Profits Bounce Back At Rupert Murdoch's Huge Media Empire

NEARLY three years ago, News Corporation, media magnate Rupert Murdoch's massive conglomerate, was poised on the edge of bankruptcy.

Last week, the corporation announced a profit of $864 million, 73 percent up on last year.

Newspapers and magazines around the world contributed the largest portion of News Corp.'s earnings, $1 billion of $1.7 billion in operating income. But those are mature industries. Profits from television ventures like Britain's Sky satellite television and Fox TV in the United States are also up. Television was the fastest-growing segment.

What has happened to turn the picture around is a combination of cost trimming, improved interest rates, and debt refinancing. The company is focusing on securing a long-term reduction in debt-funding costs.

"Adversity has been useful to us. It has allowed us to reflect and focus better on our business," says Ken Cowley, chairman and chief executive of Mr. Murdoch's Australian operations. He says the more solid grounding has set the company for further expansion in international television broadcasting, particularly in Asia. At this point, it is mostly free programming, but is expected increasingly to be pay TV.

This year, News Corp. extended its investments in television with its acquisition of 15 percent of Australia's Seven Network and 64 percent of Star Television of Hong Kong. Star TV is the world's largest satellite broadcaster, covering 38 countries.

Murdoch built up his family's Australian newspaper company into the world's largest media conglomerate consisting of newspaper, television, radio, film, and publishing interests on four continents. These include:

* US: Boston Herald, New York Post, TV Guide, Mirabella, Fox Broadcasting Corp., Twentieth Century Fox, and HarperCollins Publishers.

* Britain: The Sun, News of the World, the Sunday Times, and Sky Television.

* Australia: The Australian.

* Hong Kong: The South China Morning Post and Sunday Morning Post.

Murdoch achieved fame partly by taking on - and beating - the British print unions. In the US, his Fox Broadcasting forced the big national television networks to move over.

International banks wooed him and his company throughout the 1980s. But in 1990, Japan started to withdraw from the short-term money market in Australia. News Corp. had long raised a large share of its financing in short-term markets. Murdoch resisted suggestions to raise more long-term debt because he felt interest rates would come down.

At the same time, Sky Television was incurring unexpectedly large losses. And Murdoch was also spending large amounts of money on new color printing presses in Britain and Australia.

For four months in 1990 and 1991, News Corp.'s future looked dicey as company directors tried to persuade its 146 bank lenders to restructure the mountain of debt. Citibank of New York and Samuel Montegu & Co. of London successfully worked out a $7.6 billion refinancing deal.

For his part, Murdoch agreed not to make any more acquisitions and to stick to a stiff three-year debt-repayment schedule.

It has paid off. News Corp.'s 1992 profits were $530.5 million.