News Corp. Estimates Cut On Ad Meltdown

Just so you have no illusions, nobody's going to get through this unscathed. Viacom just warned, and now News Corp. is getting its estimates reduced. Pali's Rich Greenfield, who knows a thing or two about the company, has reduced his full-year 2009 estimates by $.10 to $1.16. Current consensus is $1.24. The issues: A local ad meltdown affecting the newspaper business and TV stations and a decline in filmed entertainment.

Says Greenfield:

The greatest cut in our estimate is in News Corp’s Television segment, and primarily in the
O&O Station group, where trends appear to be deteriorating rapidly. Our forecast now
assumes a near 20% organic TV operating income decline in FY09 (the estimated reported
decline is a higher 27% given recent TV station asset sales).

But it's not entirely bad news. News Corp. sits on a hefty $6 billion in cash, and it should have $9 billion by year-end 2009. At a time when cash is king (and in this environment, it's definitely cash, not content, that is king), this gives the company a nice dose of security.

News Corp. shares are trading down almost 9% today to about $8.40. Its 52-week high was $24.95.