News Corporation's Australian operations turned the group's second quarter earnings into a sea of red ink with $US537 million ($703 million) in writedowns on its newspapers and its Foxtel holding.
Chief finance officer Bedi Singh told the analysts call that News Corp's advertising revenue here was down 15 per cent in Australian dollars and forecast cost reductions of $US40 million in the second half, with ongoing cost cutting at the mastheads.
Overall revenue was down $US45 million or 2.1 per cent for the quarter, but stronger results from book publishing and REA Group pushing earnings before interest tax depreciation and amortisation (EBITDA) up 16 per cent to $US325 million.
Co-chairmen Rupert and Lachlan Murdoch were both in Australia last month as the group finalised writedowns of $US227 million on News Corp's half share of Foxtel and a further $US310 million to impairments of the Australian newspapers, which took the book value of the mastheads to $US420 million ($550 million).
On top of the writedowns News accounted for another $US17 million ($22.3 million) written off on Foxtel's investment in Ten Group. Including Telstra's half share in the cable provider, Foxtel's loss on Ten is $44.6 million.
The writedowns were partly offset by a one-time gain of $120 million as a result of cash proceeds from the sale of REA Group's European business.
Across the group advertising was down 8.3 per cent to $US748 million, and News & Information Services revenue was down $US97 million or 6.8 per cent, helped by a strong result at News America Marketing
The bright spots were REA, which saw a 16.3 per cent rise in revenue ($US34 million) in the second quarter and a 30 per cent rise ($US22 million) in EBITDA.
HarperCollins EBITDA was also up 31.6 per cent ($US18 million).
The impact of Netflix and Stan saw Foxtel's churn jump from 10.6 per cent last year to 15.6 per cent, with Foxtel's revenue down slightly in Australian dollars but EBITDA up 30.8 per cent ($US12 million) for the quarter.
Cashflow for the half plunged from $US178 million to a negative $US160 million, as the $US280 million payment of its settlement of the class action against News America Marketing fell due.
