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News Corp profits fall on sale of MySpace social media website

August 22, 2011 By: Dr Search Principal Consultant at the Search Clinic Category: Customer Service, Social Media, Social Networking, Technology Companies, Uncategorized

News Corporation has seen its quarterly profits fall 22% on the back of losses caused by the sale of the MySpace social media website.News Corp profits fall on sale of MySpace social media websiteThe company, whose UK subsidiary News International has been rocked by the phone hacking scandal, made £ 423 million ($683 million) net profit in the three months to 30 June – down from $875m last year.

News Corp sold MySpace in June for only £21.8 million having paid £362 million for it in 2005.

Chairman Rupert Murdoch said he had the backing of his board. “The board and I believe I should continue in my current role as chairman and CEO,” he said.

Mr Murdoch admitted the recent phone-hacking scandal that resulted in the company closing its News of the World newspaper had caused News Corporation difficulty, although its revenues rose 11% to £5.6 billion.

“Make no mistake, Chase Carey and I run this company as a team, and the strength of that partnership is reflected in our improved results,” he said.

“While it has been a good quarter from a financial point of view, our company has faced challenges in recent weeks relating to our London tabloid, News of the World.  We are acting decisively in the matter and will do whatever is necessary to prevent something like this from ever occurring again.”

The scandal also resulted in the departure of senior News Corp executive Les Hinton, who was chief executive of Wall Street Journal publisher Dow Jones, and News International chief executive Rebekah Brooks.

And last month Mr Murdoch and his son James, News International chairman and News Corporation deputy chief operating officer, were forced to appear before MPs in London to answer questions about the scandal.

Investors will have to wait until News Corporation’s next quarterly results for more information on how the closure of News of the World has affected its profits, as the title’s final edition was on 10 July, 10 days after the three months covered in the company’s latest financial results.

However, News International only provides a very small proportion of News Corporation’s revenues and profits.

Its other main businesses include Hollywood film studio 20th Century Fox, US television network Fox Broadcasting and publisher Harper Collins. It also owns the Wall Street Journal.

And News Corporation’s 39% share of UK-based satellite broadcaster BSkyB proves highly lucrative, however, last month it was forced to abandon its bid to buy the remainder of BSkyB following the hacking scandal.

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