Gary Ginsberg - IR Dave DeVoe - CFO Peter Chernin - President, COO Rupert Murdoch - Chairman, CEO

Jessica Reif Cohen - Merrill Lynch Aryeh Bourkoff - UBS Michael Nathanson - Sanford Bernstein Richard Greenfield - Pali Capital Jason Bazinet - Citigroup Doug Shapiro - Banc of America Securities Vijay Jayant - Lehman Brothers Jolanta Masojada - Credit Suisse First Boston Doug Mitchelson - Deutsche Bank Anthony Noto - Goldman Sachs David Roberts - Goldman Sachs William Drewry - Credit Suisse Alex Pollak - Macquarie Securities Jason Helfstein - CIBC World Markets

Robert Bluey - Human Events Seth Sutel - Associated Press John Lehman - The Australian George Sealy - the Hollywood Reporter Julia Angwin - The Wall Street Journal Aline van Duyn - The Financial Times

Welcome to the News Corp third quarter 2006 earnings conference call. (Operator Instructions) Here with our opening remarks is Executive Vice President of Investor Relations and Corporate Communications for News Corp, Mr. Gary Ginsburg. Good afternoon, sir, and please go ahead.

Thank you, Brad. Good afternoon, everyone, and welcome to today's call to announce News Corporation's third quarter results. Joining me today are Rupert Murdoch, Chairman and CEO of News Corp; Peter Chernin, President and Chief Operating Officer and Dave DeVoe, our Chief Financial Officer. So I know today and earlier in the week has been a long one for those of you who cover the media, so we will try to keep our comments relatively brief in order to get right to your questions. Dave will begin with some comments from the quarter that might not be readily obvious in the press release, followed by Peter who will speak about the operational successes we've enjoyed in our film and television segments. Rupert will then offer some perspective on our overall growth prospects as well as the Board's decision today to extend the Company's share repurchase program, before we go onto your questions. Given the late hour here on the East Coast, I would strongly urge you -- and I know I say this every quarter, but I will do it again -- I urge you to limit your questions to just one. Today's call, as you know, is governed by the Safe Harbor provision. On this call, we will make 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 in our public filings with the SEC that could cause actual results to be materially different from those in the forward-looking statements. With that, I will turn the call over to Dave.

Gary, thanks very much and good afternoon, everyone. As is pretty evident from third quarter results, we are very pleased with the continued strong financial performance for the Company. In fact, this is the first time in the Company's history we exceeded the $1 billion mark in operating income for a single quarter. Operating income was up 14% over last year's third quarter. This double-digit increase was led by profits at SKY Italia versus a loss recorded a year ago; by continued growth in our TV and Cable segments, partially offset by reduced profits from our Film and Newspaper Group. Our core growth looks even better when considering that the current quarter's operating income was reduced by approximately $52 million from three items not included in last year's results: equity-based compensation expense; amortization expense related to last year's purchase of the outstanding shares of FOX; and amortization expense resulting from our Internet acquisitions. The net impact of these three items is spread among our various segments. Our associate entities also performed extremely well, with equity income in the quarter of $264 million, a $173 million increase over last year's level. This improvement is primarily from our share of higher DirecTV and SKY Latin American earnings. In bottom line, News Corporation reported net income for the quarter of $820 million, more than double the $400 million reported last year. Our earnings per share for the quarter also doubled to $0.26 from $0.13 a year ago. Included in this year's third quarter results is $170 million of other income. This is primarily from the gain on the sale of our interest in Enova -- this is our satellite pay television platform in Mexico -- to DirecTV, and an unrealized loss on the fair value of exchangeable debt securities. These together contributed $0.04 per share to our EPS. Now I would like to highlight a few items from our operating segment. Films and Entertainment reported second quarter operating profit of $225 million. This is down $26 million from last year, but still a very solid result. This decline is mostly a function of the comparison to the particularly strong home entertainment results and releases that we had a year ago. It does not yet reflect profits from the success of Ice Age 2. The release of Ice Age 2 at the very end of the quarter actually reduced our third quarter profits, as the bulk of its releasing cost hit the quarter while only a minimal amount of the more than $590 million in cumulative worldwide box office receipts were recognized. This is going to be a very profitable movie and this performance sets us up well not only for the fourth quarter, but also for fiscal 2007. Turning to Television, our third quarter operating income was up $65 million, a 29% increase. This significant improvement highlights the benefits from our ratings success at the network which is a very positive carryover effect to our stations. The strength of our schedule also resulted in lower series cancellation cost as compared to last year. Peter will give you more information on the network in a minute. I should also note that while total Television segment revenues were down in the quarter from a year ago, included in last year's results was about $170 million of revenues associated with the broadcast of the Super Bowl. We were able to offset much of that with this season's prime time strength in post-season sports. As has been the case for the past few years, our Cable Network segment continues to deliver strong growth with revenues up 33% and operating profit of 23% on a combination of strong ratings and affiliate increases. You will note that the current quarter includes the consolidation of the Florida and Ohio state regional networks after their acquisition in April 2005. Also, last year's quarter included a benefit from not having any NHL rights cost. This is due to last year's strike. The net of these items is a combined $13 million positive impact on the operating income quarter-over-quarter. The largest growth driver in the quarter this year was SKY Italia with third quarter operating income of $69 million, a $90 million improvement from last year. This business is really developing well with all key matrix on track. Gross additions in the quarter of approximately 178,000 resulted in net additions of 112,000; and ending subs of 3.71 million. This put us on pace to meet our 3.8 million to 3.9 million subscriber estimate for our fiscal year end. ARPU for the quarter of approximately EUR46 is up 3% over last year, reflecting the nearly EUR2 price increase that went into effect last fall. SAC in the quarter approximated EUR235 per subscriber. This is about the same level as last year. Annualized churn in the quarter was 7%, an improvement over last year's third quarter. Considering all of these factors, SKY Italia is well on pace to generate a $200 million U.S. profit improvement over last year's results. Shifting to our Print businesses, I'd like to give you a little more detail behind the newspaper results. Overall trends for our major mastheads in both the United Kingdom and in Australia were essentially in line with last year. Our circulation revenues were up in both territories, primarily from color price increases. Advertising revenues in the quarter were up a little in Australia and down slightly in the United Kingdom. However, total newspaper segment operating income for the quarter was down $33 million compared to last year, primarily due to the absence of the operating income from the TSL Education business that we sold last October; costs associated with the launch of a consumer magazine division in the United Kingdom; and a stronger U.S. dollar in the period. Our cash flow during the quarter was strong. We generated $1.4 billion in cash flows from operations less capital expenditures. We continue to be active with our share buyback program, purchasing more than 44 million shares in the quarter for a total of $740 million. This brings the total repurchases to more than 151 million shares for a total of nearly $2.5 billion since we started last June. We've paid down more than $800 million in debt in the quarter and our ending cash balance was $5.3 billion with gross debt of $11.4 billion, our net debt position was $6.1 billion. Finally, let me address our guidance for the current year. During our earnings call in February, we indicated an expectation that fiscal 2006 operating income growth would be approximately 12%. Based on the assumptions inherent in our projections, we are still comfortable with this 12% growth estimate for the current fiscal year. With that, I would like to turn the call over to Peter, who will provide you additional comments.

Thank you, Dave. I know it's been a long day for many of you, so let me get right to it and touch on just a couple of salient items, some of which relate to today's results and some of which will have a more meaningful impact down the road. Let me start with two topics that are having a significant influence on current year results; namely the success of our broadcast network and our film studio. At SBC conventional wisdom held it that it would be very difficult for us to repeat our ratings victory from a year ago. Well, with only two weeks to go in this current season, it looks like we will defy that wisdom and we will be the ratings victor again this year, winning the coveted top spot among adults 18 to 49. Even more impressively, we will do it despite not having the lift from the Super Bowl this year. So here are the facts. Our prime time entertainment ratings this year are up 14%, excluding the Super Bowl a year ago and Major League Baseball. We consistently win three of the seven nights each week and we have finished for 11 straight weeks as the number one network in adults 18 to 49, a record for our network. Now obviously, American Idol is a huge contributor to this success, with ratings this season up an astonishing 13% over a year ago. I think -- and this is the most important part -- our success is not confined to Idol, and it's not confined to just the Idol nights. What's truly exciting to us is that we're heading into next year with more bona fide hits and fewer holes to fill than ever before. We now have an arsenal of established series, most of which are continuing to grow. This is led by House, which is up 26% in its second year, and just last week was the third-highest rated show in all of television. 24, which is up 12% in its fifth season, which is the largest fifth season increase of any drama in over 15 years. And Family Guy, which in its first full season since returning to the broadcast network, has grown its time slot by nearly 50%; and that's against one of the top shows on television, Desperate Housewives. Equally as important, we have also established several new shows that are primed to return next season. Shows such as Prison Break, the second-highest rated new drama of the season; Bones, which has raised its time slot household viewership by nearly 50%; and American Dad, which again performs extremely well against Desperate Housewives at 9:30 on Sunday. So with more established shows set to return than ever before, with more rating points at our disposal and with more returning series expected on all seven nights, we head into the upfront and our next broadcast season in really the most competitive position we've ever been in. This would be reflected not only on the network, but also across our television stations to next season. Quickly turning to Film, as Dave alluded to, we were down slightly in the quarter, but this is by no means indicative of the strength of our film business. We continue to have great consistency and superior performance across our entire slate. Interestingly, if we had released Ice Age 2 three weeks earlier -- similar to the time we released Robots a year ago -- we would be talking about significant increases in the Film results for the quarter. Now the success we have enjoyed with the Ice Age franchise, which is right now surpassing $600 million in worldwide box office, is a microcosm, almost of paradigm of the success we have enjoyed now for almost six straight years in our Film business with earnings increasing each year in that span. So let me give you a couple of the highlights of the movie. First, it was created at a fraction of the cost of almost every other CGI film. Next, it was marketed cleverly to ensure that the target audience was reached, and reached often. This was a great example of our ability to use the resources of News Corp's sister properties. Our TV stations, our broadcast network, our newspapers, our cable channels and our Internet properties were all deployed to help us open the film. It was leveraged across our international distribution platform and just last week surpassed $400 million in international box office alone. As a result of all this, it will be a very profitable film for this Company for years to come and I think is another ongoing franchisees which we can continue to exploit in new movies and new releases. One other point I want to make on Film is that while we were down in the quarter due to the timing of home entertainment sales a year ago, we continue to have very strong success with our new releases on DVDs. Walk The Line shipped over 8 million copies; Transporter 2 shipped over 3 million; and we are just right now in the middle of the DVD releases of The Family Stone, Big Momma's House 2 and Cheaper by the Dozen 2; all of which are rounding out fiscal 2006. Not to mention the theatrical release of the highly anticipated X3. So we expect to have a strong finish to the year in Film. We also took some significant steps during the quarter that will not have an immediate impact financially, but would set us up for continued growth down the road. The success of MySpace is pretty familiar to all of you, but let me remind you of its highlights. We're now approaching 80 million registered users. We averaged more than 30 billion page views last month and we're showing significant growth in revenues and the introduction of new features, including the video section and a comedy section. Some of the other new initiatives that we're working on to ensure our growth for years to come: in February, we announced the launch of Mobizzo, a comprehensive new destination for mobile content on mobile platforms, the first such venture by a major media company. The mobile market is exploding and it makes sense for us to create a content destination for the billions of cell phone users around the world. From FOX Television and movie properties, such as Family Guy and Ice Age to original content produced directly for the mobile audience, we're creating a unique and compelling mobile entertainment offering to deliver directly to the consumer. One other recent development I want to mention is the agreement we reached with our affiliates to share in the revenues from new media distribution of content. By partnering with our affiliates first instead of taking unilateral action as some of our competitors have done, we now have more flexibility to repurpose network content in ways to take advantage of all of the new media opportunities to the benefit of us and our broadcast partners. Just in the past two weeks as a result of this agreement, we announced a deal with Apple for delivery over iTunes of 16 of our hit series, which I think is the largest offering of any content company. Separately, we announced a download deal for American Idol. Both of these arrangements can be very meaningful down the road. Finally, just this week, we have launched expanded new web sites for all of our O&Os, and we're rolling those out across our FOX affiliates. So I am extremely bullish about the new media environment today. Led by the accelerating growth of content and issues, movies, TV and cable properties on new platforms and the continuing growth across all of our properties, not only from MySpace, but including IGN and Foxsports.com. We remain highly focused on the new media growth opportunities across the Company, as well as on sustaining performance across our established businesses. With that, let me turn it over to Rupert.

Thank you, Peter, you really sold me with that. To sum up ladies and gentlemen, we have had another great quarter; 14% operating income growth, strong results from our Television, Film and Satellite segments, double-digit growth in our cable channels and a doubling of net income from a year ago. And, despite a decline in top line numbers at our Newspaper segment, continued resilience in the face of tough climates in both England and Australia. All very good news for our Company that we work to ensure the best positions strategically, geographically and operationally to continue to outperform the sector over the next several years. The Company is solidly on track for the remainder of this year, but also I think for the future as well -- for the next several years in fact -- particularly given how durable our growth engines are proving to be. SKY Italia, for example, if anything it is showing signs of accelerating growth as it approaches the end of its third year of operations. Indeed, with 70% of its costs fixed, and sub acquisition costs declining slightly and a sub base that is expanding steadily, this platform alone will become a major profit contributor to the Company beginning next year and rising steadily from there. Look at our other satellite platforms. Take Direct or BSkyB; both of them, despite fierce competition are expanding nicely and generating significant equity contributions to our bottom line. Both are clear market leaders, offering consumers the best choice of video content and enhanced services. Looking out over the next two or three years, both will continue to be large profit contributors to the Company as they solidify their leadership positions. Or consider our Cable segment and the growth we could achieve through the end of the decade. Our three primary cable channels are growing affiliate and ad revenues at double-digit rates, with FOX News now facing the expiration of its original carriage deals, stands poised to finally reach the level of earnings that it deserves. We're not just focused on growth quarter-to-quarter or even year-over-year, though both are important. At the same time that we would achieve double-digit growth each of the last four fiscal years, we've also focused on how we're going to achieve double-digit growth four, five or six years from now. As well, with the focus on our new media properties and in establishing leadership positions on all new digital delivery platforms. It's also why we're so purposed on building out our satellite platforms. All the while, we're still focused on continuing to develop new cable channels to complement our existing collection of leading channels in news, sports and general entertainment and our fast-developing channels at National Geo and SPEED. All the while we are making investments in fast emerging markets throughout Asia Pacific, where STAR is achieving solid success and where we plan to launch our direct-to-home satellite business later this year. Or in further developing our international cable channel business, as more and more international pay TV platforms recognize the value of our branded channels. We are focused on where our next generation of growth will come from and using the consistent, durable cash that we generate from our slower growth print assets to help finance that growth. At the same time, we remain just as focused on returning value to shareholders. To that end, today the Company announced an extension of the stock buyback program we recently launched last June. Under that program, as David noted, the Company has purchased $2.5 billion of the $3 billion originally authorized by the Board. We have been aggressive buyers because of the value we see in acquiring our stock at such depressed levels. There has frankly been no better use of our cash during this period than investing in new shares, particularly as we continue to trade at such a discount to our media peers and to the overall market. Recognizing that disconnect and the continued value inherent in purchasing new shares, the Board has extended our original program by an additional $3 billion to be completed over the next two years. We expect to continue to be active buyers of our shares so long as the market undervalues the Company. It's a good use of our cash. Appropriately, it returns value to our shareholders and is an endorsement of our own belief that the Company is poised to deliver more strong growth in future. So with that said, Peter and I will be happy to take the questions that you have. Thank you, ladies and gentlemen.

(Operator Instructions) Our first question comes from Jessica Reif Cohen - Merrill Lynch. Jessica Reif Cohen - Merrill Lynch: Thank you. Congratulations, that was a spectacular quarter once again. It appears that underlying momentum is strong across so many of your businesses, so my question will focus on television. First, with the enormous ratings success at FOX broadcasting and the cable networks, do you expect to fully capitalize on these numbers in the upfront? As part of that could you discuss your sales strategy for My TV at both the national and local level, given the advertising split? Will it in any way be tied into MySpace?

I would start off and say, look, while I can't predict what will happen in the upfront, I do think that we go into it arguably in a stronger competitive position than we have every been. We're not only having these great results, we are finishing up with a great May sweep; we're the only network to be up in the May sweeps versus everyone else in decline. I think our strategy is first and foremost to convert these ratings increases to volume increases in dollars. We're going to look to combine that additionally with CPM increases and we think we're in a great position to get both; not only because of our own performance, but we also think that some dollars will be freed up by the combination of the UPN and WB. We think we're in the best position to reap those benefits. So I think we're going to look for more. We're going to focus on volume increases, we're going to be pretty patient about it. And you know I do think the upfront may go a little bit slower, but I think you'll see us with both volume increases and with market share increases, both at our network and our stations. The same thing is largely true on our cable channels. We have different strategies for different channels. Some of them are going to be looking for pretty significant CPM increases. Other ones such as SPEED where we have, I think, about a 50% increase in our ratings, we're going to really focus on volume increases at the expense of CPMs. Overall, I think on an ad front, we are feeling pretty good about going into it and pretty good about the marketplace. We're having strong scatter sales across both broadcast and cable properties and we're having low cancellations, so we feel pretty good about all of those. In terms of My Network TV, we have a reasonably conservative national inventory. We believe that we can deliver strong demos, particularly strong female and young adult demos on those, and we have a pretty modest bogey that we have to overcome. I think as we said on the last call, our net UPN prime time ad sales were about $52 million. We believe we can more than make that up. I think that the interesting thing on the local front is that there will be more strong prime time inventory available in our local stations than has ever been before and I think if we can perform halfway decently on the ratings front, I think it will be not only strong for My Network TV, but it will give some strong leverage to those stations because they will have more highly valuable prime time inventory to sell than they have ever had before. So I think that's our overall strategy. The only other thing I just want to say about My Network TV is that we continue to do very well on signing up affiliates. I think we're right now somewhere around 73% of the country already signed up, we have about 15% of the country working and we would expect to be at, if not above, 90% by the time we launch. Finally, right now there is no relationship between My Network TV and MySpace. Jessica Reif Cohen - Merrill Lynch: Will there be any digital sales?

There will be digital sales. I just saw this morning the first generation of the web sites for My Network TV, which looked pretty good and we'll be looking to integrate opportunities on those programs. We're working on some deals with sponsors already for web things, we're working on things for the characters and behind the scenes so there will be a highly integrated web presence of those shows. Jessica Reif Cohen - Merrill Lynch: Thank you.

Our next question comes from Aryeh Bourkoff, UBS. Aryeh Bourkoff - UBS: Thank you. Just two quick questions, not to be greedy after such a strong quarter, but the nine-month number looks like about 12.65% operating income growth, excluding the redundancy. Obviously, you're affirming your 12% guidance, which implies a deceleration in the fourth fiscal quarter. Anything to read into that, or can that quarter continue to be strong, especially given your contents, Peter, on the Film side? The second question is SKY Italia obviously showing all the momentum, especially on the profitability side. Any plans there to do an IPO of some sort in Italy? Thank you.

In Italy, certainly nothing has been decided, although one is under consideration for maybe early next year. But Dave, you'll address those figures; it's not what I understood.

No, no, no, no -- there's nothing to be implied from it at all. Our guidance is for 12% and you shouldn't read into it any weakness in the quarter, it's just basically [safe]. We'll take the next question.

Our next question comes from Michael Nathanson, Sanford Bernstein. Michael Nathanson - Sanford Bernstein: Thanks. I will stick to one question. I have one for Peter. Peter, looking at next season, do you see any reason why cost inflation will be higher next year or significantly higher? I guess in other words, I'm trying to figure out, will the strong operating leverage next year translate into profitability at the FOX Network business?

We're actually working on the schedule right now. But my guess without seeing it is that cost inflation will actually decrease next year. We had some pretty significant inflation this year with That '70's Show and Malcolm and a new price for American Idol. We'll continue to have price increases for Simpsons, but I think the '70's and Malcolm will probably go away. We have already made our American Idol deal. So I would assume that if anything, that price inflation is likely to decrease on the Entertainment side of the broadcast network. Michael Nathanson - Sanford Bernstein: Therefore, there will be a big margin expansion at the FOX Network next year, or should be?

Yes. Michael Nathanson - Sanford Bernstein: Okay, thanks.

Our next question comes from Richard Greenfield, Pali Capital. Richard Greenfield - Pali Capital: Question related to STAR India. You said that STAR operating profits were up 28% year-over-year. Could you give us some sense of what the absolute level of operating earnings are now for the Indian portion of STAR? Maybe just give us a sense on a 12-month basis, how big is that business in terms of operating earnings now? Thanks.

Yes the overall revenues, which we haven't been breaking out, a little over $120 million in revenue in the quarter and around $30 million of earnings in the quarter, slightly less.

Our next question comes from Jason Bazinet, Citigroup. Jason Bazinet - Citigroup: Just one question. If you look at the EasyNet acquisition over at BSkyB and talks about WiMAX over at DirecTV, it seems like DBS companies are increasingly wanting to add to their video capability, in that context, in Italy. Do you have any interest at all in Fast Web? Thank you.

No. Jason Bazinet - Citigroup: Okay, thanks.

Our next question comes from Doug Shapiro, Banc of America Securities. Doug Shapiro - Banc of America Securities: On MySpace. I was just wondering if you could talk about the success getting branded advertisers, or branded advertiser receptivity to your efforts to I think you've referred to productizing the site, creating different silos that might be attractive to branded advertisers? As part of that, I think in the past, you have talked about expecting somewhere in the neighborhood of about $350 million in revenue from FIM this calendar year. I just wondered if you could comment on that number in light of the momentum?

I think in terms of branded advertisers, we're actually very pleased with how we've done and how we continue to do. We have a great roster of blue-chip advertisers, from Cingular and Verizon to P&G, Pepsi, Unilever, Coke; all of the major car companies like Chrysler, Ford, Toyota; Target, Best Buy, et cetera. So I think we're at a point right now where almost anybody who wants to reach young demos in this country, this is about the broadest young demo reach vehicle and we continue to see growth of branded advertisers coming on the site to reach them. I think that it's accelerating because of the launch of some of the new features. I think the launch of the video section and the launch of the comedy section, I think that those are environments that are highly, highly attractive to branded advertisers. So we see that as a real positive. In terms of the revenue, we're not breaking out figures, but we remain highly comfortable with that $350 million figure and believe that we will have no problem achieving it. Doug Shapiro - Banc of America Securities: Great, thank you.

Our next question comes from Vijay Jayant, Lehman Brothers. Vijay Jayant - Lehman Brothers: A question for Peter. The timing on launching the FOX Business Channel, is that going to be sort of bundled with the FOX News discussion in the fall?

You know, actually, we have gone out of our way not to bundle it because we would like to, whatever leverage we have off of FOX News -- which we actually think is pretty considerable -- we want to focus that leverage on trying to maximize our price, which is the price we think that Roger and this team deserve for their remarkable performance. So the discussions we've been having about the Business Channel have been stand-alone discussions involved in different parts of our cable business. Those discussions continue and I actually think they're going pretty well. I'll say the same thing we've said before, which is we don't want to launch until we have a significant distribution commitment from the cable operators across the country, because we believe we have enough of a track record that we don't want to go through the same sort of investment cycle that we had to go through to launch FOX News or some of our other cable channels. We want to be able to launch with a significant distribution and try and get this thing to profitability very quickly. Vijay Jayant - Lehman Brothers: Thank you.

Our next question comes from Jolanta Masojada, Credit Suisse First Boston. Jolanta Masojada - Credit Suisse First Boston: Thanks very much. I just wondered if you could give us an update on advertising trends in the UK and Australia since quarter end and whether in the fourth quarter you will see the contribution of the sale of the UK property?

I didn't get the last bit, but on the advertising trends, we've had a difficult slog in both countries. In the popular press in Britain, we're down less than half I think what our position is, but we're still down so far this year, but it really varies tremendously week to week.. I could not give you a really firm -- I know this week, we're doing better than last year and better than budget, but that's the first time and there's no saying its going to happen next week. The retail trade is having a very hard time there. In Australia, it has been also difficult but we held our revenues. I think we will hold our profit for the year, if not quite make our budget. But we're doing I think Time -- and it certainly didn't go to many opposition papers -- but it is difficult there. Particularly the telecom industry seems to have cut back on its advertising without being replaced by anything else. It's just hard work in both places. There is not the growth in newspaper advertising that we have experienced in the past, but we are holding on well and certainly improving our competitive positions.

The supplements contributed $15 million of operating earnings in the third quarter of a year ago, $21 million in the fourth quarter a year ago and $43 million for the entire year.

That's out this year.

Correct.

Our next question comes from Doug Mitchelson, Deutsche Bank. Doug Mitchelson - Deutsche Bank: Thank you very much. Just looking for more details on SKY Italia, Rupert. I believe you mentioned accelerating sub growth at SKY Italia. Was that looking at the June quarter pacings maybe due to the World Cup promotions? If you could flesh that out more fully. Could you talk about how you think the regulatory environment in Italy might be shifting with the changing of the guard there? Thanks.

I don't know whether they have a real government, or will have one. But we're not worried about any change in the regulated requirements in Italy. If anything, we think that will improve, but time will tell. Doug Mitchelson - Deutsche Bank: Great, thanks.

Our next question comes from Anthony Noto, Goldman Sachs. Anthony Noto - Goldman Sachs: Thank you. Peter, it looks like as we go into fiscal year 2007 in addition to strong ratings gains and CPMs for FOX Broadcast Network, it looks like there's an opportunity on the cost side as it relates to baseball licensing. And our estimate is that you lose about $200 million or thereabouts annually. Is there an opportunity to get that to breakeven as you go forward on these renegotiations, and is it something you're willing to walk away from if you can't get to breakeven? Thank you.

I would say, first of all, I think that number is pretty high. I think that we lost -- John, correct me if I'm wrong -- a little bit over that for the entire six-year contract. So we were never losing that kind of money on an annual basis, but we weren't making money on the contract. We had an official negotiation period which expired December 31 with Major League Baseball, we were not able to come to terms with them. We have a very straightforward view, which is we like the sport, we've enjoyed our relationship with them and we're more than happy to renew if we can make money on the contract. But if we are not prepared to sign a deal that loses money, and we are prepared to walk away from the sport if that's the case.

Peter, the loss was what we wrote down, so it was about $200 million.

I thought it was a little bit over $200 million for the entire contract as opposed to per year. Anthony Noto - Goldman Sachs: Thank you.

Our next question comes from David Roberts, Goldman Sachs. David Roberts - Goldman Sachs: Thanks very much. Just a question for Dave. On the free cash flow guidance for '06, are you still on track for a shade over $2 billion? Also just on the guidance, I suspect the performance of Ice Age and the network ratings have exceeded your internal budgets. Given that you haven't changed full year guidance, which divisions have disappointed relative to your expectations when you gave that guidance?

We had high expectations with respect to Ice Age, and so I think we were comfortable with the 12% guidance we gave in the quarter. It was a light year versus the quarter three months ago and we're confident with the 12% we just gave today. David Roberts - Goldman Sachs: And on the cash flow?

We're forecasting our cash flow to be around $2 billion. It could be slightly less, depending on timing of capital expenditure programs. David Roberts - Goldman Sachs: Thank you.

Our next question comes from William Drewry, Credit Suisse. William Drewry - Credit Suisse: Just a question on SKY Italia. I'm just wondering, given the success that you've had on turning it to profitability, very solid profitability this year. I just wondered, looking out next year and beyond, what kind of growth rate could we expect in terms of operating profit from here? How much leverage is still left in the business? Also, if you were to IPO it, would that be an IPO that would be consolidated and take it below the operating line, or would it be sort of putting a stub out there in the market in terms of News Corp as a whole?

Certainly not take it out of our operating profit. Dave, are you prepared to give guidance on --

We're not prepared to give guidance on where SKY Italia might do, but I do think it's pretty easy to do the math by taking the sub growth. That's essentially a fixed cost business.

You could take what happened last quarter and what will happen in the current quarter. But we're not prepared to make a firm forecast. William Drewry - Credit Suisse: Okay, thanks.

Our next question comes from Alex Pollak, Macquarie Securities. Alex Pollak - Macquarie Securities: I had a question just on the newsprint, with the online hit from the newspapers, was pretty much approximating the offline readership that you're getting with the papers. What opportunities do you see going forward to monetize those online newspaper properties? It seems to me that investors are getting the online component of the newspapers for free yet because it hasn't yet started to roll in. Can you see a point where those ads are going to start to roll in soon?

Strong increases in advertising on the online, papers both in Australia and in Britain; and at FOX News here of course, which is in profit, the online. They are not big profits and they're not at this stage showing signs that they're going to replace fully what we may lose. But we are not losing much and as long as we can remain the dominant newspapers in our markets, we're not too worried. Alex Pollak - Macquarie Securities: Good, thank you.

The real worry is for papers that are totally dependent on classified advertising for their cash flows, and none of our papers are particularly strong in that. About GBP3 million or GBP4 million pounds in the Sunday Times in London.

We'll take one more question from the investment community, and then let's go into the press call if we could, please..

Our next question comes from Jason Helfstein, CIBC World Markets. Jason Helfstein - CIBC World Markets: Thanks. Just a question about multi-platform ahead of the upfront. Not to front-run your upfront presentation, but can you talk about besides television, what other types of platforms you will be talking to advertisers about in your upfront discussions? Thanks.

I think most of what we're trying to do is advertisers are clamoring for opportunities to have new media opportunities that are associated with the broadcast opportunities. So we have created those not only across our own properties, our own FIM properties, you know MySpace and IGN and FOX Sports, but we're also making separate deals with pieces of our content so that we're looking at deals with things like Family Guy and 24, et cetera. I think the other thing worth noting is, we did actually as a company, a pre-upfront presentation to all of the advertisers about a month ago called Generation FOX which was really aimed at pointing out how, if you combine the various FOX properties -- the broadcast networks, our cable channels, our Internet properties and our mobile properties -- we have an unduplicated ability to reach young people in this country. I think that's the thing we're really focused on. We're really focused on those advertisers and we're trying to reach young people and how do you combine our broadcast properties, our FOX mobile properties, Mobizzo, our Internet properties, MySpace and really reach them in ways that I think no other media company can duplicate. So we have already laid out that presentation to the advertisers. I think it was very well-received and we're looking at doing integrated deals that integrate our broadcast and our leading cable properties with various new media opportunities associated with them. Jason Helfstein - CIBC World Markets: Just a follow-up on that. So to the extent that on advertisers, you're going to lock up an advertiser for a set amount of money, will they have the flexibility this year, let's say within the sum that they committed to you in the upfront, to move that around to some of the interactive properties as things emerge during the year? Because that's some of the themes that we've heard from the agencies about their flexibility.

The truth is, we have not been asked to do that. We've already written a number of key deals on some of our broadcast and cable properties and some of our sports properties where there have been specific amounts set out for each individual property. I don't see how you can do too much of that. We're selling our ads for a fixed price on the network and I assume we probably be willing to let them buy fewer ads if they wanted to move that money over to new media properties. What they seem to be focused on is coming up with a product that allows them to reach their constituencies on multiple platforms and looking to lock in what that product and what the pricing of that is going to be upfront, and we certainly have the capabilities to offer that to them. Jason Helfstein - CIBC World Markets: Thank you.

(Operator Instructions). Our first question comes from Robert Bluey, Human Events. Robert Bluey - Human Events: Hello, Mr. Murdoch, thank you for the briefing on the earnings. Turning political for a moment, I wanted to ask, given the fact that Hillary Clinton has compiled a record of liberal positions such as increasing taxes and supporting partial birth abortion and opposing Justices Roberts and Alito for the Supreme Court, what are conservatives to make of your sudden willingness to support her financially?

It will be pretty modest support and it's giving the opportunity to people in our office who want to join us at a breakfast to hear her. We think that she has been effective on state issues and local issues here in New York, she's been an effective and good senator. If people want to come to breakfast for $1,000 they're welcome. It's no big deal -- this is not a $1 million raising, and it has got nothing to do with anything other than her Senate re-election. Robert Bluey - Human Events: So you're standing by and you're going to continue to hold the fundraiser?

Oh, sure.

Our next question comes from Seth Sutel, Associated Press. Seth Sutel - Associated Press: Good afternoon, everyone. Just two quick ones if I could, please. Could you please update us on the status of your talks with John Malone? I see he said the other day that he is optimistic about resolving the talks with you guys before the shareholder vote. Also, could you please go into a bit more detail about what other kinds of new platform distribution agreements you're contemplating now that you have this agreement in place with your affiliates? I saw the iTunes deal the other day. Could you give us an idea of what else is in the pipeline, please? Thank you.

I will answer the first part and Peter the second. I would just say that we share John's optimism.

We are currently in discussions with lots of different platforms and lots of different advertisers and we would expect to have a fairly steady stream of new announcements over the months ahead. We will make those announcements when we make them. So we are talking to and negotiating various people and we continue to participate in the migration of what we think is some of the best content in the world to various new media platforms. We see great enthusiasm both on the part of those platforms and on the part of advertisers to participate in that. So we'll have announcements to make frequently over the weeks and months ahead. Seth Sutel - Associated Press: Okay, thanks.

Our next question comes from John Lehman, The Australian. John Lehman - The Australian: Just one question for Mr. Murdoch. Having made several successful Internet acquisitions over the past the year, I wondered if you had any views or comments on John Fairfax Holdings' recent decision to spend AU$625 million on a New Zealand online auction site, Trade Me?

No, I don't really have anything to say about it. I was surprised when I read it, but I don't know really anything about it and I'm not capable of commenting on it. I'm sorry. John Lehman - The Australian: Okay, thank you.

Our next question comes from George Sealy, the Hollywood Reporter. George Sealy - the Hollywood Reporter: Good afternoon Mr. Murdoch. It seems like you guys are not involved in the Univision auction, and I was wondering if you can give us a little bit of color; what kind of thought process you went through and what the main driving factor was for you guys not to even look at this much more closely?

Well, if we were to buy it, we would end up with four television stations in all of the major markets, which is clearly illegal. Secondly, I know Jerry Perenchio well; he's a good friend of mine and he always seems to know when to sell. So I don't spring to attention when he's putting something on the market. But seriously, it's just not a possibility. It's a great market and a growing market and I'm sure someone will do well with it.

Our next question comes from Julia Angwin, The Wall Street Journal. Julia Angwin - The Wall Street Journal: I was wondering if you could update us on the status of your efforts to make MySpace safer? I think last quarter you said you were putting a lot of efforts behind that. How far are you along, and has that convinced advertisers to buy run of network, or are they still only buying in certain safe areas of the site?

Peter, if you want to handle that? We have done a tremendous amount.

I think we have done an awful lot over the six months that we have owned the site, ranging from adding additional parental controls, adding additional advice to users, both parents and kids on the site; appointing a chief safety officer, working closely with parents' groups and teachers' groups and various educational groups; working closely with some of the states' Attorney Generals. So I think that we've really worked hard on this. Again, I think as we said at the beginning, we don't think that the site was ever unsafe, unfortunately people behave badly all across the Internet, and our job is to provide the greatest amount of protection and advice and guidance to our users to exhibit the safest kind of behavior possible, and we have done that. We have not seen, as I said earlier on the other call, we have not seen tremendous resistance on the part of blue chip advertisers. We have a robust list of advertisers participating on the site. I think that the issues with run of the site versus specific places have less to do with safety issues than they have to do with just volume. Run of the site is 30 billion page views. Certainly in the month of March, we were the second most visited site in terms of page views, on all of the Internet and it's just too much volume for people to have. Clearly, there is more volume in the higher advertising reach on the home pages and some of those first couple of pages seen. I think that will continue for some time; not as a function of safety, but just as a function of effective advertising spend. I don't know, Gary, if there's anything you want to add on our safety efforts?

I think that's a pretty comprehensive list of initiatives, Peter. Julia Angwin - The Wall Street Journal: Okay, thank you.

Our next question comes from Aline van Duyn, The Financial Times. Aline van Duyn - The Financial Times: Good afternoon. I wanted to ask about the possible SKY Italia IPO. Are you close to making a decision on that? There's been some speculation that an IPO, a value of around EUR1,500 per subscriber is being talked about. Does that sound in the right kind of range of discussions, or can you give a little bit more sense of that?

I think we're a long way from making a decision about an IPO in Italy. It was kicked around and we've not made a decision and it's not really on our radar screen to make a decision in the next few months. The EUR1,500, I think that's sort of minimum that I've seen any pay TV subscribers change for in Europe. I think at the rate at which we're growing and turning more profitable, we should probably get a higher price. Aline van Duyn - The Financial Times: So you're thinking a decision might be made more towards the end of the year, or how far away?

I don't think there's any timetable, Aileen. I think that's what we're trying to say. Aline van Duyn - The Financial Times: Right, okay, thanks.

With that Mr. Murdoch and our host panel, I'm going to turn the call back to you for any closing remarks. There are no further questions.

I think we've said everything we need to say, and appreciate your interest in the Company. Feel free to call us in New York if you any additional questions. So thank you very much everybody.

Thank you all for you time today. Ladies and gentlemen, Mr. Murdoch is making today's call conference available for digitized replays for 10 full days starting at 9:15 PM Eastern daylight time, May 10, all the way through 11:59 PM May 20. To access AT&T's executive replay service, please dial 800-475-6701, and at the voice prompt enter today's conference ID of 826062. Internationally, please dial 320-365-3844 again with a conference ID of 826062. That does conclude our earnings release for News Corp. Thank you very much for your participation as well as for using AT&T's executive teleconference service. You may disconnect.