Rupert Murdoch, the chief executive of News Corporation, parent company of The Times, gave warning yesterday that a deterioration in the US economy was dragging down television advertising revenues.

The media owner said that “in the last month” he had become “a lot more pessimistic” about the health of the US economy, becoming the first executive in the sector to say that problems in the sub-prime market were affecting the broader economy.

He said that advertising across the Fox television stations was “about 5 per cent behind what we'd hoped for”, although there was no impact on trading elsewhere for a group that had reduced its dependence on advertising to 23 per cent of total revenues.

However, the remarks, made at a Bear Stearns media conference, eased the company’s voting stock down 35 cents, or 1.88 per cent, to $18.28 by the close of trading, as investors continued to worry about the resilience of consumer media businesses in a weakening global economy.

Mr Murdoch also said that he would “not get into a fight with Microsoft” over Yahoo!, because the software giant “has a lot more money than us”, implying that News Corp's interest in a white knight rescue for the struggling search engine was limited.

News Corp and Yahoo! - which is the subject of a takeover bid from Microsoft - are still in discussions about a deal in which News Corp's MySpace would be injected into Yahoo!, but the discussions have not gained momentum.

Yahoo! is also holding similar discussions with Time Warner's AOL online content division. Despite the discussions, Mr Murdoch was also careful to praise Yahoo!'s principal rival, the search market leader Google, which sells advertising on behalf of MySpace.

“We're very happy to be in the Google camp. They sell our search advertising, and pay us well for it,” he said, hinting that there was not a strategic imperative for News Corp to arrange a Yahoo! deal.

The chief executive also insisted that he saw a healthy future for network television because big advertisers “still want mass audiences” achieved by sport and entertainment programming.

He noted that the local stations were hurt worse because they were dependent on smaller business, such as “car dealers, real estate and department stores”.

Despite the softness in local advertising, Fox television “lost no ratings” so far in 2008, as the network was helped by screening the Super Bowl and having American Idol in the schedule, while rivals suffered from the loss of popular scripted dramas, taken off air by the writers' strike.

Mr Murdoch predicted a tough future for local newspapers in the United States, because their principal source of advertising, classified, will “go to the internet almost totally”.

He predicted that local titles, although still remaining profitable, would produce “a 15 to 20 per cent margin instead of a 35 per cent margin” over time.

That, though, was likely to help to enhance the value of national newspapers, such as The New York Times and News Corp's recent acquisition, The Wall Street Journal, because branded advertisers still be anxious to reach a large upmarket demographic.

The session ended with an unlikely intervention from Martha Stewart, the US homemaking and lifestyle guru, who said that she was a fan of Amazon's electronic book reader, the Kindle, and used it to read The Wall Street Journal on subscription for $119.

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