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Attacks hurt News, Viacom
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October 2, 2001: 2:34 p.m. ET
News Corp. expects to fall short of targets; Viacom sees $500M in costs
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NEW YORK (CNNfn) - Media powerhouse Viacom Inc. said on Tuesday that it expects about $500 million in costs this year due to the Sept. 11 attacks, and Rupert Murdoch's media group News Corp. said it had lost millions of dollars in ad revenue due to the incident.
Viacom and News Corp. joined a host of media companies that have warned of financial fallout from the attacks on the World Trade Center and the Pentagon, which have left 5,700 people dead or missing.
Viacom President Mel Karmazin said given the uncertainty in the market, the company had to take a bearish view, though it was not encountering any difficulty in selling ads.
And News Corp. President and Chief Operating Officer Peter Chernin said his company have lost many tens of millions in ad revenue in the weeks immediately following the Sept. 11 incident.
Shares of Viacom (VIA.B: up $0.80 to $34.10, Research, Estimates) moved higher in early afternoon trading on Tuesday, while News Corp. (NWS: up $0.56 to $25.45, Research, Estimates) American depositary receipts (ADRs) also stayed on the upside.
Karmazin said Viacom expects about $200 million in costs in the third quarter related to the attacks, with about $85 million in lost advertising revenues at its CBS television network. Viacom's best guess for fourth-quarter costs related to the attacks was $300 million, he said.
The company's TV stations group had lost about $40 million in ad revenue in the third quarter, he said.
News Corp., which owns the Fox television network and TV stations, said it now expects operating income for its 2002 fiscal year to grow in the high single-digit to low double-digit range, compared with earlier estimates of about 20 percent growth.
That would put News Corp. on track to earn about $1.8 billion to $1.85 billion in operating earnings, compared to $1.67 billion for the 12-month period ending June 2001. Earlier estimates pegged fiscal 2002 operating earnings at $2 billion-to-$2.1 billion.
Numerous other media companies including AOL Time Warner Inc. (AOL: down $0.52 to $32.25, Research, Estimates), the parent of CNNfn and CNNfn.com, have also warned that the terrorist attacks would worsen an advertising slowdown that had already been hurting earnings.
-- from staff and wire reports 
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