Feb. 5 (Bloomberg) -- News Corp., the media company controlled by Rupert Murdoch, slashed its fiscal 2009 profit forecast a second time after slumping advertising and a writedown led to the first loss in 13 quarters.

Operating income will fall about 30 percent in the year ending in June, more than a November forecast of a percentage drop in the “low to mid teens,” the New York-based company said today on its earnings conference call.

“The downturn is more severe and likely longer lasting than previously thought,” Chief Executive Officer Murdoch said in a statement. The company is implementing “rigorous cost-cutting,” including “major” expense reductions at local TVs, he said on the call.

The global recession is reducing ad sales at News Corp.’s Fox TV stations and newspapers including the Wall Street Journal, bought by Murdoch in December 2007 as part of the $5.2 billion acquisition of Dow Jones & Co. Operating income slumped 8.7 percent at the newspaper unit and 93 percent at the TV stations.

The company recorded an impairment charge of $8.4 billion before taxes in fiscal second quarter to reflect the declining value of its TV, newspaper and other assets. Excluding the impairment, profit fell to 12 cents a share. Analysts projected 19 cents, the average of 19 estimates compiled by Bloomberg.

Local Markets

“The advertising environment, particularly local markets, has degraded even further,” David Bank, a New York-based analyst at RBC Capital Markets, who rates the shares “outperform.” “It’s clear that a newspaper asset or a TV asset is worth less.”

The net loss of $6.42 billion, or $2.45 a share, compared with profit of $832 million, or 27 cents, a year ago. Sales dropped 8.4 percent to $7.87 billion in the period ended Dec. 31, missing the $8.38 billion average of 15 analysts’ estimates compiled by Bloomberg.

Analysts are estimating a 22 percent drop in fiscal 2009 operating profit to almost $4 billion, the average of 14 estimates compiled by Bloomberg.

News Corp. fell 54 cents, or 4.9 percent, to A$10.58 in Australian trading. The stock rose 33 cents to $6.94 in regular Nasdaq Stock Market trading before the release. The shares The stock fell 56 percent last year, steeper than the 38 percent drop for the Standard & Poor’s 500 Index.

Time Warner Inc., the world’s biggest media company, and Walt Disney Co. this week reported sales and earnings that missed analysts’ estimates because of flagging ad sales and fewer DVD purchases. Time Warner had its first loss in 14 quarters after it recorded a $24.2 billion goodwill writedown.

‘External Issues’

“It’s not surprising that these News Corp. numbers are weak as well,” Alan Gould, a Natixis Bleichroeder Inc. analyst who recommends buying the shares, said in a Bloomberg Television interview. “It’s mostly external issues right now.”

Murdoch, 77, is trimming costs and cutting jobs to cope with tightening consumer spending and the plunging ad market.

“The big thing that really is killing us is the lack of automobile advertising,” Murdoch said on the call.

Local TV ad sales slumped an estimated 19 percent last quarter, News Corp. said. The unit’s operating income fell to $18 million from $245 million a year earlier.

“Local TV advertising fell out of bed in the December quarter and will likely weaken in 2009,” Gould wrote in a Feb. 2 report.

Job Cuts

News Corp.’s film profit fell 72 percent to $112 million on declining DVD sales. The quarter’s movies, including “The Day the Earth Stood Still,” didn’t earn as much in box office sales as “Alvin and the Chipmunks” and “Hitman” in the year-ago period.

In November, Murdoch announced “across the board” job cuts at U.K. and Australian newspapers. The Wall Street Journal cut 25 newsroom jobs, managing editor Robert Thomson said today in a memo. Fox Interactive Media, the division that includes MySpace.com, is also eliminating jobs. News Corp.’s HarperCollins unit froze pay until after July 1.

Print ads in the U.S. newspaper industry declined 20 percent in the fourth quarter, according to estimates by John Janedis, a Wachovia Capital Markets analyst.

In November, News Corp. cut its forecast from an August projection for operating income to gain 4 percent to 6 percent off a base of $5.13 billion in the prior fiscal year.

News Corp. and its subsidiaries compete with Bloomberg LP, the parent of Bloomberg News, in providing financial news and information.

To contact the reporter on this story: Sarah Rabil in New York at srabil@bloomberg.net

Last Updated: February 5, 2009 19:05 EST