News Corp, which is trying to stem newspaper revenue declines, could charge for access to its news Web sites by the middle of next year, and might break off its relationship with Amazon.com’s Kindle e-reader if it cannot get better terms.
Rupert Murdoch, chief executive of the global media empire, said on Thursday that he is unhappy with the Kindle’s control of relationships with newspaper subscribers, and might seek a better deal with rival e-reader maker Sony.
Amazon officials did not return calls seeking comment.
Murdoch’s comments come after News Corp (NASDAQ: NWSA), whose properties include The Wall Street Journal, cable programmers, local TV stations and movie studios, reported a 10.7 percent drop in quarterly revenue to $7.67 billion, which was in line with expectations, according to Reuters Estimates.
It forecast operating revenue for fiscal 2010, which ends next June, would rise in the high single digits on 4 percent revenue growth.
“I think it looks reasonable,” said RBC Capital Markets analyst David Bank. “They gave a pretty realistic view of where the growth is coming from and where it is not going to come from, particularly the advertising-supported businesses.”
Shares of News Corp were flat in extended trading.
Murdoch said the worst might be over. But another fight looms: persuading millions of people to pay for news on the Internet when most get it for free.
He did not provide details on a conference call with reporters and analysts, but said that he wants to make people pay for access to his news Web sites by the middle of the 2010 fiscal year, which ends next June.
“An industry that gives away its content is cannibalizing its ability to do good reporting,” Murdoch said. The Wall Street Journal, owned by News Corp’s Dow Jones unit, now offers some paid and some free stories.
Web sites visited by millions
The move would affect news Web sites visited by millions of people around the world, including popular tabloids like the New York Post and The Sun in London, as well as other papers such as The Times of London and The Australian.
Publishers including The New York Times are searching for ways to charge for news online, convinced that they must not give news through search engines such as Google (NASDAQ: GOOG) and Yahoo (NASDAQ: YHOO). Many new media experts say it would gut the ad revenue they get now and drive people away.
News Corp’s results reflected the tough conditions that media companies have operated in since the financial crisis took over headlines last year.
Its net loss was $203 million, or 8 cents a share, for the fiscal fourth quarter, ended June 30, primarily because of charges at the unit that includes the MySpace social network. Net income last year was $1.13 billion, or 43 cents a share.
TV revenue, including at its Fox Television Stations unit, fell as local TV station ad revenue fell 27 percent. The HarperCollins book publisher lost $1 million on a 20 percent revenue decline.
Reports lower ad revenue, uptick in DVD sales
News Corp’s “other” segment, which houses MySpace and Fox Interactive Media, reported an operating loss of $136 million because of lower ad revenue at MySpace, which is facing rising competition from Facebook.
Revenue rose, however, at the filmed entertainment division, helped by DVD sales of films such as “Slumdog Millionaire” and “Marley & Me.” Cable revenue also rose.
News Corp shares have more than doubled since hitting a low of $4.95 in March, as big media companies from Time Warner Inc to Viacom and CBS Corp have said in recent weeks that ad declines are beginning to ease.
News Corp’s results reflect “the general notion that the other media conglomerates have reiterated over the past week that the worst is behind us,” said Miller Tabak analyst David Joyce.
Excluding impairment charges at MySpace and other business units, adjusted operating income was 19 cents a share, compared with 30 cents last year, about in line with Street estimates.