NEW YORK News Corp.'s NWSa.N Rupert Murdoch sketched out his plan for the future of Dow Jones & Co Inc DJ.N on Wednesday, including discussions about making the Wall Street Journal's Web site free.
At a conference call after News Corp reported a 4.5 percent rise in quarterly profit, which met market expectations, Murdoch said he was exploring "closely" with Dow Jones executives making the subscription-based wsj.com, one of the Internet's most successful subscription businesses, free.
"It would be an expensive thing to do in the short term," the 76-year-old media mogul said. "In the long term, it may be a great thing to do."
The goal would be to boost online advertising from an expected jump in readership.
News Corp struck a $5.6 billion deal for Dow Jones last week after three months of negotiations with its controlling shareholder, the Bancroft family.
"Dow Jones should not be separated from News Corp," Murdoch said, responding to a reporter's question about plans for the Journal's digital operations. "It's a part of News Corp."
Shareholders are expected to vote on the deal in the coming months.
Murdoch also said he would invest in Dow Jones' Europe and Asia outposts, posing threats to Pearson Plc's (PSON.L) Financial Times newspaper and Reuters Group Plc. RTR.L, and he expected to begin hiring staff immediately.
No employee cuts were expected, but he said News Corp would likely cut about $50 million from Dow Jones functions, declining to be more specific. He expected to sell off Dow Jones' local newspapers, but would keep everything else.
And contrary to a tactic he has employed with his other U.S. newspaper, The New York Post, Murdoch said he will not be cutting prices.
"(We're) certainly not going to be cutting prices of either advertising or subscriptions. We're not getting into any price war," he said.
Securing the $60 per share deal for Dow Jones completed Murdoch's decade-long ambition to control one of the world's most respected papers. It also theoretically brings instant credibility to News Corp's upcoming Fox Business Channel, a rival to General Electric Co's (GE.N) CNBC.
But Dow Jones is locked in an editorial contract that expires in 2012 with the reigning cable business news network.
Asked if negotiations had begun to unwind the contract, Murdoch said: "No, we're not negotiating."
News Corp said its fiscal fourth-quarter net income rose to $890 million, or 28 cents per share, from $852 million, or 27 cents per share, a year earlier, helped by higher revenue from its Fox News Channel and new subscribers at its Sky Italia satellite TV service.
The result matched the average analyst forecast, according to Reuters Estimates.
Operating income rose 18 percent to $1.2 billion for the quarter, which ended on June 30. Revenue rose 8.6 percent to $7.37 billion.
"They're firing on all cylinders," said Christopher Marangi, an analyst and associate portfolio manager at News Corp stock holder Gabelli & Co.
The owner of the 20th Century Fox movies studio and the MySpace Internet social network gave an outlook for fiscal 2008 that appeared light to some analysts, forecasting operating income would rise in the low-teens percentage range.
Marangi said the forecast was "reasonably conservative," although it was in line with his estimates. He said analysts who thought the outlook light did not factor in an estimated $340 million in investments the company planned to make this year on the new business channel and Eastern European expansion.
News Corp shares initially slipped in after-hours trading, but were flat after the conference call.
Cable networks, including Fox News, posted operating income that was 46 percent higher and revenue 17 percent higher.
News Corp's satellite television operating profit rose 84 percent and revenue rose 15 percent. It ended the quarter with 4.2 million customers.
Newspaper segment operating income rose 19.4 percent to $203 million, reflecting higher contributions from papers in the United Kingdom and Australia. Newspaper revenue rose 13 percent to $1.2 billion.
Revenue at Fox Interactive Media, led primarily by MySpace, exceeded its target and hit $550 million for fiscal 2007. Quarterly revenue doubled from a year ago to $183 million and operating income was $30 million.
For fiscal 2008, digital operating profit was $10 million, dragged by $80 million in purchase price retention and amortization costs.
MySpace alone is expected to generate more than $800 million in fiscal 2008. Murdoch said he would be surprised if Fox Interactive Media revenue did not exceed $1 billion this year, with margins well above 20 percent.