Murdoch suffers ad slump

Forecasts for rapid growth at Rupert Murdoch's media empire News Corp have been slashed because of a sharp fall in advertising revenues.

The company blamed the terrorist attacks in New York and Washington for the slump in business. "We have lost many tens of millions [of dollars] in ad revenues in the weeks immediately following the attacks," said News Corp president Peter Chernin.

News Corp is one of the last big media groups to warn that the economic turmoil during the past weeks would hit its bottom line. AOL Time Warner and Disney were among the first to warn shareholders of the impact on their businesses.

According to News Corp's chief executive Rupert Murdoch, the advertising market had been weakening even before the catastrophic events three weeks ago.

Key markets hit

The slowdown affected all of News Corp's three key markets - the US, the UK and Australia - Mr Murdoch said.

Company income had been expected to grow at 20-26%. This forecast has now been cut to about 10%.

It's biggest US holding, Fox Entertainment Group, is predicted to see the growth rate of its cash flow plummet from well above 30% to between 10% and 15%.

Mr Murdoch, however, insisted that "despite these near-term weaknesses" the company's "strategic and financial position remains strong".

News Corp owns newspapers, radio stations, television networks and other entertainment businesses in all continents.

As the events in New York and Washington unfolded, television stations across the United States had dropped advertising slots, while in the aftermath of the attacks many companies withdrew ad campaigns that were deemed not to meet the public mood.

News organisations, meanwhile, are counting the rapidly escalating costs of covering a story that spans the globe and involves the expensive deployment of journalistic teams to places like Pakistan.