How bad is local advertising? Ask Fox
We’re guessing Rupert Murdoch isn’t smiling quite so much right now. Not after News Corp reported a larger-than-expected drop in quarterly profit and cut its full year outlook.
The problem? In case you haven’t heard, advertising, particularly at the local level, is in terrible shape. Any company with local TV stations — and News Corp is one of them — is hurting right now.
Indeed, Fox Television Stations’ first-quarter operating income fell 48 percent from the same period last year. Overall, News Corp profit fell 30 percent.
What seems to be surprising media-watchers and analysts is the extent of the advertising pullback. Now everyone seems to be rushing to ratchet down their estimates well into 2009.
“There’s probably still going to be negative sentiments on the sector since people are starting to realize…that we’re probably not going to be getting out of a recession for another three quarters or so,” said Miller Tabak analyst David Joyce.
“Going forward, the debate will now shift to whether this new more dour outlook represents just the type of earnings reduction investors will need to get interested in the stock,” said Citigroup’s Jason Bazinet. “Or, alternatively, it could suggest we’re still in the early innings of a protracted downturn that could extend beyond fiscal 2009.”
Next up: Walt Disney Co this afternoon.
Keep an eye on:
- Media companies that lapped up millions of political advertising dollars in 2008 will feel the loss of that money next year (Reuters)
- What Yahoo needs is a new CEO — someone to make everyone believe that a true leader is at the helm, ready to fight (TechCrunch)
- Johnson & Johnson has consolidated U.S. creative duties on more than 35 prescription drug brands at WPP Group and Interpublic Group (AdWeek)
- Barack Obama’s win on Tuesday captured the attention of more than 71 million television viewers, a record audience for a presidential election (LA Times)