Murdoch offers grim message

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The Independent Online
Rupert Murdoch, chairman of the News Corporation, warned that newsprint prices could rise by 10 per cent over the next 12 months, costing the group Aus$350m in the year.

Speaking at the group's agm, Mr Murdoch also refused to rule out a future joint venture with BT - the subject of speculation at the weekend - but said that at present there are no discussions "on the rope".

Rumours erupted at the end of last week that Mr Murdoch was in talks with the BT chairman, Sir Iain Vallance, concerning co-operation in the "information superhighway". BT denied any such discussions but Mr Murdoch said yesterday: ''We have a joint venture with their partner MCI in North and South America and we would not rule out a similar joint venture in Britain and we are certainly looking with them. It's not just them ... we're all talking.''

The agm also approved the recently announced alliance with MCI, the US company in which BT has a 20 per cent stake. Under the deal, MCI will take a stake of up to 13.5 per cent stake in News Corporation for up to US$2bn and has first refusal on buying the Murdoch family stake in the event that they decide to sell.

The media chief warned that he expects flat to slightly lower earnings in the three months to September, adding that he does not expect higher dividends in the future for shareholders.

"We have built this company in 40 years from being a couple of hundred thousand dollars to being worth $20bn by pouring back the profits into it. Basically I think any shareholder will tell you, it has been a capital growth play. It has not been a dividend play," he said.

Shares in News Corporation fell by 12p to 324p on Mr Murdoch's newsprint predictions. "Paper costs are a worry and it is going to be some time before this turns around." But he remained bullish about the UK, where profits are expected to rise in the year to June 1996. Mr Murdoch said: "We have great faith in our newspaper position in Britain. We see growing profits ... if we increase our share of the market and manage to get even more competitive and even more efficient.''