News Corp. to Focus on Improved Profit
Media baron Rupert Murdoch said Thursday that his sights have shifted from making acquisitions to improving earnings at News Corp.
The Australian-based News Corp. secured its place over the past decade among the global communications powerhouses partly by buying a U.S. movie studio, several television stations, magazines and book companies.
But the acquisitions of the 20th Century Fox movie studio, Metromedia TV stations, TV Guide magazine and Harper & Row Publishers as well as costs in starting the Fox TV network and the British satellite-TV service called Sky Television have left the company with a debt of more than $6 billion.
Murdoch disclosed his plans to forgo major acquisitions and focus on earnings improvement and the company’s current businesses in an interview published Wednesday in the Wall Street Journal. He confirmed some of the details of that account by telephone.
“We are not going to purchase anything major,” the chief executive of News Corp. said in the phone interview.
“We are sorting out our portfolio of media assets. Our main concentration is going to be on developing our earnings,” he said.
Only a year ago, Murdoch was planning to create a second company that would be used as an acquisition vehicle. But the investment banker was able to line up only about half of the $1 billion sought, and Murdoch dropped the plan.
News Corp. reported in February that its earnings tumbled 67% to $117 million in the first half of its fiscal year ended Dec. 31, as its revenue rose 8.3% to $3.17 billion.
Murdoch said one of his top priorities would be Sky Television, which offers four channels of programming and has 450,000 paid subscribers in the United Kingdom.
The service, launched last year, already has cost about $400 million and may cost another $150 million or more before it reaches the break-even point of 2 million paid subscribers late next year, Murdoch said.
The company announced March 26 that it had agreed to sell its Star magazine, a supermarket tabloid that features heavy doses of celebrity gossip along with health and beauty tips, for at least $400 million in cash and preferred stock to G. P. Group Inc., the publisher of the archrival weekly, the National Enquirer.
Media analyst Peter Appert of the investment firm C. J. Lawrence, Morgan Grenfell, said he expected the investment community would take a positive view of Murdoch’s plans to try to improve earnings.