NEW YORK – News Corp. Ltd. on Wednesday said an industry-wide advertising slump hurt its fiscal first-quarter earnings, and the company vowed to put its failed 18-month takeover bid for satellite broadcaster Hughes Electronics Corp. behind it.
Ten days ago, News Corp. withdrew its proposal to merge Hughes' DirecTV satellite service with its own stable of satellite services, which would have fulfilled chairman and chief executive Rupert Murdoch's dream of a global satellite distribution network.
But his surprise withdrawal paved the way for Hughes' rival EchoStar Communications Corp. to win acceptance for its takeover offer for the General Motors Corp.-owned unit.
"Life is too short,'' Murdoch quipped in response to questions whether News Corp. would lob a counterproposal or try to derail EchoStar's effort in Washington, where the deal is sure to face close regulatory scrutiny.
"We're not going to obsess about it,'' Murdoch said. "We are focusing on picking ourselves up and getting on with life.
The company, which also owns the Twentieth Century Fox film studios and a host of cable networks, newspapers and satellite assets, reported a profit of $83 million, or 6 cents per American depositary receipt (ADR), excluding one-time items, for the first fiscal quarter ended Sept. 30.
In the prior-year period, it earned $149 million, or 14 cents an ADR.
Revenues rose to $3.40 billion from $3.24 billion.
News Corp. ADRs closed at $27.70, down 5 cents, on the New York Stock Exchange.
The company's television unit was hurt by the same ad slump afflicting the rest of the media business, exacerbated by $100 million in lost ad revenue and cancellations that followed the Sept. 11 attacks. Higher programming costs also took a toll on the company.
Partially offsetting that weakness was a strong performance at its filmed entertainment unit, thanks to Twentieth Century Fox's box office hit Planet Of The Apes, and syndication revenues from television shows like Buffy The Vampire Slayer, The Practice, and Ally McBeal.
Including the effects of accounting changes in both 2001 and 2002, the company reported a net profit of $73 million, or 5 cents a share, compared with a loss of $268 million, or 27 cents a share in the year earlier period.
The Fox Entertainment Group, which is 83 percent owned by News Corp. and holds its film, television and cable assets, reported a net loss of $22 million, or 3 cents a share for the quarter, compared with a year-ago loss of $458 million, or 63 cents a share. Both quarters include an accounting costs, but 2000's loss was affected to a much greater degree.
Excluding those accounting costs for new regulations about film and TV production, Fox earned $4 million, or 1 cent a share.
Fox shares closed at $23.11, up 2.7 percent, or 61 cents on the Big Board.
Chief Financial Officer David DeVoe reaffirmed 2002 News Corp.'s operating income would grow in the high-single digits to low double digits from 2001's $1.67 billion. A month ago, the company lowered expectations from a range of 20 percent and 26 percent, citing the impact of the Sept. 11 attacks.
DeVoe also said the company's cash flow would grow in the low-to-mid teen percentage range over fiscal 2001's $1.13 billion.
Murdoch added that the guidance assumes no recovery in the ad market during the year.
Company officials said they are seeing some signs of life in the moribund TV ad market. For instance, Fox had expected November ad sales to be down 15 percent to 16 percent, but because spending in the near-term, or ``spot'' market, appears to be picking up, Fox expects it to be down 8 percent to 9 percent.
Murdoch said that figure could rise even more, but he also cautioned that "visibility is so poor, it's hard to predict beyond the next couple of months.''
News Corp.'s television unit, which includes the Fox television network plus a series of TV stations that were recently expanded by its acquisition of 10 stations from Chris-Craft, saw its operating income trimmed in half to $52 million, on a pro forma basis, assuming the inclusion of those stations a year ago.
DeVoe said the company was on track for $175 million in cost savings and additional revenue in its fiscal 2002 as a result of the Chris-Craft deal.
Its filmed entertainment unit saw its operating income and revenue rise 24 percent.
Its cable network unit -- which includes Fox News Channel, FX, a series of sports channels and the Los Angeles Dodgers baseball team -- saw its operating income drop 18 percent, despite a 19 percent increase in revenues.
The company attributed the income decline to increased sports programming costs, which offset a stronger quarter for Fox News and the FX channel.
DeVoe conservatively estimated that the company would realize $200 million in cost cutting across the company in fiscal 2002.
Murdoch declined to rule out job cuts, but he noted, "We've avoided job cuts everywhere we can. But we've told people that the costs they save are going to save jobs, maybe even their own jobs.''
News Corp. is the parent company of the Fox News Channel, which operates FOXNews.com.
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