended June 30, it spent $224 million on costs related to "the ongoing investigations initiated upon the closure of The News of the World." Its scandal tab for the fourth quarter alone was $57 million.