News Corp to stick to 'poison pill' plan

SYDNEY - Media group News Corp is to extend its "poison pill" provision as it posted a jump in annual net profit, with strategic moves underpinning momentum.

News Corp's third consecutive year of double-digit growth saw a rise in full-year net income to US$2.1 billion ($3.05 billion) from US$1.5 billion last year.

Operating income for the year to June 30 jumped 22 per cent to US$3.6 billion.

In the fourth quarter, operating income was US$955 million, 42 per cent higher than the previous fourth quarter.

Chairman and chief executive Rupert Murdoch said strategic acquisitions such as obtaining full ownership of assets including Queensland Press and Fox Entertainment left the company in its strongest financial position ever.

"While we generated record financial results this past year, I believe we have made the right strategic and operational moves to secure our momentum heading into fiscal 2006."

News Corp has determined to extend for a further two years the expiry date of the stockholder rights plan due to run out after a year on November 8.

John Malone's Liberty Media grabbed 18 per cent of News Corp last year, prompting Murdoch to set up a "poison pill" strategy to dilute Liberty's holding in the event of a hostile bid.

Last week, Malone said discussions with Murdoch had ended and he would like a bigger slice of News Corp.

"To prevent potential future acquisitions of significant amounts of News Corp voting stock by Liberty without consultation with the board, the board has determined to extend the expiration of the stockholder rights plan until Liberty Media and the company reach a favourable resolution with respect to Liberty's ownership stake," News Corp said.

"In that event, the board of directors expects to redeem the existing stockholder rights plan and will also consider eliminating the company's classified board structure."

Murdoch said nearly all businesses delivered double-digit revenue and operating income growth and many developing businesses turned profitable.

The good news for News Corp since the shock resignation of Murdoch's son and heir apparent, Lachlan, on July 29 is that its share price has barely budged. Analysts have put that down to Murdoch's second-in-command, Peter Chernin, who was promised as much as US$30 million annually when his contract was renewed a year ago.

They say that investment is already paying off. "Looking at it over the next three to five years as a business, I know who's going to be running the company," says Morris Mark, president of Mark Asset Management, in New York.

Andrew Baker, an analyst at Cathay Financial in New York, said Chernin would continue to increase sales of home videos, lift ratings at the Fox television network and raise cable TV subscription fees.

Investors saw Chernin's presence as more important to the company's fortunes than the question of which of Murdoch's children would succeed the 74-year-old.

The Australian newspaper group reported a big rise in fourth-quarter and full-year operating income, in local currency terms, on fiscal 2004.

This was driven by a robust advertising market and the inclusion of results from Queensland Press.

- AAP, BLOOMBERG