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No Murdoch? Cable Helps News Corp Beat Estimates

Rupert Murdoch didn't come on News Corp's earnings call, which meant there were no dramatic statements about the future of subscription models or the importance of tablets like the iPad.

The company said Murdoch didn't participate because he's traveling — he gave COO and President Chase Carey a chance to address Wall Street Analyst questions.

Rupert Murdoch
AP
Rupert Murdoch

News Corp stock moved higher after hours on higher earnings than last year that beat expectations: 27 cents a share (excluding one-time items) to the 24 percent Wall Street Projected. Revenue came in at $7.43 billion, a hair more than expected and up from $7.2 billion last year. Get after-hours quote here.

Cable networks continue to drive News Corp's business — they now account for 25 percent of revenues and over 57 percent of operating income.

Advertising at the cable nets showed a remarkable rebound — 16 percent year-over year growth at the domestic channels and 27 percent growth. Affiliate revenue grew 14 percent in the US and 12 percent overseas — signs of success at channels such as regional sports.

The TV segment also posted growth — $105 million in operating income, up from $67 million a year ago. Carey says that eventually there will be less of a distinction between broadcast and cable — they want Fox to look more like the cable networks, as they want it to have two steady revenue streams in advertising and subscription revenue.

Of course Carey couldn't avoid questions about Cablevision — he wouldn't speak to the terms of the deal, but said Cablevision was clearly frustrated that it couldn't get the government involved.

How much did the two-week standoff cost the network? He wouldn't say, but stressed that it's unfortunate that the World Series didn't go to Game 6. Those extra eyeballs would have helped compensate for ratings points lost during the weeks when Cablevision customers couldn't watch Fox.

The real thorn in News Corp's side is MySpace.

"We've been clear MySpace is a problem," Carey says. Now that the site has been re-vamped to focus on entertainment, it's now on a "clear path to profitability." But Carey doesn't seem married to holding onto it.

When asked "What if it doesn't work?" Carey says in this situation, they'll "judge in quarters and not in years." The studio didn't fare so well, thanks to some very tough comparisons to the year-ago quarter when "Ice Age" was released.

Carey continued Murdoch's tradition of stressing the importance of subscriptions. He's also very optimistic about the profit potential in digital distribution but said you can't just rely on advertising.

So the message is whether it's Fox or WSJ.com, News Corp wants both subscription and ad revenue.

Questions? Comments? MediaMoney@cnbc.com