Print price war costs Murdoch £40m

RUPERT Murdoch's News Corp is on track for a first-half profit surge, buoyed by a recovery in advertising revenue at its UK newspapers.

But the turnaround comes not a moment too soon. The newspapers, including The Sun and The Times, have cost the company £40m over the past year because of a damaging price war, according to News Corp president and chief operating officer Peter Chernin.

The battle of the 'red tops' saw The Sun and rival The Daily Mirror slash their cover prices from 32p to 20p in most regions until May. But Chernin says that, with the cover price restored, The Sun is showing steady revenue and circulation growth.

'We've seen a strong lift in advertising in our newspaper businesses in Australia and the UK,' he told a media conference in the US.

'The price war in the UK ended last May...giving us easing costs for another two quarters. The net effect in terms of cost of that price war would have been £1m a week over the year it went on.'

Australia-based stockbroker ABN Amro Morgans expects News Corp to post a full-year net profit of about A$2.2bn (£930m) this year, up from the record A$1.8bn (£761m) in 2003.

Merrill Lynch media analyst Jessica Reif Cohen believes this will be a 'breakout year' for News Corp, with growth fuelled by advertising gains at its newspapers and bigger profits at BSkyB