2Q Profit Down at News Corp.

NEW YORK, February 7: Despite revenue growth of 18 percent,
News Corporation’s second quarter profits dropped 23.5 percent to $822 million
from $1.08 billion last year, when the company recorded a one-time gain of $381
million.

The company delivered consolidated revenues of $7.84
billion, up 18 percent from the $6.67 billion posted last year.

Commenting on the results, Chairman and CEO Rupert Murdoch
said:

“Our second fiscal quarter was a success both financially
and strategically. Financially, we enjoyed double digit revenue and operating
income growth, with a better than expected performance at our film studio and
strong growth at SKY Italia, where subscriber additions reached the four
million mark. The quarter was not without its challenges, however. In
particular, we were disappointed with the results at MyNetworkTV, whose ratings
have been far below expectations. We are focused on reversing this performance,
and since quarter’s end, have brought in new management and will introduce new
programming to jump-start its recovery.”

The filmed entertainment segment posted revenues of $2.23
billion, with a record second quarter operating income of $470 million, an
increase of 57 percent. The gains were attributed to strong theatrical releases
like Borat: Cultural Learnings of America for Make Benefit Glorious Nation
of Kazakhstan and the home entertainment
performances of Ice Age: The Meltdown, X-Men: The Last Stand, Little
Miss Sunshine and The Devil Wears
Prada. Further, Twentieth Century Fox
Television (TCFTV) increased contributions versus the second quarter a year
ago, thanks in part to DVD sales on 24 and Prison Break.

At the television segment, operating income fell by $71
million to $112 million, on revenues of $1.6 billion. Increased contributions
from the Fox Television Stations were more than offset by lower contributions
from the FOX Broadcasting Company, STAR and by losses from the launch of
MyNetworkTV. Fox Television Stations’ second quarter operating income increased
8 percent. At the FOX Broadcasting Company, second quarter operating results
declined by 36 percent compared to a year ago, primarily due to weak ratings
for Major League Baseball’s post-season and increased National Football League
programming costs. In prime time, a decline in ratings and cancellation costs
for several new series was offset by lower programming costs. STAR’s second
quarter operating income decreased 36 percent from the same period a year ago,
as subscription revenue growth was more than offset by a decline in advertising
revenue at STAR PLUS in India.

Cable network programming posted revenues of $920 million, a
13.6 percent rise, and operating income was up by $13 million to $275 million.
Fox News Channel (FNC) reported operating income growth of 25 percent,
primarily from higher affiliate revenues on increased rates and additional
subscribers.

SKY Italia reported a second quarter operating loss of $12
million, versus a loss of $53 million a year ago, on revenues of $764 million.
More than 432,000 net subscribers were added over the past 12 months, bringing
SKY Italia’s subscriber base to 4.03 million at quarter end.