News Corp profits rise to pounds 645m

MATHEW HORSMAN

Buoyed by firmer results in the UK newspaper market and a stronger showing from Fox television in the US, Rupert Murdoch's News Corporation yesterday announced profits for the year to June of $991m (pounds 645m), up 19 per cent. Revenues climbed 13 per cent to $9bn (pounds 5.8bn).

The figures, bolstered by higher cover prices for the company's main UK newspaper titles, the Sun and the Times, nonetheless disappointed the market, and the shares lost 3p in London to close at 385p.

Analysts said the results were at the low end of expectations, and expressed concern over a troubled year for Ansett, the Australian airline and hotels group, 50 per cent-owned by News Corp. Airline industry analysts said that lower load factors had helped to halve the company's share of Ansett profits.

Analysts also speculated that Mr Murdoch is keen to sell the stake, to concentrate on his global media holdings.

The television sector saw profits rise to $379m from $320m a year ago.

The company's Fox Television network, as well as its recently formed cable network fX, were largely responsible. Fox ended the year ahead of CBS, one of the traditional big three networks, in market share among the key 18-49 age group, but behind ABC and NBC.

During the year, the company added six new stations to its network and sold two, leaving it with a net 12. The company also bought out the minority stake in Star TV, and launched two new subscription channels in Asia. With joint venture partner Zee TV, it started a second Hindi-language general entertainment channel.

Hollywood studio Twentieth-Century Fox had a better year, with its late release, Die Hard With A Vengeance, on target for a US box office take of $100m.

Despite higher paper costs, US publishing operations saw earnings climb by 13 per cent, helped by advertising revenues at TV Guide up 15 per cent year on year. Operating income at the book publishing division, principally HarperCollins, was down to $134m from $143m a year earlier, reflecting weaker retail sales in the UK.

In the UK, News International recovered sharply from the low levels of fiscal 1994, the height of the circulation price war. Since then, advertising revenues have risen strongly, while both the Sun and the Times have seen cover prices rise. Overall, operating income was up by 35 per cent on the low levels of the previous year, helped by a record circulation of 680,000 at the Times.

Commenting on the UK results, Leslie Hinton, News International's executive chairman, said:

"Our strategy of producing the best newspapers at the most competitive price is clearly vindicated by the impressive increases in circulation."

The flotation of BSkyB late last year generated a one-off gain of pounds 410m for News International, reducing the company's stake from 50 to 40 per cent. BSkyB announced record profits of its own last week.

Analysts expect Mr Murdoch to continue to invest in media and entertainment assets over the next year, with the emphasis on building capability in digital TV and multimedia.