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News Corp. Profit Surges

The Australian media conglomerate and its U.S. offshoot beat Wall Street estimates.

Updated from Nov. 5

News Corporation

(NWS) - Get News Corporation Class B Report

and

Fox Entertainment Group

(FOX) - Get Fox Corporation Class B Report

, its U.S. entertainment subsidiary, both reported higher operating income on revenue growth in the neighborhood of 20%.

The better-than-expected results, released after Wednesday's market close, were driven by strong performance at Fox's film and cable operations, as well as at News Corp.'s newspapers and magazines-and-inserts businesses. Shares of both companies rose slightly Thursday morning.

The operational success in the companies' first fiscal quarter also offsets the latest bit of grumbling about nepotism at the News Corp. empire: the appointment of CEO Rupert Murdoch's son James as CEO of satellite operator

British Sky Broadcasting

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(BSY)

.

"The unparalleled growth we delivered during the first quarter -- our seventh consecutive quarter of double-digit earnings increases -- is a clear demonstration of the strength we are enjoying across our balanced collection of businesses," Rupert Murdoch said in a News Corp. statement.

For the quarter ended Sept. 30, News Corp. reported revenue of $4.65 billion, ahead of the Thomson First Call four-analyst consensus of $4.37 billion.

News Corp.'s earnings "before other items" -- the First Call number -- amounted to 29 cents per share, up from 12 cents in the first quarter one year ago and ahead of the six-analyst consensus of 20 cents.

Fox Entertainment's revenue for the quarter amounted to $2.76 billion, up from $2.34 billion one year earlier. Analysts had expected $2.54 billion.

The company reported net income of $401 million, or 45 cents per share, up from $214 million, or 25 cents per share, one year earlier. The analyst consensus was for 29-cent EPS.

Fox's filmed entertainment operating profit more than tripled to $333 million for the quarter. Executives said the growth reflected mostly worldwide home video business and higher free TV syndication. News Corp. President Peter Chernin declined, however, to predict that filmed entertainment would perform as well in the coming quarters. "It's far too early to predict where the year as a whole is going to end up," he said on a conference call with analysts.

On the call, Murdoch acknowledged investor nervousness about broadcast TV ratings in the new TV season. "Let me assure you that you're not alone," he said. Some of the factors giving him confidence for the full year, he said, were the continuing performance of the Southern California melodrama "The OC," and the scheduled return of "American Idol" in January.

Murdoch reiterated prior 2004 fiscal year guidance for both News Corp. and Fox.

On Thursday, News Corp. rose 40 cents to $36.88 and Fox added 59 cents to $28.60.