News Corporation (NWS)

NWS posted a $6.4 billion loss in its Q2 2009 particularly because of declining earnings from its television and film segments. As the company is already reeling from decreased advertising in its print publications, NWS can ill afford to suffer losses in TV/film. Moving forward, the company will have to shift to more syndication or subscription services or otherwise face the prospect of liquidating some of its less profitable business segments. Overall, it appears that things could continue to get worse for NWS as its locked into many businesses (newspapers, tv stations, movie studios) that are on a secular decline as advertisers are reducing spending and moving ad money to other outlets like the Internet.

NWS relies on the publishing industry for roughly a quarter of its yearly revenues. However, the publishing industry as a whole is declining secularly primarily because of the rise of the Internet. Furthermore, the cost of newsprint rose by over 25% in 2008, reducing the company's margins on its publications. Because of this, it is becoming increasingly more vital for the company to diversify into healthy or growing businesses, like its DBS segment. However, as of now, the company's reliance on print advertising leaves it vulnerable to the secular shift away from print. For example, the Wall Street Journal's ad revenue is down an estimated 20% in 2008, meaning that NWS must seek new distribution channels to save the advertising streams of its publications.

Many of NWS's businesses rely primarily on advertising revenue, like its newspapers and cable broadcasting companies. However, advertising expenditures are closely linked to macroeconomic health and have declined greatly in recent years because of the global economic recession. Furthermore, many advertisers have switched to Internet advertising because of its low costs which further hurt NWS's advertising revenues.