This is a partial transcript from "Your World with Neil Cavuto," May 6, 2004, that was edited for clarity.

Watch "Your World w/Cavuto" weekdays at 4 p.m. and 1 a.m. ET.

NEIL CAVUTO, HOST: You know they say that media advertising is a good, early economic indicator. Now, if that is the case, the economy should be in very good shape.

Media giant News Corporation (search) out with a stunning 69 percent jump in third quarter profit, lifted by double-digit growth in virtually every segment, including newspapers, book publishing, cable networks, I think including this place, Fox News Channel.

News Corp., as you might have heard, is the parent company of this place. And with me now, the boss of this place and me, Rupert Murdoch (search). First off, for full disclosure here, I am a News Corp. shareholder and a preferred and Fox Entertainment shareholder as well.

Mr. Murdoch, good to have you.

RUPERT MURDOCH, NEWS CORPORATION CHAIRMAN: Thank you, Neil. Good to be here.

CAVUTO: Advertising looks good.

MURDOCH: It looks very good, and it's pacing very well for the next few months.

CAVUTO: Now, the street looks at that and says, you can't keep this kind of momentum going. Your stock gets hit, other media stocks get hit. What do you make of that?

MURDOCH: Well, that's life. You've got to go with the market, I guess. But, you know, if you just keep working on getting the profits up and the earnings per share up, it will kick in, in the end.

CAVUTO: Yes. What is going on with Wall Street lately? All these earnings have been great, yours included. Your stock, all three issues...

MURDOCH: I think the pounding by the media on issue after issue against Bush, against Iraq, whatever, just leading to uncertainty. And, you know, wondering how things are going to go. And in an election year there is always uncertainty. It's not a good year for the market, election years.

CAVUTO: Yes. There is also concern that because things are so good interest rates are going to go up higher. Are you worried?

MURDOCH: No. I think they should go up a little bit, only just to stop the long rate going up because people are frightened they're going to get inflation and the long rate will get out of hand. Just, you know, 25, 50 points. It wouldn't have mean a thing.

CAVUTO: If the Fed rate...

MURDOCH: If it went from 1 percent to 2 percent it wouldn't hurt anybody.

CAVUTO: What if it goes to 3 percent?

MURDOCH: That's probably all right. But if it goes to 6 or 7, no. But we don't have inflation except in commodities, which we cannot control, which is a worldwide thing. There is no other inflation.

There is fabulous productivity gains going on in the economy. The economy is behaving like it is on steroids at this moment.

CAVUTO: Yes.

MURDOCH: Everyone I talk to, you know, people, big shopping mall owners around the country, economists, and so on, they are all amazed at the strength of the economy and how it is picking up day by day.

CAVUTO: So you share that sentiment?

MURDOCH: Yes. Well, it seems to be so in advertising. I wouldn't say that we couldn't take more, but advertising is good, and it is getting better.

CAVUTO: Let me ask you something here. I'm wondering if there is a pall on media stocks in general. You had said not too long ago in The Financial Times, "Bigness in media is out of fashion in America politically." That is with big combos and that sort of thing.

You dismissed talk that you might even be interested in Disney, that I guess it would be just too big a leap. What did you mean by that?

MURDOCH: Well, there are regulations about how big you can get. You certainly can't have two major networks. You can have a major and minor one, like CBS has UPN.

It's unclear at the moment how much coverage you can have in the ownership of local television stations. And so we wouldn't be buying more of those at the moment until that is clarified, certainly. And then probably not.

The future, I think, you know, is in cable and satellite, very lively with a great growth. Although our stations are doing well and we are budgeting for another extremely strong year next year, stronger year than this year in growth.

CAVUTO: Right. Let me ask you a little bit about the Disney situation. As you know, Comcast withdrew its bid. You were never a very big fan of whether that would come to pass anyway. But no one else has come to the floor. Is it safe to say Disney is off the hook?

MURDOCH: I think it is off the hook for now. I don't know who would want it. It has a lot of problems. ABC would take a lot of turning around. It can be done.

They've got theme parks that probably need more investment in them. But they are throwing off a lot of cash. You know, it's not in that bad of shape. It is that they have become very unpopular in the industry and with the people they deal with. And they've got this bit of a black hole with ABC.

I'm just amazed that the crisis and the talk hasn't gone away, because they will be showing good results this year. But I don't see anybody coming to take them over.

CAVUTO: Is Michael Eisner's job safe?

MURDOCH: I don't know. I would have thought so. But people keep talking about it. And if they keep talking about it, that is going to be destabilizing and bad for the company.

CAVUTO: There were rumors Jack Welch, the old GE chairman, might be interested in a Disney job. He was rumored to be talked about for the Coca-Cola position, which he reportedly he turned down. What about that? Do you give that much credence?

MURDOCH: I give it quite a lot of credence, but I hope it's wrong because I don't want Jack as a competitor. He's too good.

CAVUTO: Yes. You said in your conference call earlier, Mr. Murdoch, that by year end, Fox will be launching a channel. What did you mean by that?

MURDOCH: Well, we've got a lot of plans for different channels which we haven't chosen yet which way we'll go. But I think before the year is out, I'll either have another channel on the air, or be very close to it. We will have certainly shown our hand and do it. But whether it will be in sports or whether it will be in another aspect of news, or entertainment, is yet to be decided.

CAVUTO: There is always talk about a business channel. Do you watch CNBC?

MURDOCH: No, I don't. But what are you worried about? Aren't you busy enough now?

CAVUTO: Absolutely. So when you look at some of the competitive product out there, whether it's CNBC or MSNBC or CNN, what do you think?

MURDOCH: I am amazed that CNN can't get its act together, or that MSNBC doesn't seem to be able to get any traction. But I guess one day they'll find something.

Us and your ratings here on Fox just get better and better. It is showing in the earnings. When we launched, we had to give 10-year deals to all the cable companies. We can't move or rates up, subscription rates for another two to three years. And when it does, of course our profits will really take off.

But meanwhile, the ratings that you are achieving are showing themselves in advertising. And you see in our report today, I think Fox News, of all our subsidiaries, had the best increase in profits.

CAVUTO: Indeed. You talked about when you'll be able to take advantage of that and charge higher ad rates, and that is sort of like a box for you right now. How soon...

MURDOCH: The ad rates now, subscription rates...

(CROSSTALK)

CAVUTO: When do they gel?

MURDOCH: I think seven or eight or nine, or perhaps six, seven, and eight. When we're 10 years old it starts to kick in. And we'll be going out there, looking for something better than what CNN gets. We are giving them three times, or at least twice the primetime audience, and daytime audience, too. So we would like twice their rate.

CAVUTO: Yes. We kick their butt in business, too.

MURDOCH: I know.

CAVUTO: All right. Let me ask you a little bit about CNN's parent, Time Warner. Sumner Redstone of Viacom had expressed an interest in Time Warner. Is that realistic to you?

MURDOCH: Well, it is possible. But it could be a tremendous delusion. I'm not saying on earnings, but on his position in Viacom and everything else, because the market values are roughly the same, price and -- it would be a very, very big -- Time Warner is a fine company, it is in good shape, with the exception of CNN, we'll say. But question marks over AOL, but it is still throwing off a lot of cash.

CAVUTO: Right.

MURDOCH: Their film company is on fire. It's really going well. HBO's doing great.

They've got probably the best of the magazine companies. PEOPLE Magazine is like a gold mine. I think, you know, they are in very good shape.

CAVUTO: Do you see them selling off pieces? I mean, Mel Karmazin I think was making a speech, I think, in Buffalo, where he said he likes CNN. Could you ever see that kind of a situation develop, where the parts of the company. including CNN, are spun off? And would you be interested in...

MURDOCH: I don't think for a minute that Time Warner would sell off anything. The day may come when they spin off AOL if they feel they can't make a go of it for a dial-up service or convert it into the new broadband. I can't see them ever getting rid of anything else.

CAVUTO: If CNN were up for sale, would you be interested?

MURDOCH: Well, I certainly be allowed to have it. No, I'm very happy with what I've got, thank you very much.

CAVUTO: Well, there is a precedent, as you know, when there was an FNN and there was a CNBC, and ultimately GE came in to buy FNN, essentially shut it down so that CNBC could thrive. There is a precedent.

MURDOCH: Yes, but days are different now. I can assure you, if we bought CNN, there would be an almighty storm. And we'd wanted to change at it lot.

CAVUTO: Yes.

MURDOCH: But, you know, there are other aspects. You mentioned business news, headline news. There's a lot of possibilities.

CAVUTO: All right. Very quickly, on your voting stock right now, you have John Malone, who has a significant voting stock, too, 17, 18 percent share of the company, I should say. Is that relationship still cozy and everything?

MURDOCH: Oh, very. He's very supportive. He's between nine and 10 percent of the voting stock. I have 30 percent. There is no worry.

CAVUTO: All right. Rupert Murdoch, thank you very much. The man who runs this place we call News Corporation, of which Fox News is such a vital, vital part with the business programming. I guess it is even the most vital part.

MURDOCH: Well...

CAVUTO: Enough.

MURDOCH: Enough for now.

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