News Corp posts $5.8bn profit

NEWS Corporation has posted a healthy $5.8 billion profit in the financial year just ended on the back of a series of box office hits.

Tough times ahead ... despite posting a record profit, News Corp chairman and CEO Rupert Murdoch anticipates an "increasingly difficult economic environment" / AFP

NEWS Corporation has posted a healthy $5.8 billion profit in the financial year just ended on the back of box office hits such as The Simpsons Movie, Juno and Fantastic Four: Rise of the Silver Surfer.

But while the media giant lifted its annual net profit by 57.2 per cent in 2007/08 it warned of tough economic times ahead.

"In the year ahead we anticipate an increasingly difficult economic environment," News Corp chairman and chief executive Rupert Murdoch said on a conference call from Beijing.

He said escalating energy prices, falling real estate values and liquidity issues in the finance sector were creating economic shocks that would likely be felt by the vast majority of consumers in the US and Europe.

But he said his Australian businesses appeared to be operating well, in a more favourable economic environment.

"Our Australian titles are in extremely good shape and operating in economic environment that seems to be very different to that in the US."

News Corp said strong advertising growth in the Australia newspaper group, which includes The Australian, The Daily Telegraph and Herald Sun newspapers, was driven by robust retail and real estate advertising.

News Corp is the parent company of the publisher of NEWS.com.au.

In Britain, where News Corp owns The Times and The Sun newspapers, advertising revenue was weak.

The company had success with its various online ventures in 2007/08.

News Corp said its social networking site, MySpace, was experiencing strong growth in display ads and The Wall Street Journal, which News Corp acquired when it took over Dow Jones in late 2007, had proved to be a money spinner with the Journal's pay-to-access website posting an 88 per cent jump in online subscriptions.

Looking ahead, Mr Murdoch said media companies willing to invest in new forms of information delivery would do well.

"That the newspaper sector is changing is clear," Mr Murdoch said.

"But companies willing to invest in new forms of delivery, which have a commitment to quality, will prosper."

Due to the economic slowdown in the US, Mr Murdoch is seeking further investments in Asia, Eastern Europe and Germany.

Earlier this week he said he planned to invest $US100 million ($109.3 million) in six new television channels in India.

"With all the talk of an international downturn, Indian economists are forecasting gross domestic product growth (GDP) of at least 7 per cent this year," he said.

In comparison, Australia's economy is expected to grow by 2.25 per cent in calendar 2008.

Mr Murdoch said he was no longer negotiating with Yahoo, Microsoft and Time Warner about potential partnerships or acquisitions.

"We've really moved on from those conversations," he said.

News Corp's operating, or underlying, profit was $US5.381 billion ($5.79 billion), up 21 per cent in the year.

The company said it expected operating income to grow by between 4 and 6 per cent in fiscal 2009.