to lose $5b Q3

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    Writedowns tipped to drag on News Q3 earnings

    SYDNEY, May 13 (Reuters) - Rupert Murdoch's News Corp (NYSE:NWS - News) is expected to post a March quarter loss of up to US$5 billion on Tuesday after writing down the value of its investment in Gemstar-TV International.

    However, analysts are tipping a 25 percent improvement in earnings per ADR and said the world's fifth biggest media group was poised for an earnings pick-up after stripping out one-offs.

    News Corp will release its third quarter results at noon GMT on Tuesday - 8 a.m. Tuesday in New York and 10:00 p.m in Sydney.

    Analysts expect the results to be dominated by a hefty writedown on News Corp' Gemstar investment of US$4-US$5 billion in the quarter.

    News Corp, which has a 42.6 percent stake in Gemstar (NasdaqNM:GMST - News), warned last month its planned writedown could rise beyond US$2 billion - its share of Gemstar's US$5 billion non-cash charge booked in the March quarter.

    Gemstar shares have shed more than two-thirds of their value since the start of this year, from just above US$28.04 to US$8.34 on Friday.

    Recent changes in U.S. accounting rules have forced companies to quickly book changes in the value of acquisitions.

    The potential write-down is making headlines in Australia as it would be the largest in the nation's corporate history.

    However, analysts were upbeat on expectations for continued earnings growth and said the company was well positioned to benefit from an expected recovery in the U.S. economy and advertising market.

    Wall Street expects earnings per ADR of 15 U.S. cents from 12 U.S. cents a year ago, according to market data research group Thomson Financial/First Call.

    "Growth is projected to come largely from the Fox Entertainment assets, which, with the exception of the Fox network, should display strong operating momentum across all business segments in 2H FY02," Merrill Lynch analyst Jessica Reif Cohen said in a recent research note.

    "Television stations, cable networks and the film division, should all contribute to industry-leading growth."

    Reif Cohen has forecast earnings per ADR of 14 US cents for the quarter.

    News Corp executives will also face questioning about the future of the group's involvement in failing German media group KirchPayTV.

    Britain's BSkyB (London:BSY.L - News), 36 percent owned by News Corp, last week topped forecasts with operating profit before goodwill rising 33 percent to 129 million pounds for the nine months ended March.

    News Corp's Australian shares, which fell to a 30-month low of A$11.53 last week, were 2.1 percent weaker at A$11.80 in a lower overall market on Monday.

    News Corp's ADRs closed in the United States down 0.2 percent at US$26.10 on Friday
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