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News Corp. print holdings would have lost $2 billion as stand-alone

December 21, 2012|By Meg James
  • Rupert Murdoch's publishing unit had a tough year.
Rupert Murdoch's publishing unit had a tough year. (AFP/Getty Images )

Rupert Murdoch's publishing empire, which includes the Wall Street Journal, would have recorded a $2.08-billion loss during its recent fiscal year if it had been a stand-alone company.

The loss was due to write-downs, declines in newspaper advertising sales and legal expenses stemming from government investigations into the phone hacking scandal at News Corp.'s British newspapers.

News Corp. made the disclosure in regulatory filings Friday as the company prepares to cleave itself into two separate, publicly traded companies: the new News Corp., which will include newspapers and HarperCollins book publishing; and the Fox Group, which will boast the lucrative television network and movie studio properties.

The break-up of News Corp., announced in June, is being designed to unshackle the more profitable side of the company from the declines in publishing. The split is expected to be completed next summer and current investors will get shares in both companies.

The filing provided investors with an outline of the financial health of News Corp.'s publishing business. If it had been a stand-alone company, the publishing unit would have generated $8.65 billion in revenue for fiscal 2012, down from $9.09 billion in fiscal 2011.

News Corp. had previously disclosed the impairment charges without shedding much light on which newspaper titles were particularly hard hit. The company said it recorded non-cash impairment charges of $2.6 billion during its fiscal fourth quarter, which ended June 30.

"These impairment charges were primarily the result of adverse trends affecting several businesses in New News Corp.'s News and Information Services segment, including secular declines in the economic environment in Australia," Friday's filing said.

News Corp. owns national, regional and dozens of community newspapers in Murdoch's native Australia.  "Australia in particular has experienced weakness in newspaper advertising reflecting a combination of a softening economy and declines in paid circulation."

The filing also said that Robert Thomson, 51, who just stepped down as editor in chief of the Wall Street Journal, would make a base salary of $2 million in his new position as chief executive of the new publishing company. The Australian native also will be entitled to an annual bonus, with the target amount of $2 million.

Murdoch, 81, will serve as executive chairman of the new company, and will also be entitled to a salary. That compensation hasn't been decided, according to the report. Murdoch will also serve as chairman and chief executive of Fox Group.

"We expect that his overall compensation for both roles will increase modestly compared to his current total compensation," the filing said.

Murdoch collected $30 million during Fox's past fiscal year, a 10% cut from the previous year. His compensation was clipped because of the phone hacking scandal in Britain.

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