Price cuts hit Murdoch profits

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The Independent Online
RUPERT Murdoch's News Corporation admitted yesterday that cutting the price of the Sun and the Times was denting profits in its UK newspaper division.

These were 15 per cent lower than during the same period last year, principally as a result of the 5p cut in the cover price of the Sun, it said. But it refused to give a precise figure.

It said operating income for its newspaper division as a whole slipped to Adollars 149.8m ( pounds 70m) from Adollars 164.3m. The decline was against a background of generally improving newspaper earnings in Australia and Hong Kong.

The company added that the price reduction had boosted circulation, with the Sun achieving extra sales of about 250,000 copies a day, and the Times, which has reduced its price by 15p, adding about 100,000 sales a day. News Corp now puts the circulation of the Times at around 440,000 copies, its highest figure for eight years.

Despite the downturn in newspaper revenues, News Corporation's first-quarter net profits rose by more than a quarter, largely thanks to a strong performance by Fox Films.

Operating profits in the film division nearly tripled to Adollars 42.5m from Adollars 15.8m thanks to successful releases such as Rookie of the Year, Robin Hood - Men in Tights, and Rising Sun.

Total group net profits were Adollars 246m in the three months to the end of September, on revenues up 7 per cent to Adollars 2.78bn. Interest charges continue to fall, dropping to Adollars 173m (Adollars 206m).

Associated companies, such as BSkyB and Ansett Airlines, made a contribution of Adollars 74m.

The results are slightly artificial since during the quarter News Corp sold its 34.9 per cent stake in the South China Morning Post to Robert Kuok and the Kerry Group of Hong Kong for USdollars 349m.

This was accompanied in August by the purchase of a 63.6 per cent holding in the Hong Kong-based StarTV group of companies, for which it paid Hutchison Whampoa dollars 525m ( pounds 360m).