UPDATED: News Corp Has Negative U.S. Tax Rate, But U.S. Is Its Cash Cow
UPDATED July 14, 2011: REUTERS RETRACTS claim about negative tax rate [Argh and apologies]
Updated: 
A beleaguered News Corp announced Tuesday that it’s using $3.2 billion to “to boost its share buy-back programme from $1.8bn to $5bn” in the face of a $7 billion drop in valuation over a four-day period.
The company, which generates about 75 percent of its revenue in the U.S., can afford this due in part to the $4.8 billion in tax refunds it has received over the past four years, netting it an effective -46% tax rate. In part, this was due to a 2008 paper loss of $8.4 billion — “a pre-tax non-cash impairment charge related to goodwill and identifiable intangible assets.”
Media attention is on Murdoch’s bid to buy BSkyB (British Sky Broadcasting Group PLC). BSkyB is a satellite broadcasting company that operates in the United Kingdom and the Republic of Ireland; it has more than 10 million subscribers, making it the largest pay-TV broadcaster in the U.K. News Corp currently owns 39.1% of BSkyB as well as all of Sky Italia (about 5 million subscribers) and almost half of New Zealand’s SKY Network Television Limited (<1 million subscribers).
In the U.S., Fox News had $1.5 billion in revenue in 2010 (a 27% year-to-year increase), even though its audience (like that of all cable stations) was declining. For FOX, in 2010 the prime-time audience fell 11% to a median viewership of 1.9 million.
For context, News Corp had revenue of about $33 billion in calendar 2010.
6 Responses to “UPDATED: News Corp Has Negative U.S. Tax Rate, But U.S. Is Its Cash Cow”
What a fine example of why tax loopholes really, really need to be closed!
The story is BS. The author of the piece reversed the numbers: what actually happened was that News Corp *paid* 4.8 billion in tax. You can check the financials yourself over at Edgar: the cash payments are negatives, which is consistent w/ interest payments (also negative) and proceeds from sales of assets (positive)
Journalists typically suck at tax and accounting, and even if Johnston is in the 99th percentile of journalists for accounting / tax knowledge, he’s still a journalist.
Dear, jpe12 — assertions don’t “make it so”.
Here’s what the journalist wrote:
“The relevant figure is the cash paid tax rate. This is the net amount of corporate income taxes actually paid after refunds. For those four years, it was minus 46 percent, disclosure statements show.”
Given that you are an anonymous writer (without an editor) who doesn’t even provide a link to contrary evidence … I believe Reuters and Johnston until I see a retraction.
[...] 4-of-a-Kind Join Date: May 2006 Posts: 1,637 News Corp Has Negative U.S. Tax Rate, But U.S. Is Its Cash Cow | The Moderate Voice [...]
@ Kathy: Johnston has now removed the column.
And here’s the retraction.
http://www.theatlanticwire.com/business/2011/07/david-cay-johnston-getting-news-corp-tax-story-wrong/39943/