By: Ongoing advertising softness and the lackluster performance of News Corp.'s movie business to date led an analyst to downgrade the media company Friday.
Michael Morris of UBS said in a client note that ad trends will probably continue their downturn as companies face the possibility of defaults and contend with soft debt financing markets this year.
News Corp., whose properties include Dow Jones & Co., 20th Century Fox, Fox News Channel and the online networking site MySpace, is likely to be hit with long-term challenges due to its exposure to both the newspaper and television industries, which are both experiencing advertising slowness, Morris said.
The newspaper sector in particular has struggled as advertisers pull back on spending during the recession and increasingly shift to the Internet.
The analyst reduced his fiscal 2009 operating income forecast to $4.03 billion from $4.40 billion and predicted News Corp. will have to alter its fiscal outlook for the year when it reports second-quarter earnings, scheduled for Feb. 2.
Morris lowered News Corp.'s rating to "Neutral" from "Buy" and slashed its price target to $8.50 from $13.
Shares of the Rupert Murdoch-led company slipped 18 cents, or 2.1 percent, to $8.43 in afternoon trading. The stock is off 59 percent from its 52-week high of $20.76.
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