Murdoch circles Telstra's share of Foxtel

News owns 25 per cent of Foxtel, Telstra holds a 50 per cent stake and Consolidated Media Holdings accounts for the last 25 per cent.

News Ltd also owns half of the Fox Sports channel. As a subscription-based business, Foxtel has been a rare strong performer in a media sector hit by the advertising downturn.

Speculation over the ownership of Foxtel has increased since the Government unveiled legislation designed to forcibly separate Telstra's wholesale and retail arms as a precursor to the $43 billion national broadband network. The legislation also gives the Communications Minister, Stephen Conroy, the power to force Telstra to sell its Foxtel stake.

"We have the right to appoint the [Foxtel] management, but we only earn about a quarter of it. Fox Sports is very profitable, but we only own half of it," Mr Murdoch said.

"There's endless talk going on with the new set-up at Telstra, the Government talking about putting in a broadband network to every single home ... It's all in flux, but Foxtel will continue, the only question is whether we can improve our position within that."

The jostling over Telstra's stake in Foxtel began weeks ago, with tycoons Kerry Stokes and James Packer wrestling for control of Consolidated Media, before striking a deal that gifted Mr Stokes two seats on the company's board.

Like News, Consolidated Media has pre-emptive rights over Telstra's stake. Foxtel will be an even more attractive proposition if the Government, as expected, reduces the list of sporting events that are off limits to pay TV under anti-siphoning laws.

Mr Murdoch made the comments while unveiling first-quarter results for the multinational corporation. News reported an 11 per cent rise in net profit and upgraded its guidance for 2009-10 on the back of what Mr Murdoch said was an encouraging outlook. "Overall, I'm very confident about the long- and short-term future ... Our industry and the economies we're operating in are clearly in better shape than they were a year ago.

"However, I prefer to remain conservative in treating this recovery as still a little fragile. I expect 2010 to be a year of stability that puts us in a great position to be ahead of the full economic recovery, regardless of its degree of strength."

First-quarter consolidated operating income, or earnings before interest and taxes, was $US1.042 billion ($1.15 billion), up 9 per cent from $US953 million a year ago. However, the corporation's newspaper division struggled, recording $US25 million operating income, down from $US134 million last year.

Mr Murdoch also said News might not start charging readers this financial year for access to content on the company's newspaper websites. In August, Mr Murdoch said the drastic move, which other newspaper proprietors are watching with interest, could occur within the year.