News Corp sees economy hurting advertising

By Kenneth Li

NEW YORK (Reuters) - Rupert Murdoch said on Wednesday stress in the U.S. economy is squeezing advertising budgets, adding that News Corp's (NWSa.N: Quote, Profile, Research) Fox Interactive Media would miss an ambitious $1 billion annual revenue goal by 10 percent.

But FIM, which oversees the MySpace online social network, is a "very healthy" business and expects "well over" $1 billion in revenue in fiscal 2009, Murdoch said on News Corp's fiscal third-quarter earnings conference call.

"There's no doubt the consumer economy is stressed. You're seeing it affected in advertising, more short-term planning and booking," said the News Corp chairman and chief executive.

The media conglomerate said fiscal third-quarter profit tripled on higher advertising sales at the Fox TV network and Fox News Channel, as well as a $1.7 billion one-time gain from its stock swap with Liberty Media (LINTA.O: Quote, Profile, Research).

News Corp, which also owns the 20th Century Fox film studio, said its net profit rose to $2.7 billion, or 91 cents per share, in the quarter ended March 31, from $871 million, or 27 cents per share, in the year-ago period.

Revenue rose 16 percent to $8.75 billion, compared with the average Wall Street forecast of $8.6 billion. Profit excluding special items was 30 cents per share, apparently missing the Street's 31 cents forecast, but it was not immediately clear if the two numbers are directly comparable.

Pali Research analyst Richard Greenfield said News Corp continued to log strong operating income growth from its television division compared to peers.

"You've now got three straight quarters of industry-leading growth," Greenfield said. "When will investors give them credit for their growth?"