American Idol lifts News Corp profits

The huge success of US reality TV series American Idol and Joe Millionaire helped Rupert Murdoch's News Corporation offset a 25% drop in income at its UK newspaper division to record a profit in the third quarter of its financial year.

News Corp revealed the bitter tabloid price war between the Sun and its arch-rival, the Daily Mirror, had lopped 25% off income at its UK newspaper division, which also includes the Times, the Sunday Times and the News of the World.

But the success of its US TV and cinema businesses, which include the top US news channel Fox News, easily outweighed the falls.

Net profit in the three months to the end of March rose to $275m (£171m), up from $239m (£149m) in the second quarter.

It marks a reversal of fortune for the company since its $4bn (£2.5bn) loss this time last year, when it had to write down $4.2bn (£2.6bn) on its stake in TV guide company Gemstar.

News Corp said revenues were up 14% to $4.39bn (£2.73bn) from $3.85bn (£2.39bn) last year, with increases in all seven of its divisions.

But income dipped at the group's newspaper business, which also includes a number of Australian titles and the New York Post.

Overall income fell 9% as the effects of the Sun's price war with the Mirror cut into circulation revenues.

"Advertising revenue gains were more than offset by circulation revenue declines in the UK as a result of the Sun's discounted pricing to match the competition," the company said in a statement.

Circulation revenues at the Times and Sunday Times rose but these were wiped out by the cost of selling the Sun at a discount, the company said.

News Corp said the improvement in newspaper advertising revenues was driven mainly by classified and display advertisements at the Sun and the News of the World.

"Our print businesses continued to deliver significant operating income while weathering the UK price war," said Mr Murdoch, the chairman and chief executive of News Corp.

Newspapers accounted for 16% of the group's revenues and 16.8% of its operating income in the third quarter.

The best performing News Corp division was TV - which includes Fox Broadcasting, Fox Television stations and the Asian network Star TV, where operating income rose by 82%.

There was also a 25% rise in income at the filmed entertainment division thanks to films such as One Hour Photo, The Banger Sisters and Swimfan.

Profits at Fox Entertainment Group, which is 81%-owned by News Corp, were boosted by improved ratings at the controversial Fox News Channel, the success of Fox network shows such as American Idol 2 and Joe Millionaire, and video sales of films such as Ice Age.

Fox recorded a profit of $276m (£1.7m), compared with $108m (£67m) a year ago, while revenue rose 9% to $2.7bn (£1.7m) from $2.5bn (£1.6bn) last year.

News Corp's other operations include the HarperCollins book division and a magazines and inserts business.