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News Corp Emerging From Bottom of Cycle: Murdoch

Strong performance at News Corp's (NWS) cable channels and movie studio helped compensate for advertising declines, helping the media giant outperform Wall Street's expectations.

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CEO Rupert Murdoch told reporters during the earnings call that he sees "marked improvement from last year" and that the company "appears to be emerging from the bottom of the cycle."

The media giant reported an 11 percent increase in net income to 22 cents per share, beating analyst expectations by four cents per share. Revenues of $7.2 billion were in line with expectations.

Operating profit at News Corp's cable networks grew 41 percent, benefiting from the strong dual revenue stream of carriage fees and advertising.

Murdoch says that prices for "scatter" (or last minute) ads are up, boosted by strong ratings for its cable channels. News Corp has over 200 cable channels in more than 60 countries, and more than 70 percent of cable revenues are from affiliate fees.

Now that the company is pursuing cash payments for all of its channels, the challenge is whether the company can expand its dual revenue stream to the broadcast model.

News Corp's movie division was bolstered by its latest "Ice Age" sequel, which posted $391 million in operating income, up from $251 million from the same quarter a year ago. The media company is also hoping its 3-D "Avatar" movie directed by James Cameron opening in December, together with soon-to-be-released "Wolverine" DVDs, will boost its bottom line further in the fourth quarter.



Newspapers, however, continue to drag on the company's balance sheet - operating income for the division dropped to $25 million from $134 million in the year-ago period.

Murdoch answered a pointed question about the Wall Street Journal's finances, a unit of Dow Jones which News Corp acquired in 2007, saying the newspaper was profitable.

And with regards to Comcast's potential deal with NBC Universal, Murdoch maintained that Comcast is a partner and shot down rumors that News Corp is competing with Comcast for the deal.

"We're not interested in NBC as such," said Murdoch. "We kick the tires but we're not in talks with anybody at the moment."

But when asked whether News Corp is in the running to buy the Travel Channel from Cox Communications, Murdoch declined comment.

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