News Corp. (NWS) shares close below $9.50 on August 14?

Rupert Murdoch's media empire may be profitable but it's shaping up to be a grim summer for News Corp., owing to uncertain revenue prospects for key properties, continuing management and staff shakeups, and a critical advertising picture.

The situation at MySpace embodies many of the challenges facing the company. In April, the company replaced several key executives as the social networking site's growth stagnated. Layoffs are rumored to be in the works, and there is also concern over the coming expiration of a large ad deal with Google.

Traditional media properties are also under pressure at News Corp. and elsewhere. The newspaper advertising market is "horrible," say experts, and newspapers' online ad revenue has declined sharply. Television advertising, another important revenue generator for News Corp., is also faltering. News Corp.'s television unit reported FY 2009 third quarter operating income of just $4 million, a decline
of $415 million versus the same period in 2008, "due to decreased operating results at
the Fox Television Stations, FOX Broadcasting Company and STAR." The company blamed weak financial, auto, and movie advertising trends. At least one of those trends is likely to continue, as the nation's auto industry is restructured and thousands of dealerships close their doors. Consumer spending, which drives many ad campaigns, has contracted since last year, and will likely remain down as the economy remains in a recession and millions of people remain out of work. Mudoch himself acknowledges that the national unemployment rate is likely to rise to 11%.

There are some bright spots for News Corp., however. Murdoch claims its movie business is doing well, and one analyst believes that the negative perception of several News Corp. businesses are "unjustified," considering the company's positive cash flow projections. 

Prediction: News Corp. class B shares (NWS) will close below $9.50 on August 14, 2009, owing in part to continued weakness in the global advertising market and uncertainty over several important properties, including MySpace.

Image: Rupert Murdoch in Davos, Switzerland, earlier this year (flickr/World Economic Forum, creative commons license)