AUSTRALIA: Murdoch talks up News Corp papers' profits
Despite revenue problems in the print media, the tycoon said things are still rosy, especially with Internet advertising
Thursday, November 16, 2006
Media mogul Rupert Murdoch said yesterday his News Corp was in a "very healthy" state despite flat advertising revenue in major newspaper markets across the globe.
The Australian-born press baron also told a shareholders meeting in his home town of Adelaide that his myspace.com Web sites, which he bought last year in a US$580 million deal, held out hope of boosted ad revenues in the future.
"In our major markets of the United States, Australia and Great Britain the advertising market is pretty flat," the company chairman and chief executive told the meeting.
"In some places it is down a fraction, in other places it is up a fraction but nowhere would you say the consumer marketing economy is buoyant," he said, without providing details.
The varying results in different markets meant the group's newspaper business, which includes the Times of London, the New York Post and the Australian, would experience flat earnings in fiscal 2007.
"We feel that they are all very profitable and they will make the same sort of money that we did last year, before tax," he said.
New York-based News Corp, which was born in Adelaide, said last week its newspaper operating income was flat at US$124 million in the first quarter of the 2006-2007 fiscal year, while operating income was at US$851 million.
Murdoch said his company was comfortable with earnings guidance of 14 percent to 16 percent growth in operating profit this year and next, up from last year's record US$3.9 billion.
"You could say we're in a very healthy state. That would add up ... to a profit before interest and tax of something in excess of US$4 billion this year," he said.
Murdoch also said News Corp had begun testing its myspace.com Internet chat Web site in Japan and would also kick off a version in Italy shortly.
Myspace was an "extremely effective form of advertising," which was very promising, he said.
He also said the company believed it had "too many" TV assets in the US and would look to sell four or five of the smaller ones. He gave no further details.
Murdoch also warned that Australia was being left behind some Asian countries because of its poor broadband Internet access.
He said the Australian government and telco giant Telstra needed to invest up to A$12 billion (US$9.2 billion) to improve broadband speeds.
"I think it is a disgrace, I think we should be spending -- the government with Telstra should be spending -- A$10 billion or A$12 billion on it [so it gets to] every town in Australia]," he said.
"They do it in Japan, they do it in South Korea, we should be able to do it here," he said. "We are being left behind and we will pay for it."
Telstra last year launched a new high-speed broadband service but said regulatory constraints meant it would only be available in areas where its competitors already offered fast broadband.
Another Australian media baron, James Packer, head of Publishing and Broadcasting Ltd, has been equally critical of Australia's broadband speeds.
Date Posted: 11/16/2006