Rupert Murdoch’s News Corp looks set to join the club of underperforming media giants. The company is due to report third quarter results on May 6 and could produce a 45% slump in net earnings, according to research from media analysts at UBS in New York.

UBS said this would come on a 14% fall in revenues, which if it happens, would be the most worrying development, indicating that News’s sector and geographic diversity is now working against it.

If News was to report a result around this level, then it would be in the same ballpark as NBC, which revealed a 45% drop in third quarter earnings on a 2% rise in revenues. News would be better than The New York Times Co and Media General, both of which have reported quarterly losses (MediaGeneral has 19 local TV stations as well as a clutch of city and local papers) and Gannett, America’s biggest newspaper group reported a 60% decline.

Media analysts at UBS in New York say News Corp’s facing another rough quarter and management will have to “address earnings guidance” which sees a 30% drop in earnings for the June year.

They also warned that news could be in for a tougher time for much longer, especially as its newspapers and TV businesses faces continuing weakness:

We believe that investor expectations for ad revenues are at pessimistic levels and that signs of stability (i.e., a slowing rate of decline) would be viewed positively.

However, we remain cautious as 1) we believe that ad sales declined at a greater rate in F3Q09 than F2Q09 and 2) that ad sales will remain at depressed levels for a longer period than current estimates imply.

We expect that TV and Newspaper ad sales declined further in F3Q09. We forecast a 20% decline at the FOX Network and a 45% decline at stations compared to ~10% and 35% (ex-political), respectively, in F2Q.

We forecast a 20-25% decline in newspaper ad revenue across the U.K., U.S. & Australia. We estimate a 33% decline in Sky Italia revenue (23% organic) due to promotional & F/X impacts.

We estimate revenue declined 14.5% to $7.49bn and operating income declined 45.6% to $782mm, led by weaker television and newspaper ads. We forecast EPS of $0.13 vs. $0.38 in F3Q08, with additional pressure from equity investments in European pay-tv.

Management should address current guidance, which calls a 30% decline in annual operating income (vs. $.5.13bn base, UBSe -32%).

News Corp’s relatively high exposure to newspaper and broadcast television advertising is weighing on near-term performance given cyclical weakness.

We are also concerned about the longer-term outlook for the company as we anticipate secular declines for newspapers and television stations beyond this cycle.

In addition, two of the company’s primary growth drivers, Sky Italia and Fox Interactive Media, are now facing cyclical challenges.

We lack clear visibility into the company’s most promising growth drivers, its international cable networks, which also tempers our growth expectations.

Given these concerns we rate the shares Neutral, despite the reasonable current valuation relative to historical multiples.

The weak macro-environment and related declines in our advertising revenue outlooks have driven our expectation of significantly lower profit in 2009.

In February News surprised with a 42% fall in ‘adjusted operating income” for the December quarter. Revenue fell 9.4% from the December quarter of 2007.

It also reported a huge impairment charge quarter of $US8.4 billion, including around $US2.6 billion in the value of the Dow Jones Company, which News bought for just over $US5 billion as the credit crunch erupted in 2007.