News Corp warns of less robust '09 growth

Chairman and CEO of News Corp Rupert Murdoch speaks during a news conference in Mumbai August 4, 2008.

NEW YORK (Reuters) - Rupert Murdoch's News Corp reported a 27 percent increase in its fiscal fourth-quarter net income, but said it faces a "much more difficult economic environment" in its current year that will continue to hurt local television advertising, but not national TV ad sales for now.

Operating income for News Corp is expected to rise by a more moderate 4 to 6 percent in fiscal 2009, compared with a mid-teens percentage range for 2008.

Revenue at Fox Interactive Media, which includes the popular MySpace Internet social network, is expected to rise by about 30 percent in 2009, executives said. Based on Reuters calculations that would result in total revenue for Fox Interactive Media of about $1.12 billion.

Fox Interactive Media revenue rose 57 percent in fiscal 2008.

"Although we clearly face more challenging macro-economic conditions in fiscal '09, we're well positioned to deliver continued, if somewhat less robust growth," Murdoch said in a statement.

Christopher Marangi, an associate portfolio manager at News Corp investor Gabelli & Co, said News Corp's film and cable results looked strong but had expected the company's operating income would rise by 9 percent in fiscal 2009.

Both Viacom Inc and CBS Corp were battered by lower local and national advertising sales when they reported quarterly earnings last week, stoking fears that the ad slump would bleed over to national advertising sales for other media companies.

Not so for News Corp, executives said during a conference call. Although admitting weakness in automotive, telecommunications and movies advertising categories, they said such trends had not yet hurt sales on its national networks.

"We are seeing real strength in national, and particularly in some of the cable up fronts, but also ... on our broadcast network business," News Corp Chief Operating Officer Peter Chernin told analysts on a conference call.

Sales of its interests in Fox Sports Bay Area and Gemstar-TV Guide International helped boost its fourth-quarter net income to $1.1 billion, or 43 cents per share, from $890 million, or 28 cents per share, a year earlier.

Shares of News Corp, which owns the 20th Century Fox movie studios, Fox News, Sky Italia and the Times of London, were down about 1 percent in after-hours trading.

Revenue rose 17 percent to $8.6 billion. Quarterly operating income rose 21 percent to $1.5 billion.

Excluding items, News Corp said it reported a 35 cents per share profit, ahead of Wall Street expectations of 34 cents, according to Reuters Estimates.

News Corp's television unit was among the weak spots in the quarter, with operating income falling 28 percent hurt by lower advertising revenue at the local stations and primetime ad sales declining due to lower ratings at the network.

But that was offset by double digit fourth quarter profit growth from its cable networks, films and newspaper group.

News Corp shares have fallen 32 percent this year on investor fears that Murdoch may invest more heavily in the newspaper sector following his $5.6 billion purchase of Wall Street Journal publisher Dow Jones last year.

MURDOCH EYES INDIA

Speaking from Beijing, where he plans to attend the Olympics, Murdoch said on the conference call that the difficult economic environment would send "economic shocks" that would affect "the vast majority of consumers in the U.S., as well as in Europe." He has sought to invest more heavily in faster growing regions such as Germany, Eastern Europe and India.

Earlier this week, Murdoch said he would invest $100 million in six new Indian television channels and introduce a new Dow Jones index to track the Indian stock market.

Murdoch said on Tuesday the investment in India is closer to $60 million than to $100 million and said News Corp would likely sell off smaller investments in India to fund the growth.

"The growth there is really extraordinary and we will be doing more and more there," Murdoch told reporters. "We would like to be doing more in China."

He confirmed reports that News Corp aims to sell off its assets in Bulgaria and said he was undecided over the News Corp's assets in Poland, saying they were more difficult to operate than expected.

"We don't quite know if we scale back a bit in Poland, which is proving more difficult than we expected... or a diversion of those resources elsewhere," Murdoch said.

Addressing questions about sales of News Corp's assets in Russia, including its stake in an outdoor advertising business, he said, "The sale of (assets in) Russia is a different matter all together. We have great growing business there, but ... This is purely me, I'm sorry, the more I read about investments in Russia, the less I like the feel of it."

(Editing by Carol Bishopric)