SYDNEY --- Although News Corp. would appear to be a media colossus to the casual observer, chairman and chief exec Rupert Murdoch believes it "is quite small relative to the opportunities in the global market for media."

"For this reason," the mogul said in his upbeat commentary in the company's just-released annual report, "the years ahead look incredibly exciting."

Not surprisingly, given the cost of big-budget pics like "Speed 2: Cruise Control," "Volcano," "Titanic" and "Anastasia," the report shows investments in film production rose to $719.1 million for the year ended June 30, from $409.5 million the year before. The dismal domestic performances of "Speed 2" and "Volcano" are widely blamed for a $119 million fourth-quarter loss for the Fox film division, dragging News Corp.'s full-year net profit down 27% to $561 million (Daily Variety, Aug. 20).

Murdoch said News Corp. is now the world's largest TV network operator, with full or partial ownership of more than 90 channels in Asia-Pacific, Europe and the Americas, and that soon more than 75% of the world's population would have access to News Corp. programming.

Fierce competition

"The competition in the global marketplace will remain fierce and will favor those companies with financial strength," he said, noting that selling assets, restructuring the book unit and favoring joint ventures for expansion had allowed News Corp. to maintain cash reserves of more than $2.7 billion to pursue aggressive growth strategies.

"These cash resources, together with our established cash flows, give us the flexibility to finance future investments without jeopardizing our investment-grade credit ratings."

But the accounts show News Corp. has increased its Oz feevee commitments to about $349.7 million, with few returns in sight, including doubling its investments in breakaway Rugby competish Super League to $173 million for his cabler Foxtel, into which News has sunk $176.7 million. Foxtel, which lost $195 million this year, has agreements to pay about $3.06 billion for programming based on subscriber numbers, $1.5 billion of which News Corp. is liable for.

Murdoch said "significant progress" was made in "building an unparalleled global distribution platform and developing quality content with lasting and profitable brand names." He pointed to Fox TV's airing of major sporting events, the building of cabler Fox Sports, the launch of Fox Sports Americas with ESPN in Latin America, the acquisitions of the Family Channel and New World Communications, and the bow of Fox News.