News puts up ad rates after 45m pounds fall in profits: New subscribers minimise damage caused by price cut

NEWS International is putting up advertising rates for the Sun, the Times and the News of the World by 15 per cent from September in an attempt to compensate for cover price cuts that led to a pounds 45m fall in profits last year.

Gus Fischer, chief executive, said the UK newspaper market had never been so competitive 'and I can't see that changing'.

The circulations of the Times and the Sun have risen by 14 per cent and 31 per cent respectively to almost 600,000 and 4.1 million over the past year following the decision to slash their cover prices to 20p and 22p respectively. In an effort to persuade advertisers to pay higher rates to reflect improved circulations, News has said for the first time that it will 'guarantee' those circulations for a full year.

Improved advertising revenues are essential to make up for falling circulation income at Rupert Murdoch's UK subsidiary. Operating profits in the year ended 30 June were pounds 96.2m, compared with pounds 141m the previous year, despite a slightly higher turnover of pounds 733.5m.

However, a sparkling performance from BSkyB, the satellite channel in which News has a half share, helped total pre-tax profits to leap 123 per cent to pounds 360.9m.

The profits from BSkyB and from another associate company, Ansett Airlines, helped News Corporation, News International's parent, to push up its after-tax profits before exceptional items by 24 per cent to Adollars 1.212bn ( pounds 577m). An exceptional Adollars 123m gain, principally from the sale of the company's interest in the South China Morning Post, meant net earnings rose 54 per cent to Adollars 1.335bn.

The profits leap makes News Corporation Australia's most profitable company, although the operating figure was mildly disappointing to analysts, who had not expected the price-cutting at the UK newspapers to be so damaging to UK earnings.

News Corp, which owns Twentieth Century Fox, also benefited from soaring operating income in the filmed entertainment division, which jumped 166 per cent to Adollars 141m. The combination of strong earnings in film and television, both based primarily in the US, meant North America was News's most profitable region in 1993/94, with US earnings up 11.8 per cent to Adollars 1.1bn.

News Corp has reduced its debts by more than Adollars 1.8bn over the past year, slashing its interest costs by 9 per cent to Adollars 667m.

HOLLINGER, parent company of the Telegraph, saw second- quarter operating earnings rise dollars 10m to dollars 60m compared with last year helped by the March purchase of the Chicago Sun Times group. But the price war meant the Telegraph's contribution fell dollars 10m while the group also suffered from dollars 4m losses on foreign exchange.

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