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August 7, 2009

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Murdoch is optimistic despite quarterly loss at News Corp

NEWS Corp reported that it lost US$203 million in the latest quarter due to a huge writedown at MySpace, but Rupert Murdoch said his global media conglomerate is seeing signs of life in moribund advertising markets.

Results for the quarter to June 30 narrowly beat analyst expectations.

Despite the loss, the sprawling New York-based media company that owns The Wall Street Journal, the Fox broadcast network, Sky Italia and newspapers in Britain and Australia said the economy was slowly turning around and predicted revenue would grow in the current fiscal year.

"Advertising markets, while weak and particularly hurt by the slump in cars and finance, have shown some good signs of life," Murdoch said on a conference call on Wednesday. "I think the worst may be behind us, but there are no clear signs yet of a fast economic recovery."

The fiscal fourth quarter loss of 8 US cents per share compares with profit of US$1.1 billion, or 43 cents per share, in the same quarter a year ago.

The results included a US$450 million impairment charge and US$180 million for restructuring charges at Fox Interactive Media, which houses MySpace. MySpace recently laid off 700 workers and broke the lease on office space in Los Angeles that it no longer needed.

News Corp bought MySpace for US$580 million in 2005, but reflecting the social networking site's stalled growth, the company recently shuffled its leadership team.

The quarterly earnings conference call also marked the first time that News Corp's new president and chief operating officer, Chase Carey, addressed investors since being rehired by the company on July 1.

"We are in an industry that seems to be in a state of shock from the combination of the economic crisis and the digital revolution," Carey said. "On the broadcasting side, we have an ad-supported business model that does not work."

Murdoch indicated Carey would have a couple major tasks: fixing the Fox broadcast network and making sure the company's newspapers make money online.

The Wall Street Journal is one of the few newspapers that successfully charges subscribers for its Internet version and Murdoch said its other papers, such as The Times of London, could begin to do so this fiscal year.


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