By Glenn Dyer


News Corp has posted a 7.8% drop in third-quarter profit due to higher network TV costs, while sales
rose 17% (to $6.04 billion) on surging advertising revenue at cable television networks including Fox News Channel – the AFR has a full report here and the company announcement is here.

News Corp ordinary shares closed up more than 2% at US$16.35 on
Wall Street overnight, but are currently trading down 16c at $20.36
on the ASX.

When News Corp was an Australian-listed company it used to provide a
very handy quarterly breakdown of newspaper earnings and revenues. This
gave the public a very good feel of how News Aussie papers were
travelling.

But no more. Since fleeing to the US, that information
has been dropped from the quarterly reports. There’s now just a single
line report on revenues and operating income and directors’ comments
about how the Australian papers are going. The problem is the directors don’t provide any figures to confirm their remarks, so
they have to be taken on trust.

It’s an important omission given that News owns the majority of
the country’s city and near city daily and weekly newspapers. It’s also
clear from the report that Australia is the most profitable of the
company’s newspaper groups. Directors report a “67% increase in operating income in local currency
terms”. They said this was from a strong market for advertising “and the
inclusion of the results for Queensland Press Group”. The $2.9 billion value placed on Queensland Press remains hard to
justify given the fall in circulation at The Courier-Mail, its main
asset, since the acquisition late last year.

Newspapers made “operating income of US$186 million in the March quarter, up 6%
compared to the same quarter last year”. The big driver was Australia as
the British newspapers suffered a 26% slump in operating income (in
local currency terms) because of higher depreciation charges because of
the new printing plant being built north of London and the competitive
pressures of the circulation battle. The Times tabloid helped to lift
circulation revenue growth, as did a cover price rise for the News of
the World Sunday paper.

Operating income at the newspaper groups rose to US$488 million from
US$448 million in the first nine months of 2004. Revenue for the
newspapers rose to US$1.062 billion for the quarter (from US$914
million), and US$2.937 billion for the nine months to March ($US2.511
billion). The difference is probably due to the inclusion
of Queensland Press, plus the rise in revenues in the stronger
Australian
economy. But that’s supposition and that great communicator has once
again trimmed transparency. Much like the circulations of his
newspapers, we have to take him on trust.