News Corp writes $2.8 billion off its publishing activities

Suddenly, you can see why News Corp is eager to split its news, TV and movie businesses in two…

Operating income in the group’s existing “publishing” division - comprising Dow Jones, the Wall Street Journal, The Daily, New York Post, UK and Australian newspapers and HarperCollins – has halved in the last year, according to the group’s disclosure of earnings for the fourth quarter ending June 30. News Corp blames worsening advertising at overseas newspapers, the absence of income from the shuttered News Of The World and the unquantified cost of April’s e-book price-fixing settlement with the U.S. Department of Justice. So poor is the outlook that News Corp is writing down the value of its publishing businesses by $2.85 billion in impairment and restructuring costs. That means News Corp as a whole swings to a $1.6 billion quarter loss, compared with a $683 million profit a year ago. The company says the write-off is mostly against its Australian businesses. President Chase Carey told Wall Street analysts: “Our publishing business are clearly in a restructuring mode.” He forecast a flat outlook for 2013, when he said the company will cut news publishing costs. Cuts are more likely in Australia than in the UK, where some cuts and property savings have already been made, Carey said.