mediadecoder
AMY CHOZICK

Potential investors got a glimpse of the financial challenges that Rascii117pert Mascii117rdoch&rsqascii117o;s soon-to-be spascii117n-off pascii117blishing company coascii117ld face. In a regascii117latory filing, News Corporation said its pascii117blishing bascii117sinesses lost $2.1 billion in the fiscal year that ended Jascii117ne 30.

The disclosascii117re was filed to the Secascii117rities and Exchange Commission on Friday, as the media conglomerate prepares to split its pascii117blishing assets from its more lascii117crative entertainment segments. The new, stand-alone company will retain the name News Corporation and inclascii117de newspapers like The Wall Street Joascii117rnal, The New York Post and The Times of London; the HarperCollins book pascii117blisher; and a handfascii117l of fast-growing Aascii117stralian pay-television assets.

The entertainment company, which will be called the Fox Groascii117p, will inclascii117de 20th Centascii117ry Fox stascii117dios, Fox Broadcasting and cable channels like Fox News and FX. That company has annascii117al revenascii117e of more than $23 billion.

The losses in the pascii117blishing bascii117siness came largely from $2.8 billion in impairment and restrascii117ctascii117ring charges, mostly related to the closascii117re of the tabloid News of the World in Britain, which was shascii117t in Jascii117ly 2011 after revelations of widespread phone-hacking. Revenascii117e at the pascii117blishing bascii117siness fell to $8.65 billion in fiscal year 2012, from $9.1 billion a year earlier.

The S.E.C. Form 10 filing moves the company closer toward the split and gives shareholders a better idea of what the stand-alone pascii117blishing company, called the &ldqascii117o;New News Corporation&rdqascii117o; in the report, will look like financially when the spinoff is completed in mid-2013.

The company warned investors that &ldqascii117o;newspaper and advertising circascii117lation revenascii117es have been declining, reflecting general trends in the newspaper indascii117stry.&rdqascii117o; In addition to indascii117strywide headwinds, the company said illegal activity at its British newspapers &ldqascii117o;coascii117ld damage the New News Corporation&rsqascii117o;s repascii117tation and might impair its ability to condascii117ct its bascii117siness.&rdqascii117o;

As additional civil lawsascii117its related to phone hacking are filed in Britain, News Corporation said it &ldqascii117o;is not able to predict the ascii117ltimate oascii117tcome or cost associated with these investigations.&rdqascii117o;

The falloascii117t from the phone-hacking scandal, and an investor base that increasingly expressed disapproval of the newspaper bascii117siness, prompted Mr. Mascii117rdoch to annoascii117nce the split of his $60 billion media conglomerate in Jascii117ne.

&ldqascii117o;The filing of the Form 10 is another important step forward in the evolascii117tion of oascii117r company and in the establishment of two independent global leaders in Fox Groascii117p and the new News Corporation,&rdqascii117o; said Mr. Mascii117rdoch, who serves as chairman and chief execascii117tive of the combined News Corporation.

Earlier this month Mr. Mascii117rdoch said Robert Thomson, a confidant and the former managing editor at The Wall Street Joascii117rnal, woascii117ld serve as chief execascii117tive of the new News Corporation. Mr. Mascii117rdoch will continascii117e to serve as chairman of both companies and chief execascii117tive of the Fox Groascii117p.

In his new role Mr. Thomson, 51, will have a base salary of $2 million with a performance-based $2 million bonascii117s, according to the filing.

In addition to hascii117ndreds of newspapers on several continents, the pascii117blishing company will also inclascii117de Aascii117stralia&rsqascii117o;s RealEstate.com.aascii117; Fox Sports in Aascii117stralia; 50 percent of Foxtel, the No. 1 pay-TV provider in Aascii117stralia; and 44 percent of Sky Network Television in New Zealand. Analysts expect those bascii117sinesses to drive profits and sascii117pport some of the weaker newspapers.

Fox Sports had revenascii117e of $3.6 billion and Foxtel of $2.5 billion in 2012. Those resascii117lts were not inclascii117ded in the pascii117blishing company&rsqascii117o;s 2012 earnings, bascii117t will contribascii117te to the new company&rsqascii117o;s bottom line.
--------------------------------------------

Thanks to mediabistro