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News Corp to throw up pay walls, burn Kindle

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Rupert Murdoch will refashion the internet in his own image over the next year, as News Corp begins to start charging for content.

The media giant has also warned Amazon over its terms and conditions for the Kindle, after revealing financial figures for what it described as its "most difficult year in recent history."

For the fourth quarter ending June 30, News Corp made a net loss of $203m compared to last year's $1.1.bn profit, on revenues of $7.7bn compared to the previous year's $8.5bn.

Revenues were down 8 per cent to $30bn for the year to June 30. Net loss for the full year was $3.4bn, compared to a $5.4bn profit last year. The company cited operating losses and impairment charges for the loss. Full year adjusted net income was $3.6bn, compared to the previous year's $5.3bn.

News Corp spans practically every form of mass media, but the extent to which traditional channels are struggling to adjust to the internet - as well as the recession - was shown by the breakdown of adjusted operating income. [see below]

In a statement, Murdoch said, "Our 2009 financial performance clearly reflects the weak economic environment that we confronted throughout the year. We streamlined all our businesses and continue to do so, at the same time adjusting to the revolutionary changes taking place throughout the media industry."

However, Murdoch is clearly fed up "adjusting to changes" in the media industry and wants to make the media industry change to fit him

He told a conference call that he intended to start charging for access to its newspaper sites, such as The Sun and The Times by next June. The organization already charges for access to the Wall Street Journal.

"An industry that gives away its content is cannibalizing its ability to do good reporting," Murdoch said.

Murdoch also served notice to Amazon that he was not happy with the terms and conditions the book barn stuck on publishers for content on the Kindle. If Bezos and co don't get with the program, he said, he'd pull content from the platform.

If one media organisation has the heft to force a change in the market for online content, it's News Corp. Such a move could even make Murdoch a hero to the struggling minor players he's been painting into a corner for years.

On the other hand, Murdoch plays a very long game. If he follows up on his promises, other players may well follow, only to find themselves in bruising price wars with Murdoch's outlets.

The most cynical observers would not be surprised if Murdoch stated his intentions, prompting others to invest in their own charging mechanisms and pay walls, only to change his mind at the last moment, leaving rivals to contemplate redundant investment and/or plummeting web traffic.

Overall operating income at News Corp came to $848m, down from last year's $1.4bn. But operating income at its television business dropped from $279 to $95m year on year for the quarter, and from $1.1bn to $174m for the full year. Newspaper and information services profits were down from $263m for the quarter to $96m, and from $786m to $466m for the full year. Cable network programming jumped to $434m in the quarter, from $313m last year, and was up to $1.7bn for the year, compared to $1.3bn last year.

The Other segment reported a fourth quarter adjusted operating loss of $136m and full year adjusted operating loss of $363m, with the decline mainly put down to lower advertising at MySpace and the costs of launching MySpace Music. ®

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