With attention focused on the phone hacking and alleged bribery scandal in Britain, it's easy to overlook the impact of Europe's financial crisis on News Corp.'s operations.
But analysts keyed in on a troubling figure at the company's wholly owned satellite TV provider, Sky Italia, whose subscriber base fell by a net 86,000 customers to end the quarter with 4.94 million.
Revenue at News Corp.'s direct broadcast satellite television business was flat at $923 million, while segment operating income rose to $40 million from $17 million, helped by currency movements.
Chief Operating Officer Chase Carey was asked about the negative impact of Italy's recession. The country has said it expects its gross domestic product to fall 1.2 percent this year.
QUESTION: I don't remember the last time Sky Italia lost this many subscribers, but I'm just trying to get a sense of if anything is structurally changing in that market — what's the competitive situation there and where the subscribers are going.
RESPONSE: The Italian population is going through an incredibly difficult time that has people concerned about the future ... . I'm not an economic historian but I think this is probably one of the most challenging periods of time the Italian economy has faced in decades. It really started last year, and probably really started to manifest itself in our business in the beginning of this year. But there is no question consumers are deeply concerned about the short term future in Italy ....
I think we feel excited there about the long term but I think we recognize we have a tough period ahead of us short term.
- Sky Italia