MySpace Accounts for a $363 Million Drop in News Corp's Profits

News Corp., one of the largest media companies in the world, posted its financial results for the fourth quarter of the 2009 fiscal year and it doesn't look good for the media giant. While net income was of $5.4 billion last year, 2009 shows the company heading for a loss of $3.4 billion. All of its businesses are underperforming but a big part of this loss can be attributed to Fox Interactive Media, a subsidiary that handles MySpace among other smaller sites, which posted a $363 million loss.

“I am pleased that we are reporting adjusted operating income right in line with the guidance we previously provided during the last six months which reflects a decline of approximately 30%,” News Corp. CEO Rupert Murdoch commented. “The past year has been the most difficult in recent history, and our 2009 financial performance clearly reflects the weak economic environment that we confronted throughout the year. We streamlined all our businesses and continue to do so, at the same time adjusting to the revolutionary changes taking place throughout the media industry.”

All segments – TV, newspapers, cable, etc. – performed poorly, with slumping ad sales and several big expenses dragging income down. In the fourth fiscal quarter alone, the company lost $203 million, with revenue dropping to $7.67 billion, a 10.5 percent decline. Significant contributions to the drop, apart from the overall economic environment and slumping ad market, were made by the $403 million in impairment charges and the cost of the restructuring – read "massive layoffs" – at MySpace, which accounted for another $228 million.

News Corp. went from $1.1 billion net income in the financial Q4 2008 to $203 million loss this year, with Fox Media Interactive accountable for most of the $680 million in impairment and other operating charges. The poor results of MySpace don't come as a surprise from a site that has been losing users, pageviews and, most importantly, advertising money and which shows no sign of recovering.