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News Corp.'s Credit Rating Affirmed

Standard & Poor's Ratings Services affirmed its 'BBB-' corporate credit rating on News Corp. (NWS) on Jan. 11, together with all ratings on its subsidiaries: News America, Fox Entertainment Group (FOX), and News Corp. Exchange Trust. The businesses were removed from CreditWatch, where they were placed with positive implications on Dec. 1. The outlook is positive.

News Corp. has total debt of about $8.1 billion, including Sept. 30, 2004, reported levels and $1.75 billion of debt issued in early December, 2004, and excluding exchangeable securities.

WATCHING LIBERTY. The action reflects ongoing uncertainty with respect to the company's long-term investment plans, particularly the potential for a transaction between News Corp. and Liberty Media (L) that could reduce the latter's voting stake, which is approaching 18% after recent transactions.

Standard & Poor's is not aware of any imminent transaction or well-developed plan but is sensitive to the magnitude of Liberty's voting stake in News Corp., as a result of Liberty's Dec. 20 move to terminate its total-return swap, exchange non-voting News Corp. shares for voting shares under the swap arrangement, and increase its stake to the current level.

If a transaction does materialize, Standard & Poor's will then review its effect on News Corp.'s credit picture and upgrade potential.

The Jan. 10 announcement that News Corp. plans to buy out the public minority stake in Fox Entertainment Group using News Corp. shares represents a mildly positive factor, since it will provide greater flexibility in the flow of funds between the two entities.

Outlook: The rating outlook is positive. Steady improvement in News Corp.'s business and financial profile is laying the groundwork for an upgrade. An upgrade will depend on Standard & Poor's gaining further insight regarding the company's long-term investment strategy and potential plans involving Liberty Media. From Standard & Poor's Ratings Services

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