Cable, TV Strength Buoy News Corp.

Weakness at the movie division brings down operating earnings.
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News Corp.

(NWS) - Get Report

said Wednesday that it swung to a fiscal first-quarter profit, reversing a year-ago loss weighed down by a big charge, as it benefited from strength at its cable and broadcast TV networks.

For the quarter ended Sept. 30, the media giant reported earnings $843 million, compared with a year-earlier loss of $433 million. The 2005 results were dragged down by a $1 billion charge to write down the value of its TV stations' broadcasting licenses.

Excluding charges, News Corp. earned 27 cents a share for the quarter, up from 18 cents a share on a comparable basis last year. Analysts, on average, expected earnings of 20 cents a share, according to Thomson First Call.

The owner of the Fox News Channel,

The New York Post

and MySpace said total revenue rose 4.1% to $5.91 billion from last year's $5.68 billion. Operating earnings for its main businesses declined 6.4% to $851 million due to a poor performance from its film business, 20th Century Fox. That offset big gains in earnings from its broadcast and cable television networks.

Cable operating income rose 26% on affiliate and advertising growth at the company's regional sports networks and FX. Advertising growth at the Fox network helped television operating income rise 20%, the company said.

"The operational momentum we exhibited throughout our record fiscal 2006 continued during the first quarter of fiscal 2007," said News Corp. in a press release. "Sustained market-leading positions at our cable networks and television stations, along with stronger advertising at the FOX network, produced double-digit operating income growth in the Cable Network Programming and Television segments."

The company also touted the prospects of its Internet properties, like the explosion of the social networking Web site MySpace.

"We have also begun to capitalize on the rapid growth at our new media assets, where News Corporation websites now rank second in the U.S. in total page views and fifth in unique visitors," it said. "Our recently announced landmark deal with Google for textual search is expected to generate $900 million over three and a half years, signifying our ability to monetize our traffic in ways that make sense for our audience and quickly moving our new media properties toward profitability."

Shares of News Corp. were recently up 14 cents, or 0.6%, to $22 in after-hours trading, after they rose 1.3% in regular trading hours.