|You can't change the font of "text" that is the result of a formula.|
Since the text isn't really in the cell, there is no text to format.
This code will place the value displayed in C1 into D1 and then format D1 the way you want.
Since it uses the worksheet_Change event, it will run whenever a value in Column A or B is changed.
Private Sub Worksheet_Change(ByVal Target As Range)
Dim chrPos As Integer
'Was change made to Column 1 or 2?
If Target.Column < 3 Then
'Copy value in C1 to "D" & Target.Row
Range("D" & Target.Row) = Range("C" & Target.Row)
'Loop through characters in "D" & Target.Row looking for CHAR(10)
'When found, jump out of loop
For chrPos = 1 To Len(Range("D" & Target.Row))
If Asc(Mid(Range("D" & Target.Row).Value, chrPos, 1)) = 10 Then _
'Italicize the Bottom Line
Range("D" & Target.Row).Characters(Start:=chrPos + 1, _
Length:=Len(Range("D" & Target.Row))).Font.Italic = True