The firm remains concerned about 2H10 slowdown in the advertising rebound, increasingly difficult comparisons in several businesses, and deteriorating trends at Sky Italia. The firm also sees low visibility in advertising.

During 2Q10, the Company entered into a long-term supply contract pursuant to which the Company will purchase ink for its newspaper printing facilities in the United Kingdom from a third party through fiscal 2022. The Company will pay approximately $400 million over the term of the contract.

In January 2010, the Company sold its 33% interest in STOX Ltd., a European market index provider, for approximately $300 million in cash and an additional consideration of up to approximately $40 million conditioned upon STOXX achieving specific performance objectives.

Television advertising: Approximately 30% of NWS EBITDA is tied to the television advertising, which is under pressure from audience share erosion at the hands of cable networks and other forms of media (Internet, video games, DVDs), and the ongoing growth in DVR usage.

Film studio margins are industry-high: It is particularly concerning for NWSA as over 20% of its EBITDA comes from filmed entertainment versus 7%-13% for the other media conglomerates.

Decline in advertising expenditure: Expenditures by advertisers tend to be cyclical, reflecting overall economic conditions, as well as budgeting and buying patterns. A decline in the economic prospects of advertisers or the economy in general could alter current or prospective advertisers’ spending priorities.

Competitive trends: NWS is in the midst of a major restructuring of the MySpace as the platform loses ground to Facebook and struggles to monetize online traffic. Sky Italia platform is also facing an aggressive alternative pay tv offering from Mediaset, which is slowing down the growth profile of that business.