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Ladies and gentlemen, thank you for standing by and welcome to the News Corp third quarter 2008 earnings release. (Operator Instructions) I would now like to turn the conference over to our first speaker, Executive Vice President Mr. Gary Ginsberg. Please go ahead.

Thank you very much, Operator and welcome to our third quarter fiscal 2008 earnings conference call. Joining me today are Rupert Murdoch, Chairman and Chief Executive Officer of News Corp.; Peter Chernin, President and Chief Operating Officer; and Dave DeVoe, our Chief Financial Officer. As is our custom, Dave will begin the call with a brief summary of the results, focusing on items not immediately obvious from the reading of the earnings release, that you should all now have. Rupert will then give some detailed commentary on our latest acquisition, The Dow Jones Company, followed by an update from Peter Chernin on the progress we are making at Fox Interactive Media, and as a sign of our own progress, we’ll be posting both Rupert’s and Peter’s comments in their entirety on our News Corp website. We’ll then take your questions. And this call is of course governed by the Safe Harbor provisions. On this call, we will make statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve known and unknown risks, uncertainties and other factors, including those described News’ public filings with the SEC that could cause actual results to materially differ from those in the forward-looking statements. And with all that, I’ll turn the call over to Dave.

Gary, thank you and good afternoon, everybody. As you’ve seen in today’s earnings release, we are continuing the strong growth trends we reported in the first half of fiscal ’08. For the third quarter of this fiscal year, revenue and operating income are up both 16%, another strong result for News Corporation. These improvements were led by strong performance at our television, cable, and newspaper businesses and it was achieved despite absorbing approximately $53 million in incremental losses related to start-up businesses such as the Fox Business Network, the Big 10 Network, and start-up television operations in Turkey, Poland, and Serbia. In looking at net income this quarter, there are a few items to be highlighted. This quarter’s net income and earnings per share include a tax-free gain of approximately $1.7 billion related to the Liberty transaction. Additionally, we also had a reduction in this year’s equity earnings of $146 million, and this is primarily due to a write-down by BSkyB of its ITV investment, of which our share was $101 million. And our tax rate in the quarter of 10% was significantly affected by the impact of a tax-free treatment of the gain in the previously taxed equity earnings from DIRECTV. Taking all of these items into account, reported net income increased $1.8 billion to $2.7 billion, and earnings per share increased to $0.91 versus $0.27 last year. Excluding the net income effect of the items included in other and the ITV write-down, earnings per share was $0.30 this quarter, an increase of 15% over a similarly adjusted $0.26 at the March quarter a year ago. I think it’s also worth noting that as part of the Liberty transaction, we reduced News Corporation’s gross shares outstanding by approximately 513 million shares, a reduction of more than 16%. Now given…

Thank you, Dave. Good afternoon, everyone. Once again, another very solid quarter -- 16% growth in both revenue and operating income. For the nine months fiscal year-to-date, our revenues are up 15% and operating income is up 21%. And as Dave just said, we remain very comfortable with our full year forecast of mid-teens operating income growth. The quarter was also quite strong from a strategic sense. We finally completed our deal with Liberty Media, effectively selling our interest in DIRECTV for a tax free gain $1.7 billion. At the same time we reduced our outstanding share count by more than 16%. Now, after closing this deal we will have repurchased $14 billion worth of News Corp stock over the past three years, by far the largest concentrated period of buying in the company’s history. Recently, we put in a very competitively priced bid for New York Newsday that, if accepted, would enable us to greatly improve our financial performance at the New York Post. Although subsequent to our offer, additional competitor bids have emerged. As financially desirable as this asset is, we will continue to be disciplined in our pursuit. And last week, we finally divested our Gemstar stake, netting approximately $950 million in value. This quarter also marks our first full quarter of earning Dow Jones. The more time I spend working with the company, the more opportunities I see in improving and expanding their current businesses. Although a small acquisition relative to our market capitalization, it is potentially transformative on many levels and we’re very focused on revitalizing this great company starting now. I know this is an area of focus for you as well and I want to divert a few minutes to giving you greater perspective on why we are so excited about its future…

Thank you, Rupert and good afternoon, everyone. I’d like to spend the next few minutes talking about Fox Interactive Media. Since the press began reporting a couple of weeks ago that we will fall short of our initial revenue projections for the year, there’s been a lot of speculation on the strength of the business and I think it’s worth right now to give it some perspective. This is a very healthy business with significant progress over multiple fronts. We continue to expand our leadership in the fastest growing consumer area of the web. But let me begin by saying yes, we will fall short of what were very aggressive initial projections of 80% growth for this fiscal year. But it’s worth pointing out that in a tough economy our shortfall will be slight -- roughly only about 10% and to put it in some context, FIM is nearly a billion dollar revenue business; a business that is not even three years old. And to give you some comparisons, it took Google five years to hit a billion dollars; it took Yahoo eight years and we’ll get there in a little over three years. It’s also worth pointing out that FIM’s revenue growth is tied to an entirely new category of advertising inventory. Social media has only been around for a few years and gaining market acceptance for any new category will always have its challenges. But as the creators of this new media, as the leaders, we will be in the forefront of developing the tools to make it work. We’re incredibly optimistic about the future of social media and our role in shaping it. When it comes to specific challenges we’re facing, I think that there are three areas worth noting. First of all, the explosive growth of…

(Operator Instructions) Our first question comes from the line of Rich Greenfield with Pali Capital. Please go ahead.

A couple of questions; when you think about use of capital now, you’ve talked about acquisitions in the past. I’m wondering how you think about it with your stock now down at these levels. What is the right allocation of capital with Dow Jones now behind you. Has that changed your mind then? Just two, to the extent that you are not successful in acquiring Newsday, what do you do with the New York Post? Losing tens of millions of dollars, at least according to press speculation -- just wondering kind of what the plan would be if you don’t get it and where you go from here. Thanks.

The price is going up next week or the week after to $0.50. We are making several moves there which will save over $20 million this year, regardless -- I think $26 million, regardless that’s net of paper increases and everything else. We’re very happy with our capital allocation at the moment. Dave might wish to speak about it.

I think what you were saying was given that Dow Jones is behind us, we have no major requirements for capital at the moment. And I think what you are I guess trying to get you is what we are we doing with the buy-back. And where we’ve been with that, we’ve been extremely concerned with respect to the capital markets and all the fluctuations there and the concern as to what could happen. So what we’ve been doing is being very conservative. As you know, we are a very conservative company with respect to capital. I think what we will do is we will look at the markets over the next month or so. To the extent they stay stable as they’ve been, we will go back and relook at and revisit whether or not we can continue on with our buy-back.

And when you think about the right leverage for the company, forget about meaning the current quarter but as you look out over the next call it two to three years, where does News Corp want to be from a leverage standpoint?

I’ve always been pretty consistent that our leverage is somewhere between -- this is on a gross debt basis -- somewhere between two and three times would be maximum leverage for the company.

Thanks so much.

And our next question comes from the line of Jessica Reif Cohen with Merrill Lynch. Please go ahead.

Thanks. I have two questions as well -- given the inevitable consolidation in the Internet sector, how do you see MySpace evolving? Do you see it as a standalone entity or as part of a bigger and more diversified company? So you would own a smaller piece of a bigger company? And separately, several networks in recent days have been very bullish on the up-front. Besides high scatter CPMs, which seem to be due to lack of GRPs, what signs would make you positive -- I mean, do you agree with what other companies have said? And if you could in your comments just separate broadcast television from cable networks. Thanks.

On the first side, Jessica, I think we feel great about MySpace as a standalone entity. I think if you look at almost any measurement, social networking has been growing faster than any other category on the web and we have, as I said, 52% market share of all money inside that category. So we feel great about our efforts, we’re continuing to expand our efforts. At the same time, we’re willing to have strategic conversations if we thought they made sense. But I don’t think anyone should assume that we have any concerns about our positioning. I think any time you have the dominant market share in the fastest growing part of the web, you ought to feel pretty good about your position. So I think that’s our position there. I think in terms of the up-front, I sort of -- probably every single earnings call I’ve ever been on in my life in May, the networks talk about how huge the up-front is going to be and the advertisers talk about that it’s going to be a very tough up-front and instinctively, I think it’s all positioning on both sides. I do think we have had the strongest scatter market of any network, so whatever the up-front is going to be, and I’m obviously bullish about it, I think we are as well-positioned if not better positioned than anybody. And we continue to see strong scatter on both the network front and the cable front right now. You know, we’re coming off of strong ratings and a very strong competitive positioning in both.

I’ll just add to that, that we are coming off a year in which I think we’ve led the other networks in audience by a bigger margin than ever in history, or certainly for many, many years.

And our next question comes from the line of Doug Mitchelson with Deutsche Bank. Please go ahead.

Thanks very much. I wanted to switch over to the film business for Peter, just how you feel about the progress for Blu-Ray and how much do you think it might contribute to the back half of the calendar year. And then just any comments that you might have on day-and-date. You’ve had some reservations in the past as you’ve gone through the test and others are moving forward, and what kind of financial contribution if any do you think day-and-date might bring to the film line? Thanks.

Well I think -- look, we are bullish on Blu-Ray. We are very pleased to see the industry has finally gotten to one format. I think the biggest issue with Blu-Ray right now is there is a tremendous capacity -- there is a tremendous constraint of players available at retail. I think they sold out virtually every player that was there over Christmas and in January and they are right now in a big, big manufacturing push. And so it’s pretty hard to find much more than one or two Blu-Ray players in a store right now. That should change dramatically in June, over the summer, and particularly going into the fourth quarter when I think you will see a lot more players available and you will see the price of those players begin to come down. And as you see the players come out, I think you will begin to see much expanded orders of Blu-Ray. I think the two things that are important to us on the Blu-Ray side are both number of orders of discs, obviously, but also maintaining a higher price margin, which we’ve been able to do right now. We think these discs are more valuable. So far all of our competitors have held to a higher price, which -- and so I think if we can have a higher price margin and begin to see the players, we think this can be a big contributor. I think we have said that we would hope that Blu-Ray represents about $1 billion at retail home video this year and I see no reason to change that right now. In terms of day-and-date on video-on-demand, you know, we have participated in tests and we will going forward release some titles day-and-date, whereas others we will do a holdback. And I think what we particularly continue to monitor very, very closely is will day-and-date video-on-demand cannibalize our traditional video-on-demand -- or cannibalize our traditional DVD business. And we are going to keep monitoring that closely. We are going to keep experimenting. And at least from a Fox perspective, we think it’s too soon to declare overall that we are doing to move every single one of our releases to day-and-date, although we’ll continue to experiment. And right now from a financial point of view, I would expect -- look, video-on-demand has been a rapidly growing category. I would expect it to continue to rapidly grow, as ultimately it makes the availability of our product more ubiquitous, but I wouldn’t expect it to be overwhelmingly additive.

Got it. Thank you.

And our next question comes from the line of Jolanta Masojada with Credit Suisse. Please go ahead.

Thanks very much. I wondered if Rupert could give us a big picture view on how he is seeing the economy and advertising environments in all the different locations that you operate in, and what’s your feel for how those two factors, the economy and advertising, is going to progress over the course of the calendar year.

I think you’ve got to look at the U.S. economy first. There is no doubt that the consumer economy is stressed and you are seeing that reflected in advertising, more short-term planning, short-term bookings. As far as we’re concerned, we’re increasing our share of market in our stations and everywhere, even though there were some declines in total business. In Australia, it’s just booming. I mean, it’s going up all the time and in Britain, I would say it’s steady, and in Europe. Whether that will follow the American pattern fairly soon or not, I don’t know. Certainly -- I’m told that business is slowing down on the Continent. Our business in certainly in the U.K. is in a very healthy condition. I can only talk about what I see myself from week to week and month to month. I’m not an economist. I can’t predict what it will be like this time next year.

Thanks very much.

And our next question comes from the line of Anthony DiClemente with Lehman Brothers. Please go ahead.

Thanks. A couple of questions for Dave; with the favourable impact from foreign exchange on the business in the quarter, I was wondering if there was a way you could help us quantify the benefit of both the revenue and operating income in the quarter. And then at the cable networks, I mean, your results are so strong again at the cable networks. Just wondering if you look apples-to-apples at advertising growth, stripping out of course the new networks and then the benefit of consolidating Nat Geo, what was the year-over-year advertising growth in the quarter? And then, if you could give us any color around whether you are seeing any deceleration or any impact from the economy there at the cable networks advertising. Thanks.

The ad growth in the quarter was approximately 26% at the cable networks. You asked so many questions. I hate to say this, but would you mind going back to the first one?

I was just looking for the benefit from foreign exchange in the quarter?

It’s around -- I think the benefit on the operating income line is around $35 million to earnings, and the revenue number I don’t have but I will get Reed to get it for you. Around $200 million? Approximately $200 million on the revenue side.

Okay, thanks. And then on the cable network advertising, just trying to get a sense for the ongoing trends there. I mean, maybe your growth is -- your growth there is obscuring any of the underlying trends but maybe if you could just give us a little bit at the core, fully distributed networks, are you seeing any deceleration, acceleration? Thanks.

I don’t think we’re -- I think that we are seeing continued strength. You know, we’re seeing a few cancellations here and there but then they will come back a week later. And I think I would in some ways echo Rupert’s comments, which is what we are seeing more is a little bit more short-term volatility in a world in which overall there is still quite a bit of strength. So a little bit more volatile than it was three months ago but overall, we are seeing great strength and continued growth across our fully distributed networks.

Okay, thanks.

And our next question comes from the line of Alan Gould with Natexis. Please go ahead.

Thank you. I’ve got a question on a few of the transactions that you’ve discussed in the past. The U.K. land sale, is that going to occur this year? And if you can update us on the Russian outdoor and the U.S. TV stations -- is that on hold now that the private equity market is not there?

I’m reluctant to give you this news on the land sale because we’ve been negotiating for two years, but I do think it is going to close before the end of June. That’s what I know today but I’m not going to give you any guarantees. I do think it is going to close before the end of June. On the TV station sale, we are on -- we are going through the regulatory process. All I can say is we talked to the buyers and they are committed to the buyers. We’ve talked to the lenders, they’re committed. So I think it’s going along reasonably well and with the approval process taking place hopefully sometime in the first quarter of our next fiscal year, and with regard to the Russian outdoor business, really it’s a slow process and we are continuing to work on it.

Thank you.

And our next question comes from the line of Benjamin Swinburne with Morgan Stanley. Please go ahead.

Thanks. Rupert, if I could ask two questions, one about Premiere and the German TV market and your thoughts on whether that market is becoming more attractive for News Corp. It’s been a challenging pay TV market in the past, and if there’s any sort of maybe synergies between Premiere and SKY Italia. And then, over here in the U.S., are there -- if you look three to five years from now, do you think News Corp will still have a material local TV station business? I’m just curious how much value that still provides to the network. I realize it is a profitable business but just curious -- do you think that strategically still is a value asset for you guys?

On the latter part of that question, I think that the TV stations, it depends on how well they run. We are investing -- I’ll caution up a little bit but we are expanding enormously the amount of local news we do to distinguish our stations from the cable programming that’s their alternative. I think it is certainly essential or a huge help to our network. As for Premiere, we are going up to -- well, we’re buying in the market but there’s a limit a very little bit above where we are now before we go through a new regulated -- but we would like to stop actually and be on that board and have a look at that business from inside. It’s been through a lot of ups and downs and it’s just a fantastic market. Our people in Italy are extremely keen on our people in SKY, they think it’s a great business. All our experts -- and you know, think it’s a big opportunity but we’re just being a little cautious. We’d like to get inside that company for a few months before doing anything further.

Thank you.

Could I just add a comment on the station business, which is I think it’s important not to look at any one of those sectors in isolation, and I think we look at those stations, which I think are extremely well run and have gained significant market share in this quarter, which I think is a pretty good indication, but we look at them as part of an integrated television business and I think they have a positive impact on the network, they have a positive impact on our ability to grow 20th Century Fox Television, both as promotional platform for the shows and then ultimately as a buyer for some of those shows in syndication. They have a very positive impact on our interactions with the cable companies and our ability to get retransmission consent, either in the form of cash or in the form of additional cable carriage. They are meaningful for us in our local sports businesses. So I think you have to be wary of pulling out any of these things in isolation and I think looked at in the context of our global television business, or certainly our U.S. macro television business, you can see the overall growth in that television sector. And I think the stations are a big contributing factor in that.

That’s helpful. Thank you.

And our next question comes from the line of Michael Morris with UBS. Please go ahead.

Thank you. Regarding SKY Italia, can you talk about the rationale for the promotion in the quarter, relative to your view of subscriber growth and opportunity in the Italian market? Should we view this as indicative of a more challenging environment despite the relatively low multi-channel penetration? And then also, assuming that you brought on more new customers than you actually booked during the promotion period, can you tell us how net new customers in the quarter compares to the roughly 136,000 net adds that you had in the quarter last year? Thank you.

It was just a new promotion and a new form of promotion which we are testing. We now have to -- it’s over now but we have to stay with it and see how the new people that we have, are they going to stay with us, are they going to churn, how will they compare with people we’ve -- you know, subscribers we’ve acquired in other ways. And if it’s as good as we hope, we will certainly be doing a lot more of it. If not, we’ll move on to other promotions.

So it’s not -- I guess your outlook for growth in the Italian market, I mean that’s 20% to 25% penetrated -- you still see plenty of opportunity there, that’s not indicative of that? Maybe you can just give a little commentary about that opportunity?

Yeah, I think we are absolutely going to continue to grow. You know, you’ve got a strange market there where you’ve got three so-so government channels and three owned by the Prime Minister and I think offering these alternatives, particularly with our news channel and everything, very important and very popular. We hear nothing but good comment and see more growth ahead of us.

Okay, and then --

I mean, there’s no reason why we can’t get to BSkyB levels.

And if you look at the third quarter, there was one other factor affecting the net subscribers in the quarter. You may remember this law was passed in Italy about a year ago that allowed our subscribers to cancel their contract, which is -- there was about roughly 20,000 subscribers under that law. But if you look at where we are currently, as I said in my opening remarks, we are up 29% in new subscriber additions as we start the last quarter of the year. So the business is not slowing at all and we are on target for a long-term matrix and profit.

That is correct.

Great. Thank you very much.

And our next question comes from the line of Michael Nathanson with Sanford Bernstein. Please go ahead.

Thanks. I have a housekeeping one for Dave and then one for Peter. Dave, when you gave your adjusted EPS number of $0.30 for the quarter, what tax rate are you using and what should be the tax rate going forward for News, given all the moves?

Too high.

Too high, yeah -- 37%.

Thirty-seven percent? Okay and then for Peter, we’ve seen the deceleration in display at FIM this quarter and I wondered how much of the slowdown in display is maybe due to the broader market trends. Are you seeing anything on the market side, either on volume or pricing that could have driven possibly the slowdown?

Look, I think it’s hard to tell. I think that -- I think as I said in my comments, we look at this as a work in progress and we look at a lot of progress we are making across multiple fronts. I think the single biggest challenge which we are constantly grappling with is just a huge amount of inventory. And as you see us growing our business, this category has grown so rapidly between our own growth, which is sort of accelerating in terms of minutes and page views and users, and Facebook’s growth, that it puts pressure on our ability to raise CPMs because of scarcity value. But we continue to believe that we are making progress and we think the overall trends are quite positive. Maybe a little bit slower than we anticipated at the beginning of the year but overall, we see no reason to change our optimism about the business.

And our next question comes from the line of Adam Alexander with JB Were. Please go ahead.

Just one for Peter on FIM; given the costs of international expansion and your new applications and developing the new ad models. What do you see as a sustainable operating income margins for FIM over the next couple of years?

Well, I think it’s too early to say. I think one of the decisions we clearly made this year was not to take our foot off the accelerator in terms of growth. And so I think you’ve seen us continue to invest in international, where we’ve had remarkable growth across, I don’t know, I think we are in 20, 30 territories and all of them somewhere -- I think the oldest of them is only a year-and-a-half old and we are still growing our uniques and still growing our monetization. And you know, we’ve made a conscious decision not to slow that down in terms of short-term improving our margins. The same thing is true here in the U.S. We are continuing to invest in technology. We are going to invest in that MySpace music joint venture, which we think has a lot of opportunity. We invested in apps. We’re investing in new development tools for users. We’re investing in new homepage, et cetera, et cetera. So I think we could have clearly escalated our margin this year but we made a decision to continue to invest and we believe that’s the right strategy. We are seeing continued growth and it’s too soon to start milking this thing for margin right now. I think it’s much more important that we keep focused on growth, both internationally and in terms of tools and applications for users here in the U.S.

And our next question comes from the line of David Bank with RBC Capital Markets. Please go ahead.

Thanks, a couple of questions. The first is if we go back historically to previous quarters, in 2Q08 your Fox News OI grew about 47%; in 1Q08 it more than doubled; 4Q07, it was up 41%; 3Q07, up 49% -- basically have to go back to 1Q07 to find sort of flattish numbers or anything below double-digits. So can you put that in the context of this quarter where Fox News grew OI 11%? Is there something going on? Is it inherent lumpiness? And can you also comment, just to clarify in terms of your new FIM target, it sounds like you are around the $900 million mark, but on the EBITDA side, were you -- is it 10% of the original range of -- or EBIT, rather, 10% of that original EBIT range? And I guess the last question is you guys have talked about pacings at the local stations over the past couple of months, I think publicly. Can you talk about have the pacings accelerated or decelerated since the last time you’ve talked about it publicly?

On the Fox News, there’s no slowing, really. What we’ve got is increase in our cost in the current quarter for the election, for politicals. And you’ve got a little bit of -- when you look at the comparisons, we started a year ago the new affiliate rates and so you’ve got a little bit of that year over year, where the pace of our affiliate -- the growth rate on our affiliate revenue is slowing because we had some of it a year ago.

Let me state that slightly --

Well, the contracts are kicking in at different times.

That’s exactly right. The only lumpiness in growth in Fox News is that our first big affiliate contracts had kicked in this time last year and our next big new one is this summer when our Time Warner contract kicks in and then --

I see, so that could kind of reignite the OI growth?

We have Comcast at the end of the year. I think we have Charter and Cox in ’09 and ‘010. So the only lumpiness you will see in Fox News growth from an affiliate point of view is when the old contracts expire and that’s the only thing going on there. Overall, there’s continued growth. In terms of FIM, we’re not breaking out the specific numbers but as I said, our revenues were -- we will miss that original target by about 10%, and probably slow down a little bit on the EBITDA side but not because of lack of revenue; more just because we don’t want to take our foot off the growth accelerator, and so I think if we stopped investing in growth, we could move our margins back up to the previous levels. But right now, we are really focused on continuing to grow our revenues. We’d expect to be well over $1 billion next year and that’s our primary focus right now. The third question, which was on station pacings, while we are -- while we have not been breaking out monthly pacings, we are seeing a little bit of a slowdown in station pacings in the fourth quarter. Again, we continue to grow market share so clearly we have no doubt our stations are outperforming the market. But I think if you look at the overall advertising economy, which we talked earlier, still remains pretty strong on a national broadcast and a national cable level. It is a little bit slower on the local station side, particularly [in certain] geographic areas.

But as you look, as you sort of look week to week over the past couple of months, do you find that the pacings have been decelerating or about the same, down the same stable? Or have the pacing declines accelerated?

What I would say is they decelerated a little bit at the beginning of the fourth quarter and we are actually seeing them pick up a little bit at the end of the fourth quarter and into the first fiscal quarter next year. So there is a fair amount of volatility in there and I wouldn’t say there’s any overall trends other than fourth quarter a little bit slower than the third quarter and picking up a little bit towards the end of the fourth quarter and the beginning of the first fiscal quarter.

Thanks so much for taking all the questions.

And our next question comes from the line of Jason Bazinet with Citigroup. Please go ahead.

Two quick questions; on SKY Italia, you hinted at the numbers but I was wondering if you could just give us hard numbers for the churn and the SAC in the quarter. And then a slightly longer term question -- when you think about the Netflixes and Blockbusters of the world, it seems like their role in the theatrical business is getting smaller. I was wondering if you look out three to five years if you see a point where, with some combination of VOD or hulu or something else where the economics may be superior for you to pursue some other mode of distribution. Thanks.

I think the SAC for SKY Italia was about EUR240, which is pretty much -- this is Euros now -- in line with where we were, and I think the actual churn in the quarter, we had 185,000 gross subscribers, so 108,000 churned out.

Okay. Thank you.

In terms of movie distribution and changing vehicles, I guess the only general comment I would make relative to Blockbuster and Netflix is that we like the sell-through business much more than we like the rental business. We don’t have anything against it but in terms of margins for the studios, the sell-through business, whether that sell-through business is on electronic sell-through or DVD, is a higher margin business for us than the rental business, whether that rental business is on Blockbuster or on video-on-demand. So I think what you will look for us to do is consistently try and open new avenues of sell-through. I think the deal that we recently signed with Apple to put our movie titles on electronic sell-through I think was a significant deal for us. We worked a long time to get those economics right and we felt that those economics are right. We have other electronic sell-through, things that we have with Amazon, with various other web players and we will continue to look at those. We’ll certainly continue to play in the rental business, whether that’s physical goods rental or video-on-demand rental. But I think the big thing that studios should be focused on or that we are focused on is really margin -- much more margin than anything else and we have consistently over a 10-year period seen that there are much higher margins for us in the sell-through business than there have been in -- regardless of what delivery device you use, than there are in the rental business.

Okay. Thank you very much.

And our next question comes from the line of Jason Helfstein from Oppenheimer. Please go ahead.

Thanks. I’ll keep it to just one question, but it might be a little long-winded; so this has to do with the company newspaper strategy and in particular your interest in Newsday, given what you talked about in your prepared remarks, so I think we all obviously understand that the goal was to consolidate, or the goal is to consolidate the back office of the Post with the back office of Newsday to increase profitability of the Post. However, it would seem an expensive way to improve profitability of the Post and moreover, since neither appears to fit into your longer term content strategy, wouldn’t it be a more prudent move to divest the Post? And keep in mind this is coming from an avid Post read. Thanks.

No. If we succeed with this bid, which we are still very hopeful of doing, it will improve our cash flow by $100 million a year.

But wouldn’t it be dilutive to like --

No, that’s not dilutive.

No, to the long-term growth rate of the company. I mean, those assets do grow slower than your core growth rate.

We don’t think so. We think that this is a great market and this will give us a very powerful position in that from which to grow.

Thank you.

Operator, before we take the last call, let me just say that this is the last earnings call that Craig [Fallantine] will be with News Corp as a VP and I know that many of you have worked with Craig very closely and will join me in wishing him the best as he goes on to his big new job at Discovery. And with that, let’s take our last question.

He just can’t stand working for Gary any longer.

Maybe we should let Craig take the last question.

And that will come from the line of Tuna Amobi from Standard & Poor’s. Tuna Amobi - Standard & Poor’s: I guess the first question is for Rupert -- where do you see the mix of Dow Jones online revenues growing? I think you are probably at a 40% range today, so how do you see that shaking out in the next couple of years? And the other question perhaps for Peter -- I think given that Fox News has been traditionally benchmarked to CNN, which has significantly gained on ratings recently, do you think that is something that might affect your upside with the affiliate renewal conversations that you are having now?

I did say our online revenues at Dow Jones, I mean, this is what it’s about, is electronic delivery of information, I expect that we will at least double our revenues and do a lot more than that to our profit margins online. I would just add one more thing to that, that the actually subscription rate for the print Journal is a lot less than half that of The New York Times, and we intend to put that right between that and online rates and online expansion, we can see improvements in revenues of hundreds of millions of dollars. This is a business which has been under managed or not managed for decades. Tuna Amobi - Standard & Poor’s: So let me just make sure I get that correct; when you say double the revenues, you expect that as a proportion of Dow Jones’ total revenues, that online revenues would approach what percent?

Online revenues will be a lot more than 50% -- probably 60%, 70% of total revenues. Tuna Amobi - Standard & Poor’s: Normalized, right? Okay, great.

As for Fox News, despite some very clever advertising by CNN, Fox News continues its dominance. We have had our ratings increase over the prior year. I think we are up 9% in total day, up 10% in Primetime. I believe we are still probably double their ratings. That’s not an exact -- we can get you the exact number but I think it’s --

Monday to Friday, we are at least double. Weekend, they get closer to us.

And I think if you look at, probably most importantly, if you look at all cable networks overall, we are the number four rated cable network in primetime, CNN is number 13, MSN is number 27. So despite some clever advertising, we remain still the dominant news source. We would expect that to grow as we go into the general election and we don’t see any impact whatsoever. I think if anything, it’s pretty hard for me to imagine any affiliate, any cable operator saying we don’t want the number four cable network, and we have certainly seen any indications.

It couldn’t be doing better, even Mr. Wolfson, Mrs. Clinton’s manager, has said that our fair and balanced position has made it definitely number one. And they only watch Fox News. Tuna Amobi - Standard & Poor’s: Okay. I’m not going to argue that. Thank you.

And on that note, why don’t we go to the press part of the call, please?

The first question from the press will come from Kenneth Lee from Reuters. Please go ahead.

There’s been reports that talks with Yahoo! have cooled and Peter, you mentioned that News Corp is quite comfortable with MySpace as a standalone entity. So can we read that there are no more discussions with Yahoo!?

I think saying talks have cooled probably overstates them. We have regular conversations with everyone in the space. I’m not sure I would ever characterize them as talks and the important thing is to reiterate what I said, which is we will always look at strategic options but we feel very comfortable with our current positioning in [one area] of the web.

Have there been any discussions with Microsoft at this point, since they’ve disengaged from the Yahoo! talks?

No, I guess I’d say the same thing -- we’re not in discussions with Microsoft. We talk with everybody in the space but there are no discussions with Microsoft.

Okay. Thank you.

We’ll go to the line of Seth Sutell from Associated Press. Please go ahead.

Just a follow-up or two on The New York Post; could you confirm what’s the current loss rate at the paper, and is there any anti-trust issue pending in terms of owning the post as well as Newsday and the Journal, or is the main regulatory issue on the FCC side with TV station renewals?

There is no issue anywhere. We don’t have any overlap, or at least it’s less than 7% with Newsday and we are certainly not going to disclose our loss -- current financial performance on -- and haven’t done in the past and won’t in the future. What was the other part of that?

It was the anti-trust question, if there was any --

The anti-trust question -- no, there’s no possibility of anti-trust with Newsday. As far as the FCC, that’s something which will be handled when our licenses come up for renewal on TV and we are very confident that we will get through that, even if we have to go to court.

One more follow-up, if you don’t mind; some consumer groups have come out with concerns about consolidation of media ownership in the New York market, and I saw that there was a -- and congress has also, some members that have been vocal about media consolidation. Is there any response you have to those sentiments?

Yes, I’d like them to take a little look around the Internet.

Okay. Thanks.

We’ll go to the line of Shira Ovide with The Wall Street Journal.

Thanks. Let me just ask the question in a little bit of a different way -- what is your level of interest in deals with Microsoft or Yahoo! or with AOL, for that matter?

I don’t think we have any level of interest. I think that we would respond accordingly to any propositions that we though did or didn’t make sense to us. But we are not sitting around saying this is of interest to us or not of interest to us. We are prepared to have any strategic conversation that we think does or doesn’t make sense.

And does that mean that as with Microsoft, there’s no discussions ongoing with Yahoo! or AOL?

I have not had a conversation with Yahoo! or AOL in a couple of weeks.

Nor have I.

So no, I would say there are no ongoing discussions.

We’ll go to the line of Gillian Wee from Bloomberg. Please go ahead.

I just want to pick on that a little more -- what are your thoughts on the consolidation of the Internet companies? Do you think Microsoft will need to buy Yahoo! to compete with Google? And also on the SAG front, the American Federation of Radio and Television Artists rejected a SAG request to postpone talks a third time. Are you going to seek a quick agreement with AFTRA to pressure SAG into compromising on the DVD residuals and pay-per Internet work?

I have no comment on whether Microsoft needs Yahoo!. I think you should [ask Microsoft]. You know, it’s interesting and fun as a bystander, but whether it’s necessary for them, I think that’s their question, not mine. As for SAG or AFTRA, we’re not going to seek a quick deal with anyone. We are always -- we have been very consistent in our positioning, which is that we are anxious and eager to find fair deals that serve the industry as a whole well, that appropriately and [inaudible] reward talent for the work they do and yet at the same time allow companies to stay economically viable in the current environment and more importantly to participate in new media and to participate in potential growth areas without constraints that would otherwise restrict us. And that was certainly our strategy with the writers and our strategy with the directors. It is our strategy with the one deal we made with AFTRA. It was certainly the strategy we had when we went into negotiations with SAG and unfortunately, we weren’t able to successfully complete those negotiations this week, and it’s the same strategy we will go into the after negotiations with today and tomorrow. But we are not seeking anything quick. What we are seeking is fair deals for everybody, ones that treat talent fairly but also allow there to be a healthy industry in which everyone, both talent and companies, can continue to prosper.

Okay. Could you talk about the future for the Internet consolidations? What are you looking at?

I don’t -- you know --

I think you already answered that question, Peter.

I don’t know what I’m looking -- I think we’ll see what happens.

Next question, Operator.

We’ll go to the line of Thomas Meyer from Newsday. Please go ahead.

Yes, regarding Newsday, why did you decline to increase your bid for Newsday after Cablevision put up a higher cash offer? Do you consider your current $580 million offer to be part of a binding agreement with Tribune’s Sam Zell? And do you see any possibility of raising your bid if Cablevision looks like it will prevail?

No, I don’t think Cablevision will prevail. Just be patient for a couple of days, will you? We are certainly not in the business of getting into an auction here.

We’ll go to the line of Dade Hayes from Variety. Please go ahead.

Since we’ve talked a lot about newspapers on this call, I thought it was worth just getting your latest sentiment about reports linking the company to The New York Times potentially. I know you are obviously focused on other things right now but any thought on that?

Yeah, I’ve never read such nonsense in my life. I mean, it’s obviously illegal and we don’t have any ambitions there.

And actually can I follow-up real quick on the SAG front? Just operationally, I was wondering about operating in this potential strike environment, because you spoke more about the negotiations as opposed to the financial impacts.

Well look, I think it’s a shame that we weren’t able to come to an earlier agreement with SAG and I think the unfortunate ramifications are that it’s difficult for anybody to start a movie at this point. You won’t see any movies start now because they might be potentially interrupted by a strike. And I think in an industry that has already weathered an extremely devastating striker earlier this year, you know, the onset of what is essentially a de factor actors’ strike is I think a really bad thing for an industry. And certainly we have endeavored to try and get and keep the talent back to work and we would love to make fair deals for everybody concerned as soon as possible, so that we don’t have this de facto slowdown which we are already in the midst of on the movie side.

Great. Thank you.

We’ll go to the line of George [Silino] from The Hollywood Reporter. Please go ahead.

Peter, I was wondering if you can explain a little bit more what kind of films, what types of movies we could see out on day-and-date from you guys, day-and-date VOD. You said you would be very selective there. Any kind of color on what kind of movies could work for you guys on that front?

No, not really. I think we are going to experiment and we will try different genres and different categories and see the results and see what impact it has on DVD sales. But I don’t have any sort of specific template on what will or won’t be day-and-date.

Thank you.

We’ll go to the line of Andrew Clark from The Guardian. Please go ahead.

Rupert, I just wondered if you could give us your reaction to the independent committee at Dow Jones or at the Wall Street Journal which claimed that the letter and spirit of the independent’s deal had been breached over the resignation of Marcus Brauchli.

Well, naturally we don’t agree with them at all. We stuck absolutely to that and it was up to Marcus to go to the committee and he chose not to, if he wanted object in any way. And he is staying with the company. He’ll have an office in here. We’re looking forward to making great use of his counsel.

Thanks.

I’ll just say this -- we are very actively engaged in a search both inside the company and outside the company for a successor and to be able to move forward as quickly as we can. And we are naturally keeping this committee fully informed as we go along.

Okay. Thank you very much.

We’ll go to the line of Stacey Kramer from paidContent. Please go ahead.

Just wondering at this point, what’s the value of keeping Fox Interactive Media and MySpace together? Why not just have MySpace and do something else with Fox Interactive Media or dissolve it? Why does MySpace need to be part of it, other than to make all of its money? I mean, I didn’t mean that to sound flip, but --

I don’t think it’s -- I’m not quite sure the nature of the question but ultimately, if you look at certainly what we just did in the advertising side, we keep trying to have these things run as efficiently as possible. Fox Interactive Media is largely just a corporate construct o organize some of our holdings and to help us manage them, but MySpace is run independently. It now sells its ads independently, builds its features independently. And you know, we organize our businesses in what we hope and trust is the most efficient way possible.

So Fox Interactive -- I mean, having MySpace’s numbers really -- looking at Fox Interactive Media’s numbers, we’re really looking primarily at MySpace’s revenue, correct?

Well, I think MySpace we’ve said repeatedly is clearly the dominant revenue generator but there are important other businesses inside of there, whether it’s IGN, which is growing nicely, Fox Sports, which is a leader I sports, Photobucket, et cetera. I think that -- look, we’re trying to organize and run our business efficiently and we certainly don’t think that there are any negatives to MySpace to be organized inside of this larger thing and some benefits in terms of joint buying of technology, joint buying of spectrum investments, et cetera, you know, utilizing of some corporate staff and function. So we think it’s organized well and we will consistently keep an eye on it.

And the last thing on that, the decentralization of the ad sales, is that going to put you further behind for a little bit in achieving your goals, does it hold things back?

We think actually it will accelerate us because I think one of the things it allows us to do is to more closely align the building of features with monetization of those features, and I think particularly as we learn more about how social networking works and we learn more about building new applications, building new features, building things like MySpace TV or the music joint venture or new iterations of the home page, it allows those people who are in product development to be essentially next door to the people who are responsible for monetizing those developments. And essentially what we were looking to do was cut out a layer in between. And so not only do we think it will slow us down, we think it will actually accelerate our ability to do that.

Thanks.

We have one further question. That is from Ellen Yan from Newsday. Please go ahead.

I’m going to tell Sam Zell that you answered reporter questions and he didn’t, so thank you.

I’m sure he’ll be pleased to hear that.

What’s your strategic vision for a combined New York Post/Newsday operation, and also for future ventures with Tribune?

We, on both scores, we see the Newsday continuing to be a very important local newspaper covering two of the greatest counties in America, and wealthiest counties in America. And the Post covering basically the City of New York and being a paper with a very different character. We are not putting them into the one newspaper, but there are great savings in printing and distribution and of course, normal back office functions. There’s a lot we can do together and we will pursue that and see. We’re very optimistic for both papers.

When do you think that this deal might be wrapped up? Because you told Steve Levy a couple of weeks ago that it would be two weeks.

No, that was only one-and-a-half weeks ago. We’re hoping to wrap it up within the next week, and I don’t mean the end of next week. I mean within the next seven days, but it takes two to agree but we are at a pretty advanced stage. I’ll just leave it at that at the moment.

Well, I was also curious about -- I guess part of that led to your decision to stand firm on the Newsday bid then? Because you know, maybe Zell is close to making a decision and it might be you, Rupert?

I trust Mr. Zell absolutely. He’s famous as being a man of his word and we think everything is in hand.

Thank you.

Thank you. Operator, I think that concludes the call for today. Thank you very much for joining us everybody.

Ladies and gentlemen, today’s conference will be available for replay beginning at 7:30 p.m. Eastern Time today and running through Saturday the 17th at midnight. You can access the AT&T replay service by dialing 1-800-475-6701, international participants can dial 320-365-3844, entering the access code of 918409. Again, those numbers are 1-800-475-6701, international 320-365-3844, and the access code of 918409. That does conclude our conference for today. Thank you for your participation and for using AT&T’s executive teleconference service. You may now disconnect.