Warning over ad revenues hits News Corp

News Corporation has become the latest media group to take a pounding in the stock market after its chairman and controlling shareholder Rupert Murdoch yesterday expressed concern about the strength of advertising revenue at the company's US television stations.

News Corporation has become the latest media group to take a pounding in the stock market after its chairman and controlling shareholder Rupert Murdoch yesterday expressed concern about the strength of advertising revenue at the company's US television stations.

The multi-billionaire media mogul also served up disappointment when he said that the estimated $40bn (£28bn) flotation of Sky Global Networks is unlikely before next year. Investors had expected the float, which is seen raising up to $10bn through an initial share offering, to occur next month.

Mr Murdoch, speaking at News Corp's annual shareholders meeting in Adelaide, Australia, said the company's US television stations faced near-term earnings uncertainty. "They are having an extremely good October but I would have to say that the immediate future looks a little bit uncertain. There are some signs of weakness in the next couple of months."

The admission saw News Corp's US-listed stock slide $3.25 to $40.25 in late New York trading yesterday. The company hit a high of almost $66 in March.

The separately listed Fox Entertainment Group, which includes television hits such as The Simpsons and Ally McBeal, bounced up $1 to 19 ¹³/16 in US dealing. Still, shares in Fox have sunk to nearly half their 52-week high of $34 ³/4 in July.

On Sky Global's float, Mr Murdoch said News Corp was in talks with two possible US partners; DirecTV, a unit of General Motors' Hughes Electronic arm, and EchoStar. DirecTV is the biggest US satellite broadcaster with more than 9 million subscribers. EchoStar has around 4.3 million. "We are negotiating with potential strategic partners and we hope to have a very successful flotation of that in the near future," he said. "We would be very happy to have DirecTV as part of Sky Global or its competitor EchoStar."

Mr Murdoch also expressed optimism that Vivendi, of France, which holds a 23 per stake in BSkyB, might insert that holding into Sky Global. Vivendi last week agreed to sell the stake within two years as one condition for European Commission approval of its $34bn merger with Seagram, the Canadian entertainment and drinks group.

Though Vivendi could sell its stake to one or several investors, Mr Murdoch said the French group stood to gain more by swapping its stake. He added Vivendi "has declared publicly that they aren't interested in the cash". Vivendi's interest is worth about £4bn at BSkyB's current market valuation.