News Corp reveals multi-billion pound write down

Rupert Murdoch's global media network News Corporation has announced a profits gain in the third quarter, but had to write down a massive £2.74 billion investment in the Australia-based Gemstar television during the same period.

The venture has proved costly for the group as the value of Gemstar – an Australian-based network – has fallen by as much as two thirds since January this year. News Corp own 38.5% of the network. The write down was the biggest in Australian corporate history.

Mr Murdoch restated his belief that Gemstar can turnaround and has sent in a senior executive from Fox cable to run the operation. "We still believe strongly in the strategic value of Gemstar," he added.

News Corporation are one of the leading newspaper publishers in the UK, owning The Sun, The Times, The Sunday Times and The News of the World. Across the newspaper division there was a significant slide in advertising revenues of around 16%. The fall in advertising has increased tabloid competition on newsstands and The Sun and its main rival The Mirror – owned by Trinity Mirror. Commenting after the results were announced, Mr Murdoch was critical of Trinity Mirror over the latest tabloid price war, calling it a "panic move".

"We did not start this [price war] but we had no option but to match it. We would hope it won't go on for too long but that choice isn't with us, it's with Trinity Mirror. This is very heavy promotion of a new format [for the Mirror] which has failed. It was somewhat of a panic move by them," he said.

However, the company is expected to gain elsewhere as BSkyB soaks up former customers from failed platform ITV Digital. News Corp owns a sizeable stake in BSkyB and last week the broadcaster revealed that profits topped £129 million for the quarter.

The group has had other successes of late as its film industry division was involved in the making of recent box office hits such as Ice Age, Moulin Rouge and the latest Star Wars offering which is released on Thursday May 16.

The group are confidence of the future and especially that Episode II: The Attack of the Clones will be a predictable runaway success, so much so that it upped its predicted operating profit for the year by 3-5%.

(GMcG)