News Corp. Plummets as Profit Trails Estimates on Ad Revenue

  • Advertising sales hurt by foreign currency fluctuations
  • Excluding currency swings, total revenue was up 2 percent

Shares of News Corp., controlled by billionaire Rupert Murdoch, had a record decline after the publisher of the Wall Street Journal and New York Post reported fiscal second-quarter profit that missed analysts’ estimates.

Earnings, excluding some items, were 20 cents a share in the period ended Dec. 31, trailing the 21-cent average of projections compiled by Bloomberg. Revenue fell 4 percent to $2.16 billion from a year earlier as advertising sales declined, hurt by the strength of the U.S. dollar, the New York-based company said Thursday in a statement. Analysts had estimated $2.13 billion on average.

News Corp. shares slid as much as 10 percent to $10.96 in New York trading, the biggest intraday decline since the company’s split from 21st Century Fox Inc. in June 2013. Through Thursday, they had dropped 8.6 percent this year.

The results undercut the company’s strategy of increasing digital and international sales to compensate for declining print revenue at its newspapers as readers increasingly get their news online. Chief Executive Robert Thomson said Thursday that while digital ad revenue is growing, print “remained challenged” and News Corp. is focused on cutting costs at its newspapers in Australia and the U.K.

Foreign currency fluctuations “have been particularly volatile,” Thomson said in the statement. Excluding those swings, News Corp. said total revenue increased 2 percent. The company, which makes about 55 percent of its annual sales outside of North America, gets hurt when it converts revenue from countries with weaker currencies into dollars.

  • Fourth-quarter sales at the news unit, which contributes about two-thirds of revenue, dropped 8 percent to $1.4 billion.
  • Advertising revenue fell 12 percent while circulation and subscription sales declined 5 percent.
  • Net income was $63 million, or 11 cents a share, compared with $143 million, or 24 cents, a year earlier. 

Murdoch split his company in two in June 2013, giving 21st Century Fox Inc. the more lucrative entertainment assets and leaving News Corp. with his print properties, which include newspapers and the book publisher HarperCollins.

Bloomberg LP, the parent of Bloomberg News, competes with News Corp. in providing financial news and services.

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