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Writedowns push News deep into the red

THE Australian arm of Rupert Murdoch's News Corp has reported a $300 million loss for the past financial year, with large write-downs in the value of its mastheads reflecting the difficulties facing the newspaper industry and the unpredictable future of digital media.

THE Australian arm of Rupert Murdoch's News Corp has reported a $300 million loss for the past financial year, with large write-downs in the value of its mastheads reflecting the difficulties facing the newspaper industry and the unpredictable future of digital media.

Accounts filed with the corporate regulator show that in his final full year as chairman and chief executive of News Ltd, John Hartigan oversaw a write-down in the value of the assets of its holding company in the order of $713 million.

That turned the operating profit of News Australia Holdings into a significant loss. Last year, it reported a $300 million profit.

The group includes The Australian, Daily Telegraph, Herald Sun and other newspapers, plus a quarter stake in Foxtel, half of Fox Sports and 44 per cent of the New Zealand pay TV monopoly, Sky.

It reported an operating profit of $645 million, up 1.7 per cent on the previous year, with revenues of $2.9 billion, up a comparatively marginal $46 million.

The company paid a dividend of $1.2 billion, but received an interest bearing $1.2 billion loan from another News Corp entity.

The report noted that trading conditions deteriorated in the second half of the financial year - a common position for all publishers and other parts of the economy. It only briefly noted the main event that turned the accounts from black to red.

"The group also recorded impairment charges of $713 million during the year relating to certain publishing mastheads and titles and related goodwill," the report said. "The impairment charge reflects lower future forecast earnings for these businesses and uncertainties surrounding the impact and timing of future digital revenue streams."

The accounts do not indicate the performance of the various print, digital and TV businesses, but it is no secret that print newspapers are struggling in both circulation and share of the advertising market.

While their online versions have gained mass readership, the digital advertising revenue has not been enough to offset the declines in print, prompting News Ltd to launch its program of digital subscriptions, first for The Australian then for the major tabloids next year.

News is not alone in writing down the value of its print assets. Fairfax Media, publisher of the Herald and The Age, also turned an operating profit into a net loss in the past financial year after also writing down the value of mastheads. In August, it reported a loss of $401 million after write-downs of $650 million, despite a better-than-expected operating profit of $274 million after tax.

The same month, APN News & Media booked a $156 million charge against its New Zealand major newspaper mastheads - primarily The New Zealand Herald and the Herald on Sunday - which saw it post a $98 million loss for the six months to the end of June.


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