Seth Sutel - Associated Press Cecile Dorat - Bloomberg News Lisa Murray - Sydney Morning Herald Jane Schulz - The Australian Georg Sealy - The Hollywood Reporter Aline van Duyn - The Financial Times Emma Alberici - ABC John Higgins - Broadcasting & Cable Magazine Ken Lee - Reuters

Good morning, good afternoon, good evening to our global audience today. This is News Corp's first quarter 2007 earnings conference call. (Operator Instructions) Here with our opening remarks is News Corp's Executive Vice President of Investor Relations and Corporate Communications, Mr. Gary Ginsberg. Good afternoon, sir, and please go ahead.

Thank you, Brent. Good afternoon and good morning everyone and thanks for joining us today to discuss our first quarter operating results. With me today are Peter Chernin, President and Chief Operating Officer of News; Dave DeVoe, our Chief Financial Officer. Rupert Murdoch had hoped to be on the call today, but was unable to be due to a scheduling conflict and he sends his regrets. We will begin today’s call with Dave providing some financial analysis of the quarter that may not pop out from a reading of our results. Peter will then follow with some more detailed comments on why we're so bullish about our operating momentum for the remainder of this fiscal year. We will then go right into your questions, as Brent just said, first from the investment community and then from the press. Today's 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 in News' 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, thank you and good afternoon, everybody. As you have seen in today's earnings release, we reported net income before cumulative effects of an accounting change of $843 million for the first quarter of fiscal 2007. This is a 45% increase over the first quarter a year ago. This net income improvement was largely the result of the gains from the sale of our interest in Sky Brazil and Phoenix, which are included in other income. As expected, our operating profit declined by $58 million to $851 million, principally due to the timing of home entertainment releases at our film segment. Results from our associates increased by $57 million to $243 million. This is primarily from increased contributions from our equity investment in DIRECTV. Earnings per share for this quarter were $0.27, a 50% increase over last year's $0.18. Excluding the other income gains, EPS was flat year on year. For the quarter, we had double-digit operating profit increases in the Company's television, cable networks and Sky Italia segments, which were more than offset by lower film contributions and higher other segment losses, in large part reflecting our new media acquisitions and initiatives. Given you now should have a copy of our earnings release, I'm not going to tie up your time running through the financials for each of the business segments. However, I would like to provide context for a couple of items as you look at the numbers. Our television segment operating income improved 20% to $192 million, driven principally by increases at the Fox Network. This is from higher pricing and reduced program cancellation costs, and at the stations from increased political revenue and market share gains. These results were partially offset by costs for the launch of MyNetworkTV. At our cable networks, we had a 26%…

Thank you, Dave, and good day, everyone around the world. Dave has taken you through our first quarter financial results, which were very much in line with our expectations heading into the fiscal year. Our operating income for the quarter was affected by several anticipated timing issues, yet as Dave mentioned, we still firmly expect to meet our original guidance of mid-teen operating income growth for fiscal '07. Let me take just a few minutes to give you some color on why we continue to be so confident in the remainder of this year, starting with our cable business. It's a business that continues to deliver strong double-digit profit growth and high margins, despite increased spending on programming and channel development. Now, I know a lot of you have heard plenty of talk during the cable upfront about how soft it was compared to broadcast. While that may have been the case for the larger market, it was certainly not the case for us. Our ability to deliver an audience that advertisers coveted, combined with our significant ratings increases over the past year at almost all of our channels, enabled us to grow CPMs at all of our channels while also achieving double-digit volume growth. Advertising continues to remain strong. During the first quarter, scatter advertising at our cable group was up in the high single-digit range, and we see that trend continuing through this quarter. Probably the biggest and most important development at our cable group is our recently completed Fox News affiliate negotiations with our cable partners at Cablevision and DIRECTV. Now, I am not going to get into the specifics, but what I will say is that we are extremely pleased with the deals that were struck, deals that will dramatically increase our affiliate revenues on Fox…

Indeed, well thank you very much Mr. Chernin and Mr. DeVoe, we do appreciate your time in that overview today. (Operator Instructions) Your first question comes from Michael Nathanson - Sanford Bernstein. Michael Nathanson - Sanford Bernstein: Thanks. I would like to follow up on Sky Italia, and then one on advertising, if I could. On Sky Italia on the last call, you had stated that you believed that the soccer scandal would not impact sub adds, but it did. So I wonder in a typical quarter, first quarter, what percentage of sub adds usually come in September? Is that a heavily-weighted month within the quarter? How does it usually break?

Michael, a year ago we had about 85,000 adds. So that was the extent of how we were affected. It was significant. Michael Nathanson - Sanford Bernstein: That mostly comes through September?

Yes, correct. Michael Nathanson - Sanford Bernstein: So one month is most of the sub adds in the quarter?

That's correct. Michael Nathanson - Sanford Bernstein: Turning to Peter, typically News Corp has never been a big political advertiser. Political has not been a big driver of station revenues, typically. So it sounds like this year is a bit different. What was your overall station growth this quarter? How is fourth quarter pacing on the station side? There has been some discussion about MyNetworkTV stations. What kind of growth are you seeing at the MyNetworkTV station level?

Well, I don't have the final political numbers, but our political numbers have been growing with each election, I think largely as a function of both the growth in the quality of our news, and also the addition of additional news in new markets. I don't have the final numbers. Plus the overall robustness of the news marketplace. So we feel pretty good about that overall. Our stations have had I would say solid mid single-digit growth during the quarter, and we believe we're on track to continue that. MyNetworkTV, I would say that the launch has been a little bit softer than we expected, and we are keeping a close eye on it. I think that those stations have gone through a complete transformation. They were largely going dark in the final months of UPN. We have brand new programming and a brand new type of programming on there and so we are keeping a close eye on it and supporting it with marketing and looking forward to the next chapters of the shows. Michael Nathanson - Sanford Bernstein: Thanks.

Your next question comes from Anthony Noto - Goldman Sachs. Anthony Noto - Goldman Sachs : Thank you very much. My question is related to the other revenue line, which includes, obviously, the interactive business. It looks like that revenue line accelerated on a year-over-year basis to 45% year-over-year growth compared to the June quarter that grew 29% year over year. I was wondering if you could delineate for us the drivers of that growth as it relates to the online business in terms of page views, CPM increases and sell-through? Then I have a follow-up to that. Thanks.

I didn't hear the second part of the question, Anthony. Anthony Noto - Goldman Sachs : Peter, I was basically just wondering, with that acceleration in growth of 45% from 29%, how would you break it out? Is it due to a faster page view growth, greater CPM increases or better sell-through?

I would say it's due to all of them, although I think the primary things are better sell-through, higher quality ads. Clearly, page views have been going up, but I think much more importantly, we have more page views than we know what to do with, quite honestly. So I think it has been a function of better sell-through, higher rates on our key display ads. So I think it's a combination of those two, much more than it is sort of higher page views, or even frankly, a higher number of registered users. I think that's the key trend for us on FIM going forward, is our continued ability to grow our monetization of the existing strength that we have, which we are feeling very good about the increases going on. Anthony Noto - Goldman Sachs : Which tees me up very well for the next question. Could you give us a sense of your monetization rate compared to others in the industry? Are you running at a third of their monetization rate, 50% of it, 60%? Because it's extraordinary. I mean, you're driving $123 million of incremental revenue sequentially versus $90 million last quarter, which is a big step up. I just want to make sure we're not at the ninth inning instead of the third.

I think the comparisons are so wide, ranging from premium sites like Yahoo!, to small or little sites. So it's very difficult to do a broad comparison. But I think our view is that we are still in the very, very early stages, if you look at metrics like revenue per user, revenue per page view. We have got so much volume, and we are still in the very early stages of monetizing that. As has been pretty well reported, beginning later this fiscal year, but more importantly next fiscal year, we will see a big jump in just our search monetization as the Google deal kicks through. Anthony Noto - Goldman Sachs : Thank you.

Your next question comes from Jessica Reif Cohen - Merrill Lynch. Jessica Reif Cohen - Merrill Lynch: The first question relates to FIM. When do you expect to get to breakeven, and what are your investment priorities in this area?

Well, we are actually profitable now, if you take out management retention and amortization. So I don't have a target date for overall breakeven, but I believe it will come pretty quickly. Our targets for acquisition, strategically right now, I would say are first of all, we're not on a huge acquisition hunt, so I want to be clear about that. But I think that there are a couple of broad areas. We want to keep looking for additional applications which bolt-on to MySpace. We think the platform is so strong, and we think that there are additional applications which will both improve user usage and also improve monetization. We are continuing to look at various opportunities in our content business. And then I would say, we're also very actively involved in every Web 2.0 application, which relates either to content or to social networking. Jessica Reif Cohen - Merrill Lynch: My final question, it sounds like from the press this week that you're much closer to getting Fox businesses launched, at least with Comcast. Can you put any kind of timeframe on this at this point? Are the negotiations tied at all to the Fox News Channel?

I don't want to put a specific timetable. I would echo what we've said consistently, which is, we believe we have much greater clout than we had in years past, and we have an opportunity to sign up a large number of subs before we launch, thereby avoiding the peak investments that we had to make on some of our previous cable channel launches. We have always said that we look at that number as being above $30 million, and we are getting pretty close to that number. So I would hope that a launch announcement would follow that pretty rapidly. We have absolutely not tied any Fox business negotiations to Fox News negotiations. I think our view was that we wanted to use the strength we had with Fox News to maximize our affiliate rate on Fox News alone, and not try and spill some of that over into trying to achieve something else. So the negotiations we have had on Fox business right up until now have all been completely separate from the Fox News renewal rates. Our plan is to continue that going forward. Our plan is to do the Fox News renewal rates on a standalone basis, and really focus on trying to get the value that we think we've deserved after ten years of growth and ten years of record results.

Your next question comes from Richard Greenfield - Pali Research. Richard Greenfield - Pali Research: Two questions. One, could you talk to IGN? It's a business that really has gotten lost in the MySpace buzz over the last 12 months. We're heading into a video game cycle with the PS3 about to launch. Maybe give us some sense of how is IGN doing? What are its prospects? Any type of key metrics to reinforce that part of the business that we have not had as much visibility on, press-wise at least? Peter, when you look at the Fox Network this year, clearly, the fall schedule, a bunch of the new shows that you have created don't seem like they have launched terribly well. I am just wondering, it seems like you have been in this position a lot over the last several years in the early part of the fall. Maybe just comment on your thoughts on the early part of the season. Thanks.

I would say, Rich, on IGN, we believe that we're coming out of the trough of the inter-cycle slowdown in game sales. From a metric point of view, after declines in uniques and things like that, we're back to the level we were a year ago, which is probably pretty much the first time in three or four quarters that we have been there. We are seeing acceleration. We're really looking forward to the PlayStation 3 launches this weekend in Japan and next weekend in the U.S., and I think while it won't have a huge number of consoles in the market, I think it will begin to focus real attention and excitement on the sector. I think that Xbox will start promoting aggressively again to compete. So we believe that momentum is accelerating. We're also seeing some other benefits of IGN that we are very pleased with. There is a technology that was included in there called Direct to Drive, which is a means of downloading large files, and we have been using that to download some of our movie and television content on all of our web sites. The early results of that have been very exciting. So we think that we're going to see gathering momentum, particularly as we move towards the end of the fiscal year. I think what you want to do is get a bunch of new consoles and a bunch of new games, and our advertising tends to be driven less on the consoles themselves than on software ads. So I would hope towards the end of the fiscal year, and particularly going into fiscal '08, to see a lot of gathering momentum in IGN. Richard Greenfield - Pali Research: Can you quantify how big the business is today?

No, we're not breaking out the business. In terms of the network, I think it's safe to say, it has not been a stellar fall launch for us. I think the positives are, we're certainly much steadier than we have been in years past. I think the great strength of House, the great strength of Prison Break, the great strength of our Sunday night animation means that we are not in the black hole that we were in the past, but we are certainly not pleased or satisfied with the new dramas we have launched, although we are continuing to hang in there for a while. We're also very pleased and excited with we have two mid-season dramas and a third mid-season comedy which will launch. I guess the one benefit is, we have been here so often that people write us off in the fourth quarter and we come roaring back in the second half of the year and win the season. I am not in the Joe Namath business of predicting we're going to win the Super Bowl every year, but I think we are in as good a position as we have been in recent years going into the second half of the fiscal year. We have got much more solid anchors. The 24 season looks great. The American Idol contestants look great and we believe we have good mid-season stuff combined with the strength of House and Prison Break and the Sunday night animation lineup. So I guess the only benefit I can say is we have been there before, so we are probably less panicked about it, but we're certainly not satisfied with our performance, and we would expect to have much better performance with our mid-season shows.

Your next question comes from Aryeh Bourkoff - UBS. Aryeh Bourkoff - UBS : Good evening. You hit a lot of numbers, but one area of out-performance in a difficult quarter was film. You got above 20%, 21% margins. Do you think that's sustainable to get above those levels, or just keeping these levels here, given the nature of the DVD cycle? Obviously, you have some good titles you mentioned, but these are pretty good margins. Can you hold them? Secondly, with respect to DIRECTV and your now 39% stake in DIRECTV. Any sort of Liberty timing? Does a DIRECTV run-up in the stock price almost prohibit that deal from happening now because you've had such a great move in the stock? Is Liberty sort of less enamored to do that deal, or do you think that you could do a below-market deal to get that moving? Just any commentary on that would be great. Thanks.

I guess I will start the second one, and maybe Dave wants to jump in. Certainly, a run-up in price does not prohibit any sort of deal. We have been, I think as Greg talked about on his conference call earlier in the week, we have been having very constructive talks. Beyond that, if and when we have something to announce, we will announce it. But talks are going constructively. There's nothing that has happened that prohibits anything and we believe that we are in positive discussions. I don't know if you want to anything to that, Dave, before I go to the movie side?

No, I think that's right. We probably have been in advanced discussions now from where we were about two or three months ago. It is a complicated deal. I agree with you. I don't think the price necessarily prohibits the deal. We are in discussions. We will just see where we go. But as soon as we have something to report, we will tell you.

Certainly no change or run-up in price has affected that. In terms of the movie side, I guess if we can maintain these margins if we continue to make really great movies. Look, I would say the following: which is, obviously, I am extremely pleased with that operation and their financial discipline, which is what really drives our ability to monetize our revenues at a significantly higher margin rate than anybody else in the industry. That discipline isn't going to change. In fact, I think that discipline largely increases every month, and we continue to really claw at every angle of our business. I would say that based on the information I know today, I probably feel better than I have about it in some time. I think that while we had high hopes for the Borat release, I don't think anybody ever anticipated that we could have a $26 million opening weekend on 800 screens. I think it's the highest per-screen average on a release that size in history, to the best of my knowledge, and coupled with big, big results in the UK and Germany and throughout Western Europe. So I think that, and then the quality of Night at the Museum and Eragon going into the quarter gives me pretty good confidence that we can continue and maybe even accelerate our momentum on the film side. But ultimately, it is a function of the individual titles, and if we put out some bad titles in there or put out some titles that the audience does not like, it will certainly have an effect on us. But sitting here today, I probably feel better about it that I have in some time.

Your next question comes from Jolanta Masojada - Credit Suisse. Jolanta Masojada - Credit Suisse : Thanks very much. Can you update us on your thoughts on a possible Sky Italia IPO, what the timing for that would be, and the reasons you would consider such a transaction? Secondly, a follow-up on Liberty. If the deal does involve DIRECTV, can you talk about how you think that leaves the Company strategically positioned without DIRECTV?

Peter, do you want me to deal with Sky Italia?

Sure.

We have no plans to do an IPO of Sky Italia. There's a lot of talk about it in the press, but we have absolutely no plans to do it, whether now and in the future. The only reason we would contemplate it would be if we thought there were some issues with respect to the political landscape within Italy that would cause us to do that.

I don't want to speculate on the sale of DIRECTV, but what I would say is obviously, we wouldn’t even consider it if we thought it would have any detrimental effects on our strategic positioning. We feel that the two most relevant areas are our relationships with other cable operators and our ability to monetize our content across broad platforms. Both of those areas we think we have great strength. We have got such strength between the performance of our various cable networks, our sports position, our retransmission consent position, that we are happy to hold our own. We also have good relationships with the cable operators, as I think was evidenced by a much smoother negotiation with Cablevision than I think almost anyone anticipated on Fox News. In terms of our ability to widely distribute and monetize our content, we have no doubts about that channel. We still have about as wide a distribution platform as any other media company, and I think you see the growing new platforms around the world, in not only cable and satellite, but IPTV and video on demand and Internet distribution. We are pretty confident about our strategic positioning. While I am not going to speculate on DIRECTV, we would not contemplate or even consider a deal if we thought it would have any negative impacts on our overall position.

Your next question comes from Doug Mitchelson - Deutsche Securities. Doug Mitchelson - Deutsche Securities : Thanks. A question and a follow-up. I'm interested in what is engendering your confidence in the Sky Italia profit target this year? The $40 million improvement in the first quarter benefited from lower gross adds, so in theory, you're not really on pace to the $200 million number if you had normal gross adds in the quarter. So the first question is, what happens in the next three quarters that accelerates that profit ramp when you start adding subs?

I think our confidence is really based on our confidence that we're going to get to 4 million subs in December. But beyond that, when we provide guidance we are providing within a range and we've provided a range within Sky Italia, and we feel highly confident that we're going to meet our target of $200 million turnaround by the end of the year. Doug Mitchelson - Deutsche Securities : As a follow-up, Peter, you mentioned in your comments high single-digit scatter in the first quarter. Was that volume year to year, or a CPM price increase over the upfront metric? When you look into 2Q, where are you under the new upfront? If you can give us a sense of the scatter market for broadcast and cable in 2Q, that would be helpful.

First of all, the number I mentioned was actually a specific cable number. I didn't mention a broadcast number. But I would say that our broadcast scatter has been pretty solid up low to mid single-digits over our upfront pricing, and we feel pretty good about our upfront. It certainly felt very good. We have sold a lot of volume in the upfront, so we don't have a tremendous amount of scatter right now, but what we do, we tend to be selling up in the low to mid-single digits. Doug Mitchelson - Deutsche Securities : And the cable scatter into 2Q, is that pricing still good?

Yes, the cable scatter in the Q2 pricing is holding up well.

Your next question comes from Doug Shapiro - Banc of America Securities. Doug Shapiro - Banc of America Securities: Thanks. I had two as well. Just to follow-up on the FIM profitability question, I think last quarter you talked about a $250 million revenue increase this year for fiscal 2007 versus fiscal 2006. I was wondering if you could talk about how much of that you think can fall to the bottom line? Or phrased differently, at what point do the OpEx costs stop scaling at the same pace? The other question was just quickly on Fox News, if you could talk about what's driving the cost there, particularly since presumably we should have had relatively easy comps this quarter against the Katrina coverage last year.

I would say, while we are not breaking out FIM profit targets, the one target we had mentioned was to do in excess of $500 million in revenue this year. We expect to be on that track. I would say that we will begin to see some slowdowns in OpEx. We continue to closely watch the business and are certainly willing to invest in our ability to achieve greater monetization. But I do think we have made tremendous strides in solidifying the organization, shoring up places where it needed, doing investing in technology, particularly the MySpace site, which has grown so rapidly is, I think, infinitely more stable and reliable than it was a year ago. I believe that those kinds of OpEx expenses, the momentum will slow down quite a bit.

Just to clarify, we will be breakeven on FIM in fiscal 2007. This is after all amortization. Doug Shapiro - Banc of America Securities: That's after the executive compensation, you're saying?

That is all in.

Including it, is what he means. Doug Shapiro - Banc of America Securities: And on the Fox News question?

Fox News, while it has not had significant cost increases, we believe anytime you're in this kind of election with coverage all over the country, there are costs associated with that. So there has been some costs associated with that, and then we have some pretty big superstar talent, and so there are always some ongoing costs. I think Roger and his team have done a spectacular job. It is the equivalent of having the 1927 Yankees and holding them together for five-plus years at this point. I think he has managed to do that with what in my opinion, while there are cost increases associated with that, I actually think they have been very manageable and modest cost increases. So I think the cost increases on Fox News are both covering the election in so many different states, and making sure that we can hold together the stellar on-air performance team we have.

Your next question comes from Vijay Jayant - Lehman Brothers. Vijay Jayant - Lehman Brothers : Peter, with the change in government announced today, when you look forward how do you gauge the net impact to your business in terms of ownership rules? Is it net positive, negative? How do you see that? Second, we have had a quarter on DTH in India, any color on how that is tracking? Is it too early to go to the cable operators there to get a better benefit for Star TV?

The first question was Indian government regulations? Vijay Jayant - Lehman Brothers : No, no. The change of government in the U.S.

Oh, the change of government in the U.S. Look, I don't anticipate the change in government in the U.S. as having any significant impact on our business. I guess we'll see, but I don't really think it should. There are no significant regulations that we're particularly struggling with right now, so I guess we'll wait and see. DTH in India, we don't want to comment on specifically, much too early to say. Although, I would say that our early results have been encouraging. I think probably a little bit too early to use a lot of leverage on cable operators. On the other hand, there are additional subs for all of our channels. Any of their additions are sort of immediate additional subs. The good news is at least 100% reporting, which is a nice positive phenomenon in India.

Your next question comes from Tuna Amobi - Standard & Poor's. Tuna Amobi - Standard & Poor's : I have two questions as well. Peter, as you think about monetizing your online video, can you perhaps share with us your strategy for online video advertising? On that issue, there has been a suggestion that Google's pending acquisition of YouTube could perhaps undermine your relationship with Google, perhaps as a competitor. So could you comment on the talks that you have had with the company in that regard? Separately, I think you have recently bought some newspapers in some regional New York areas. The question is, is that perhaps an indication that management is looking to commit more capital to ramping up on the print assets in the US? Is that the beginning of a trend?

Why don't I take the video question first? We have been spending a lot of time and doing a lot of work on online video over the past couple of weeks, months, et cetera. I would say our monetization efforts are focused actually in two very different areas. So the first area, largely on MySpace, we are focused on user-generated video. We are the number-two user-generated video site on the web, second only to YouTube, and I think our monetization focus there is essentially traffic-driven. I think we look at it as a way of generating more traffic, generating more page views, and we will monetize those through a combination of probably display and search advertising. Right now, we don't see a lot of video advertising on user-generated content, either on our site or on YouTube. I think advertisers, big packaged goods companies and stuff like that are reluctant to put video advertising on content they don't know. Furthermore, it's so ubiquitous and I'm not sure users are going to sit through, as they are watching a one to two-minute clip and watch a video ad in there. So our focus on MySpace is certainly to continue to rapidly ramp up the traffic on user-generated video. We have made a lot of progress in the short term and that traffic should largely be monetized in terms of search and display advertising. The other place we're looking as we are also looking at it very heavily on the Fox side of the company. We think that the real opportunity on video advertising on the web is going to be on copyright-protected content, on things like Family Guy, Simpsons, all of our shows, Fox News, Fox Sports, et cetera. We have been spending a lot of time looking at that. We think…

Yes. What this really is, is an opportunity for us to get a great return on our investment, and also it allows us to leverage our advertised infrastructure and cost infrastructure with the New York Post, where we essentially can take advertisers off the community newspapers, put them in the Post, and take Post advertisers and put them into the community newspapers. This investment we will have a return on, fully returned on within a year-and-a-half. After that, it's just really all earnings. This is a very opportunistic investment. It doesn't by any means mean that we are interested in committing significant capital into the newspaper business in the United States. Tuna Amobi - Standard & Poor's : Thank you very much.

Your next question comes from Jason Bazinet - Citigroup.

I think if you look at News Corp over long periods of time, you guys have done a good job differentiating your content versus your competitors. I think a year ago, Mr. Murdoch suggested that the portal model was essentially dead. If you look at MySpace, it seems like a lot of the applications you're adding, like IM and blogging and e-mail and video search, begin to look more like a portal. So stepping away from just the intent to generate page views and monetize that, can you just characterize what vision you have for MySpace to differentiate it from some of the other rivals?

I think that these semantic descriptions are semi-meaningless. I don't really know what a portal is anymore, and I'm not sure it matters. I don't think we sit around during the day and say, should we be a portal, shouldn't we be a portal? What we do sit around and say is, I believe that MySpace represents a unique and new phenomenon on the Internet. We're moving towards a point where, if not already, it will be the largest single Internet singles site in the world, and what we are really looking at is, we view ourselves as having a community of users who gather there to interact with each other, but we think also like and appreciate and will use certain tools we can offer them. I think if you think about using IM as a specific example, we're not adding IM on MySpace as an attempt become AOL. We are adding it because, if you think about social networking, and if you think about communicating with a group of friends you have, instant messaging is a very applicable and beneficial tool in order to do that. It's the same reason we're adding mobile applications on MySpace, again, because if you're trying to interact with a social network of friends you have, you want to be able to do that. You want to be able to do that not just through e-mail, you want to be able to do that through IM, you want able to do that through mobile, you may look at various IP telephony aspects. So we will continue to add and expand the platform. I'm not sure we do it with a vision of either becoming or not becoming a portal. We do it with a vision of expanding it organically, but expanding it in its own sort of ecosphere in terms of what its users want, what its users are looking for and what is valuable to its users.

Your next question comes from Spencer Wang - Bear Stearns. Spencer Wang - Bear Stearns : Hi thank you, and good afternoon. My first question is, Peter, I don't believe you guys have made the 20th Century Fox movies available for iTunes yet. Can you just talk about the gating factors there for you guys? Is it economics or concerns about cannibalization or the Wal-Mart factor? Then secondly, can you just give us a sense of how local TV advertising demand looks post the elections? Thanks.

We have good, solid relationships with iTunes. We appreciate, I think, a unique and excellent distribution arrangement with them on the television side. We are in talks with them on the movie side. I would say that the things we consider, I'm not sure that they're necessarily gating factors, is we certainly consider our economics, we consider the content protection issues, we consider the competitive issues with other platforms and we're working through it and continue to have positive talks. Look, we have a lot of admiration for it. It is another distribution platform and in general, we would like to distribute our films across every distribution platform. So I think there's some timing details and some other details to be worked out. But that being said, we embrace most future distribution models and platforms. Spencer Wang - Bear Stearns : Then on TV advertising?

TV advertising, we don't anticipate any slowdown post the election. We are seeing, I would say, solid pacing in the months ahead. I don't to see the business on fire, but I think it's being very solid, probably fairly similar to what it has been so far this fiscal year. Spencer Wang - Bear Stearns : Thank you.

Your next question comes from Imran Khan - JP Morgan. Imran Khan - JP Morgan : Thank you. Peter, you talked about you have more inventory than you can sell. I was wondering if you can talk about what percentage of your inventory you are selling in-house versus third party? Also you talked about the Google relationship, how Google Search is on. Can you give us a sense of when we can expect to see contextual advertisement or graphical advertisements from Google?

I think I said that we actually don't have more inventory. What I think I said was our inventory is very tight, given that we sold so much inventory in the upfront. So I didn't say we had more than we could sell, I actually said we probably have less than we can sell right now. As for what percentage of our sales across our platforms are in-house, I have no idea, but I assume it's fairly minimal, just given the amount of advertising we sell as a company.

I actually meant Fox Interactive Media. Sorry for not being clear. All questions related to Fox Interactive Media.

Fox Interactive Media, we certainly have more advertising than we can sell. What percentage is internal, I have no idea. But, again, I don't think it's particularly significant. We use it occasionally for some movie releases, occasionally for a television release. But I don't have the exact number, but I don't believe it's significant. There was a tremendous amount of logistical and technical work that needed to be done to get the Google Search application up, which we were able to do, I think on Tuesday. We will begin to see them deliver contextually, I don't know the exact date, but my guess is, it will probably be early in the calendar year.

If I could ask one last follow-up question. I think you recently announced that you had licensed a new technology to stop users from posting unauthorized copyrighted music on your site, on the user’s web site. How do you think it might potentially impact the community behavior? Because MySpace was historically built on music or aspiring musicians.

I think that, first of all, a lot of what MySpace was built on was unsigned bands who are happy to have us distribute. That being said, we are committed to being in the forefront of copyright protection, and as new technologies become available, we will certainly add them in order to protect various peoples' intellectual property. So I think this one technology which we just added last week was essentially audio fingerprinting, which allows us to track. Right now, obviously, in order to comply with the Digital Millennium Copyright Act, a lot of what we are dependant upon is notifications from record companies or copyright holders that there's illegal content, in which case, we immediately take it down. We have a full department that's just aimed at taking it down. What this does is essentially automate the process. What it does is, a record company can give us the audio fingerprints of their catalog, and it's loaded into the system, and if we see anything show up that matches that audio fingerprint, it comes down automatically. So it just automates a system that is already in place. We will continue to look for any opportunities to strengthen the copyright protection on the site.

Your next question comes from Jason Helfstein - CIBC World Markets. Jason Helfstein - CIBC World Markets: Just back to IGN for a second. So Apple and Disney they did make a big deal about their joint offering of films. But it seems, particularly for films, a rental model would make much more sense for consumers, and right now, iTunes is not offering that versus Movie Link or Cinema Now. So can you discuss your view on the topic of effectively offering rentals of movies or a pay-per-view? Secondly, if you're willing to comment, could you talk about how much of the increase in expenses for other in the quarter, or FIM, had to do with building out your international platform? Thanks.

On the first one, I think we have to follow the consumer. I think that we should make our films available in multiple formats, and I think you're going to see the definition of what a rental is expand. I think you're going to see various pricing models that are watch once, watch multiple times over seven days, watch as much as you want over 30 days, download to own. So I think you're going to see an expansion of those, and I think we're going to need to follow where consumer demand goes. I happen to like the sell-through model. I think consumers actually like owning content. But if there's a group of people who would prefer shorter terms at different pricing levels, I think one of the things that's important in this world is to have flexibility in your business model so that your flexibility both in terms of availability and flexibility in terms of pricing, so that you can please consumers in multiple fashions. I think we will look to do that. The international expansion of MySpace, I don't have the specific numbers.

Very, very small.

Yes, that's what I was going to say. I think the cost has been pretty de minimus, but I think the important thing there is we're seeing great, great acceleration in international users. I think we're now up to 27 million uniques. I think this time last year, we had about 3 million or 4 million unique users internationally. We're up to 26 million, signing up really aggressive numbers. I am actually here in Japan where we just announced MySpace Japan the day before yesterday and we signed up, I believe, 17,000 or 18,000 new registered users just yesterday after the announcement. So I think you're going to continue to see great acceleration at pretty minor costs in our MySpace international user base.

Your next question comes from Lowell Singer - Cowen & Co. Lowell Singer - Cowen & Co. : A question about Major League Baseball. You obviously just finished your last contract. You're starting up a smaller one next fall. What are the pros and cons of re-upping with baseball? Are you going to make money on your next baseball deal?

I think that the big pro, first of all, I think we believe that hope springs eternal, but we believe there are only pros, or we would not have signed the new deal. I think the big pros in the new deal are that it's a shorter period of time. I think what we've felt over the past several years is running the Divisional Playoffs took a full week out of our schedule at pretty minor ratings, and really disrupted the launch of the network. So this will reduce by a third the amount of time we have baseball interrupted. It will be just two weeks and two weeks of the important games, the one League Championship series and then the World Series. So we felt pretty positively, and I think that part of, in my opinion, what is critical for broadcasting going forward is, you need to be the home of the big mass events. We're now sitting there, we're the home of the NFC, we're the home of NASCAR, we're the home of the Daytona 500, we're the home of the World Series, we're the home of the Bowl Championship. We think those big events are critical to what will define broadcasting in the years ahead. So we believe it's great in that perspective, and we anticipate the contract being, at the very least, breakeven and hopefully profitable.

Your next question comes from Alan Gould - Natexis Bleichroeder. Alan Gould - Natexis Bleichroeder : Peter, I know you're doing well this coming quarter on the DVDs, because you have good content there, but is there any break coming in the format wars?

It's interesting. Again, I'm here in Tokyo this week, and I've been talking to all of the electronic manufacturers sort of on both sides of the format wars. On the next-generation high-def format, I don't think there is likely to be a quick resolution. I think the resolution, if it comes, is likely to be driven by the marketplace, and I think we're really going to see this for the first time. I think that right now, you have a tiny, tiny number of players out there at very high prices. I think most of the high-def DVD players are in the $1,000 range. I think what you're going to see is you're going to see a huge amount of Blu-ray players entering the marketplace through PlayStation3. I think that will begin at least to put some focus on the format. But I don't think you're going to see a negotiated unification. I think that the unification, if it comes, is going to be driven by the marketplace, and I think the marketplace will start getting interesting as PlayStation3 starts hitting the marketplace.

You're supplying both formats right now?

No, we are right now just supplying Blu-ray.

Why don't we take one more question, then go right to the press?

Indeed I would be happy to, and thank you very much. Your next question comes from David Roberts - NDI Research. David Roberts - NDI Research: Thanks, just a quick question. The buyback looks to have slowed to a trickle. I just wonder whether we can expect that sort of level activity until a Liberty resolution occurs? Also, just a clarification on X-Men 2 and the DVD release there. Given the release date of October 2, quite a few shipments have occurred in September, and hence, have you booked some revenues for that product in this quarter?

I will do the X-Men 3, Dave, and then you can do the buyback. First of all, it's X-Men 3, not X-Men 2, and I believe those are all accounted for in the second quarter. Is that correct, Dave?

That's correct. With respect to the buyback, David, we still believe that given where our stock price is, the best use of our cash is to buy back our stock. But until we complete our conversations with Liberty, you're probably going to see this level of activity.

Thank you very much, Mr. Roberts. Ladies and gentlemen, members of the press, at this point we do move into your Q&A session. (Operator Instructions) Your next question comes from Seth Sutel - Associated Press. Seth Sutel – Associated Press: Hello, everyone. A question for Peter. I was wondering if you could elaborate a little bit more on some of your thoughts. Peter, you mentioned earlier in the analyst part of the call that you were looking really hard at how to monetize some of your Fox Video online. Could you perhaps share a bit more of your thoughts on that? I've got a specific question on YouTube. The content protection system that CBS says they're going to be using to identify unauthorized CBS video on YouTube and giving them the ability to take it off, have you guys considered that, or something else as an area that you're looking at? Thanks.

Well, I think that our thought process is if you look at a lot of these video sites, a tremendous amount of what is on there is our content, mostly in short form, although in full episodes in some form. I think if you look at the growing demand of people watching video on the Internet, we believe that it will be driven by some combination of user-generated content, but also a significant amount of our copyright content, and that our copyright content is likely to be easier to monetize, both because of the length and the ability to put video advertising in there, and also its compatibility for major advertisers. What we're really looking at and sort of thinking through is, how do we distribute our content on the widest possible platform, and how do we monetize it to the highest level? I think we're likely to do that in two ways. I think we are focused on two ways. One is clearly full episodes, and you have already seen us begin to introduce full episodes on MySpace, introduce full episodes on streaming and full episodes on our various affiliate and O&O web sites. And then also clips, what are the value of these three-minute clips that people are taking off our shows, and how do we controlled the copyright of that and sell ads around them, either by ourselves or in partnership with people? So we are really working through those sorts of strategies. I have been out of the country, so I have not specifically seen what CBS said, but there are various technologies available to track copyright. I know that ultimately, it's a function of the Digital Millennium Copyright Act, and the requirement that various ISPs take down content that copyright holders ask them to. What you're seeing right now is you are seeing some automated technologies that automate that process. I know there's one that the MTA is looking at. I have not read what CBS is doing, and we're certainly looking at all of those things. I think your ability to monetize copyright content is a function of two things. One is finding the appropriate monetization platforms, and second is removing the inappropriate or violating platforms. So we will look at both of those. Seth Sutel – Associated Press: Can you characterize how close you might be to rolling out some kind of a more systematic application of getting your video online and addressing these technology issues that you mentioned just now?

No. I don't have a specific table. It's something we are working on pretty hard, and we would hope to be able to do quickly. But I don't have a specific timetable.

Your next question comes from Cecile Dorat - Bloomberg News. Cecile Dorat - Bloomberg News: On the talks with Liberty Media, when you talk about constructive or advanced talks, has there been an acceleration in the past weeks? Because I recall that, after the annual meeting, Rupert Murdoch was talking about, we are in no rush basically to make a deal. My follow-up question is for Peter. Since you are in Tokyo, in Asia, I wonder if you can also talk about what the plans are in China for MySpace, and if you're considering other countries in Asia for MySpace?

I will start with Liberty. I think we mean what we say, we're in constructive talks. It's a complicated transaction that we're in discussions about and I think as we have been talking over the last few months, we're trying to put in place a structure with what the issues might have been. As Rupert said and just to reiterate what we said, we are in no rush to do a transaction.

Just to elaborate on that, I think what Rupert and Dave mean by no rush is, we don't feel pressure that we have to do a deal. So we will continue to have talks and hope that they will progress and be constructive. On the other hand, we don't feel some sort of defensive pressure, and I think that's really what Rupert meant by no rush. We're moving forward on the talks, and we'll move forward as constructively as we can, which we think we're doing. On the other hand, we're not compelled to do a deal that we don't think is in the best interest of all of our shareholders and I believe that's what Rupert meant. In terms of further international expansion of MySpace, we are absolutely looking at further international expansion for MySpace. I think Japan is our seventh or so international territory. We will look at China, if we think there's a good opportunity. I think on some of these big Asian countries, our belief is that we are better served doing it as a joint venture. That was certainly our view in Japan, which is why we have joint ventured with SoftBank, who we think is a great partner for this market. My guess is, if we were to do China, we would probably also do that as a joint venture, and we have been looking at that.

Your next question comes from Lisa Murray - Sydney Morning Herald. Lisa Murray - Sydney Morning Herald : I just wanted to ask a question about the Australian market, if I could. News has been quite active here in recent weeks from a corporate perspective, buying 7.5% of Fairfax, and bidding for a number of regional newspapers and magazine groups. I just wondered if you could talk a bit, Peter, about what your plans are for this market? Also, whether you're interested in bidding for a free-to-air network, and would you look to hive off the Australian operations as a separate entity?

I'd say the answer to the last question is, no, we have no interest in hiving off the Australian entity. We think that the free-to-air businesses in Australia are interesting, though they are extremely expensive, so it's very unlikely we would do anything with that. With respect to our other activities, we are always looking at attractive investments. And if we can find them, no matter where they are, whether it's in Australia or anyplace in the world, we'll take advantage of those opportunities.

Your next question comes from Jane Schulz - The Australian. Jane Schulz - The Australian : Just further to that, CanWest, the Canadian group, has announced that they're looking at their options with regard to Channel 10. I know you just said that free-to-air networks here are expensive, but I'm just wondering if you have had any talks with CanWest. And just secondly, overnight, the Associated Press are reporting that there has been a big bid for the Tribune Company in the US. I'm just wondering whether or not you think newspaper valuations have bottomed out, and whether or not newspaper companies around the world might become to be seen more valuable in the short term?

We have not had conversations with CanWest. With respect to newspaper valuations, I think they are where they are at the moment. I don't know that they've bottomed out or not, but at the moment, most of these companies are trading at still pretty high multiples, given the level of buyout activity.

Your next question comes from George Sealy -The Hollywood Reporter. George Sealy -The Hollywood Reporter: I was wondering if you could talk a little bit more about the Liberty talks, if that's something that could happen this year, or if that's definitely out of the question at this point?

Again, I don't want to speculate about timing, but I certainly don't think it's out of the question that it could happen this year.

Your next question comes from Aline van Duyn - The Financial Times. Aline van Duyn - The Financial Times : Peter, I wanted to ask specifically about the issue of your copyright video content and its use on the Internet. Are you still considering the possibility of suing YouTube and similar sites for distributing copyrighted content? Have you got any views on whether or not there's a value to past copyright infringements?

First of all, I don't mean to be picky. I'm not sure of the use of the word still, because I'm not sure we have been considering suing YouTube or other people. I believe that we remain committed to the protection of our copyrights, and we'll look to do that. At the same time, we are in a very interesting place as a company, which is that, certainly, a number of people over the past years have really pushed content companies to be more progressive about how we distribute our content on the Internet and in new medium. I would like to believe that News Corp as much as anybody has really been aggressive about trying to figure that out. So I think what we're focused on is certainly we're focused on protecting our copyright, but at the same time, I would like to say, we are more positively than negatively focused. We're not just in a mode of sue people and stop them from doing things. What we're in a mode of is trying to figure out mutually profitable ways to distribute our content legitimately on as many and as widely distribute it on as many different platforms as we can think about. So we're not sitting around, I don't not want to preclude that somewhere along the line, we might not sue somebody, but we're not sitting around focused on the negative or lawsuit side, we're really focused on how do we legitimately build new businesses that allow us to monetize our content, and do it as widely as possible? So I think that's really where we're at, and at the same time, comply with available copyright laws on our own sites. As part of that, I guess that says that we're not overwhelmingly focused on past sins. What we're focused on is building legitimate new models going forward, which we think is a much more productive way for a content company to look at the business.

Your next question comes from Emma Alberici - ABC. Emma Alberici - ABC : For Peter Chernin, in the context of Australia's new cross-media laws, can News Corp remain a significant player here without a free-to-air television network?

Sure. I think we have been a very significant player in the Australian media for the 50 years that this company has been in existence. Certainly given Rupert's Australian heritage and his commitment to that market, we will absolutely remain a significant player. I don't believe that it's critical to own an over-the-air broadcast network in order to that.

But, you do seem to have quite significant television interest in all the other markets you're in.

We also have all sorts of other interests. I don't think a broadcast network defines a media company or a significant media company. I think that we have them in certain territories where we believe in them. But the truth of the matter right now is, we have far more paid television assets as a company than we have broadcasting assets, and I think you have to look at each of these countries individually, and we're excited about the progress of Fox Tel, we're excited about a number of the Internet initiatives that the Australian companies put together, and we're really focused on the future, and we don't define that future exclusively in terms of free over-the-air broadcast networks.

If I could ask one more. You're teaming with Telecom Italia in Italy and China Mobile to deliver content to those telcos. Would you be looking for a similar deal with Telstra in Australia?

We have a pretty simple view of life, which is we are interested and happy to distribute our content anyplace, anytime, anywhere and we would be happy to look at deals that allow us to further distribute our content with anybody.

Your next question comes from John Higgins - Broadcasting & Cable Magazine. John Higgins - Broadcasting & Cable Magazine : Good afternoon. A question on the broadcast side of the TV, could you give us a little better detail on what was going on revenue-wise, and what precisely was driving such a dramatic increase in operating income? Secondly, Peter, what is the ad model for video that you see, either on MySpace or elsewhere? Does an advertising model develop anytime soon for this?

Again, Dave, you can correct me. I believe that our profit improvement on the broadcasting segment was pretty equally split, probably a little bit more revenue increase, but also had some cost decreases.

No, that's dead right, Peter. It's really pricing and political across both the television station and the network, and lower cost of the network mainly from less write-offs.

Right. I don't know if it's exactly 50/50, but I believe that profit increases are shared between the two areas. John Higgins - Broadcasting & Cable Magazine : What had you been writing off?

I think that was just on a series, Head Cases maybe was the one we wrote off this quarter last year? They all fade…

You have a very good memory.

Fade into oblivion. Do I think an advertising model will develop? Absolutely. I don't think it's going to eclipse broadcasting in the first three months, but I think that the important thing is to start doing things, find out what consumer demand is. There is tremendous advertiser demand for Internet-delivered video advertising with very high CPMs. So the real question is how do you deliver the eyeballs to them? That is what we are working on, and I think you will begin to see those models develop shortly. They won't be born fully-formed, but I think we will begin to see development, and I think the key issue is, get started and then respond to consumer demand and consumer interest.

If we have one more question in the queue, let's take that, and then we have to wrap it up for the day.

All right, sir. Very good, sir, and we do thank you for your time today. Your final question comes from Ken Lee - Reuters. Ken Lee - Reuters : It seems you have been expanding MySpace in approximately one new territory per month. Is it possible that MySpace could expand into China as early as this fiscal year?

I think that question was asked earlier. We certainly have had some conversations, and yes, it's possible. If we can find a joint venture arrangement that we think makes sense, we would be happy to and would be interested in expanding into China. So we have been exploring and will continue to explore that.

Thank you, Mr. Lee. Mr. Chernin, I will turn it back to you for any closing remarks.

Thank you.

We don't have any closing remarks. We want to thank everybody for joining us today, and feel free to call us with any further questions, either from the press or from the investment community.

Thank you very much. Ladies and gentlemen, that does conclude the News Corp earnings for this first quarter of 2007. Thank you very much for your participation, as well as for using AT&T's executive teleconference service. You may now disconnect.