The recession has crunched News Corp’s third quarter profits, especially from its TV and newspaper businesses. There, profits have collapsed. Operating profits fell 47% after the 42% fall in the second quarter.

News earned $US755 million against $US1.4 billion. That’s the lowest quarterly result for more than three years. The company’s revenues surprised by falling $US1.3 billion, or 15%, on lower ad sales, film income and the disposal of some assets, such as eight TV stations.

The slump echoes the results reported by rival US TV and film groups, NBC Universal, where earnings fell 45% on a 2% rise in revenues, and Disney, where revenues fell 8% and earnings dropped 44% (or half a billion US dollars).

Short of the dark days of 1980-81, this would have to be one of Rupert Murdoch’s worst quarters for earnings; profits from his Fox free-to-air TV business in the US slumped to just $US4 million in the March quarter, down a huge $US415 million from the same quarter of 2007-2008. This was after a similar collapse in the December quarter where the fell $US227 million to just $US18 million.

But this morning, in a webstreamed investors’ briefing, Murdoch was upbeat. He told analysts that, ”There are emerging signs in some of our businesses that the days of precipitous decline are done and that revenues are beginning to look healthier.” He maintained his February forecast for a 30% fall in operating earnings for 2008-09.

To make that guidance (which would put operating income around $US3.76 billion), News earnings would have to jump 80% from this quarter in the June three months to over $US1.2 billion.

Mr Murdoch said that News Corp had shed 3000 people across its businesses to counter the slowdown in revenues, primarily by merging activities at its newspapers and TV stations. Again he didn’t reveal the size of the job cuts in Australia, or at local News Ltd papers.

The free to air TV businesses in the US and the company’s newspapers earned just $US11 million in the quarter, compared with some $US635 million in the March quarter of 2008.

As dramatic as the slump in US TV revenues were, the results disclosed an even bigger collapse in newspaper profits from the businesses in the US, UK and Australia.

Papers like the New York Post, the Wall Street Journal, the Times, The Sun, The Australian and The Herald Sun could only manage to earn just $US7 million in the quarter. That was down a huge $US209 million from the March quarter of the 2008 financial year. While the various papers earned lower profits in local currencies (the Australian dollar and UK pound) the stronger US dollar all but wiped them out. If it hadn’t been for the acquisition of the Dow Jones business (for which Murdoch paid $US2.8 billion too much), newspapers would have turned in a loss on consolidation in US dollars.

Seeing the papers earned $US179 million in the second quarter, the collapse in the third quarter is nothing short of astonishing. Figures published in London on Tuesday for the June 30, 2008 results for The Times and other papers showed losses or lower profits, now there seems to be a tide of red ink sweeping his once core businesses.

News Corp said operating income fell 42% in Australia (down 18% in the second quarter) as ad revenues dropped 16% (4% in the second quarter). In the UK ad revenues fell 21%. Marketing and other costs rose, circulation revenues only rose because of higher cover prices. News made no remark on the 20.55% plunge in sales of the once core New York Post in the March quarter.

In fact, one reading of the newspaper results would indicate that the lower, unquantified profits from the Wall Street Journal and the Dow Jones Company covered much of the losses elsewhere in newspapers.

No wonder Murdoch has been telling anyone who listens that this is the worst he and the company have seen business conditions. If it wasn’t for the strength of his cable TV networks in the US at the moment, Murdoch and News Corp would be looking at a re-run of 1980-81 when the company was nearly put under by banks nervous as weak earnings and unchecked expansion.