Earnings Call: News Corp’s Murdoch Offers Bleak Outlook; ‘We’ve Never Tolerated Fat’

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News Corp (NYSE: NWS) CFO David DeVoe led off the call, seeking to reassure investors that, despite the Q4 loss, the company can clearly meet its debt obligations, insisting that it has enough cash on hand to pay the maturities coming due. In terms of guidance, DeVoe emphasized the weakness in marketer and consumer spending. Then, in grave tones, CEO and Chairman Rupert Murdoch came on, offering a bleak outlook mixed with confidence to manage through it. Murdoch: “This is the worst global economic crisis since News Corp was created and has been deeper than anyone predicted. We’ve reduced headcount and cut other costs. Even in flush times, this was never a company that tolerated fat. So we’re well positioned to handle this crisis right now. This why the WSJ is the only newspaper growing or what social networking is becoming mainstream. We never feared change and risk. We’re putting all our business through rigorous strategic reviews.”

— The U.K. newspaper group reported operating income in local currency terms in line with that from a year ago, as the absence of accelerated depreciation on the decommissioned printing presses was offset by 10 percent lower advertising revenues. Circulation revenues increased slightly during the quarter mainly from price increases.

— “WSJ has been the only paper to increase circulation,” Murdoch said WSJ Digital Network –which includes the website and AllThingsD — has seen traffic grow 76 percent over the past year.

All is not lost: Murdoch then turned to TV and the state of the ad economy. “Every time there’s a recession, advertising always comes back stronger. I’m not being flippant; I’m not saying we’ll return to record levels. But all is not lost. If our forecast is correct, we’ll make $3.5 billion operating income this year.” More after the jump.

No fat to cut: We’ve only eliminated 800 positions across all the Fox companies and reduced the open positions, said President/COO Peter Chernin.

Nothing worth buying: Murdoch, asked about possible acquisitions, said: “I’ve looked around and I don’t see anything I want to buy. But for the businesses that we will buy, I want them to have a direct relationship with the consumer.”

Newspaper schadenfreude?: Murdoch: “I’m happy with all our newspapers. There’s a huge appetite for news. If we continue the way we’re going, we might not have any competition at the end of it all.” As for the WSJ’s position, Wachovia analyst John Janedis said that company’s newspaper revenue trends look much like they did in the early part of the last downturn a decade ago. Murdoch brushed it aside, saying, “We’re down 20 percent in advertising, but we will not cut our rates. I think the NYT is, but we’re not going to do it.”

On Search and Display: Those who rely on search have a “good thing going,” but as has become crystal clear, display is a different story for many publishers. “We’re doing well at WSJ.com and if we get $120 million [in revenues] that’s fine. But overall, there’s the almost infinite increase in display inventory, driving prices down. We have to find new ways to drive advertisers to audiences. Driving data is good. We’re doing a lot to refine what we’re learning about our web users and it’s paying off.”

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