The firm blamed an annual net loss of $6.3bn (£4.1bn, Aus$11.7bn) largely on its decision to revalue an investment in interactive television services company Gemstar.

We have seen an improvement in both the American and international advertising markets

Rupert Murdoch

Shares in Gemstar, in which News Corp has a 42% stake, have halved since the firm in June lost a court battle over a claim of patent infringement on its interactive programme guide.

In all, News Corp wrote off $6.9bn in investments. As part of this, the value of holdings in pay-TV broadcasters KirchMedia in Germany and Stream in Italy were also adjusted downwards.

"Obviously we were disappointed by the writedowns," Mr Murdoch said.

But the media magnate raised hopes of a turnaround at Gemstar, saying News Corp executives were "working closely" with managers at the business to "take the necessary steps to restore the value of that important asset".

And, with signs of an improvement in advertising, News Corp was "in an excellent position for continued profit improvement".

"We have seen an improvement in both the American and international advertising markets," he added.

Circulation war

The nascent rebound in the ad market was particularly evident at the firm's UK tabloid newspapers, the Sun and the News of the World.

However, cover price cuts introduced in a circulation war with The Mirror more than offset the Sun's ad gains, and the UK newspapers saw operating income overall slide 5% over the year.

News Corp's book publishing arm, HarperCollins, achieved a 6% rise in operating profit to a record $118m, thanks largely to sales of its Lord of the Rings titles, on the back of a blockbuster film.

New Corp's own film arm, which includes Twentieth Century Fox, saw profits rise by $208m to $473m for the year, buoyed by the box office success of Moulin Rouge and Behind Enemy Lines, plus the syndication of Buffy the Vampire Slayer.

And the Fox Television Stations unit saw profits rise by $26m, as the "improving" ad market and syndication success of the Seinfeld comedy series boosted earnings.