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News Corp. Profit Surges

News Corp. (NWS - Get Report) capped off an eventful 2004 Wednesday with a strong fiscal second quarter.

The New York-based media company, which late last year completed a move from Australia, cited strong DVD sales at the company's majority owned Fox Entertainment (FOX) subsidiary.

Operating income rose 24% from a year ago to $954 million, ahead of the $922 million mean forecast. Revenue jumped 18% to $6.56 billion, beating the revenue forecast of $6.09 million.

But per-share earnings, hurt by the fair value change of certain securities, fell short of the consensus estimate. For its quarter ended Dec. 31, News Corp. earned $386 million, or 12 cents a share, up from the year-ago $215 million, or 7 cents a share. Analysts surveyed by Thomson First call had expected earnings of 17 cents a share.

"While our country of incorporation changed in the second quarter, the growth we continue to deliver remains the same," CEO Rupert Murdoch said.

Early Wednesday, News Corp. rose 13 cents to $17.75.

Operating income at the Fox film division grew 57% to $407 million, driven by what News Corp. said was its biggest quarter ever in home entertainment revenue. DVC releases included Day After Tomorrow, Garfield and Dodgeball: A True Underdog Story.

TV shows with strong DVD sales in the quarter included The Simpsons, Family Guy and 24.

Cable Networks operating income benefited from the National Hockey League lockout, the company said. The nonseason is resulting in lower rights costs as well as higher basketball ratings, even considering the "dismal" performance of the Lakers.

The results "add up to a very good story for our company," Murdoch told analysts on a Wednesday conference call.

This quarter was the first News Corp. reported as a U.S. company. The conglomerate is in the process of buying back the shares of Fox it doesn't already own.

On Wednesday, News Corp.'s voting shares rose 22 cents to $17.84, while its Class A nonvoting shares rose 26 cents to $17.16. Fox shares rose 24 cents to $34.14.

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