News Corporation profit 'to show ad slump'

NEWS Corporation is expected to report a 30 per cent fall in profit, driven by a downturn in the advertising market.

Slump ... Rupert Murdoch's News Corp is expected to report a 30 per cent fall in profit, driven by fewer ads / File

News Corp profit 'to show ad slump'

GLOBAL media giant News Corporation is expected to report a 30 per cent fall in full year operating profit, driven by a downturn in the advertising market and the global economic crisis.

Rupert Murdoch's News Corp (the parent company of the publisher of news.com.au) releases its fourth quarter and annual results tomorrow and is expected to match the profit guidance given in May for the 2008/09 year.

That would imply an operating profit around $US3.59 billion ($4.25 billion) for the year, excluding the impact of restructuring charges, down from an adjusted base of $US5.13 billion in the previous year.

The media group, which owns news agency Dow Jones, MySpace, 20th Century Fox movie studios, Sky Italia and newspapers in Australia and elsewhere, has seen its newspapers and television stations hammered by a deterioration in advertising markets.

Its earnings have also been ravaged by massive writedowns forced on it by the global downturn.

However, when Mr Murdoch commented on News Corp's (nws.ASX:Quote,News) third quarter results in May he was significantly more upbeat than in previous quarters.

He declared it was "increasingly clear the worst is over" and said advertisers were starting to return to the market.

In the nine months to March 31, News Corp reported a 35 per cent fall in operating profit to $US2.53 billion.

Credit Suisse analysts are tipping News Corp's full year operating profit to drop by 34 per cent to $US3.38 billion, including restructuring charges.

"Newspapers, television and Sky Italia are all expected to be a drag on the result, while cable networks should be a bright spot," Credit Suisse wrote in a client note.

RBS Equities expects News Corp to post a 35 per cent fall in full year operating profit to $US3.44 billion including restructuring charges.

News Corp's bottom line loss is expected to be in the region of $US2.7 billion, due to writedowns and the impact of the advertising downturn.

In the nine months to March 31, its bottom line net loss was $US3.18 billion compared to a net profit of $US4.26 billion in the previous corresponding nine months.

News Corp has undergone a management makeover in recent months with the appointment of Chase Carey as chief operating officer, replacing Peter Chernin.

Mr Carey was formerly chief executive of US pay TV company DirecTV Group Inc.

News Corporation is the parent company of the publisher of news.com.au.

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