UPDATE 3-News Corp profit up on ad recovery, Avatar

* Fiscal EPS, rev beat expectations; raises outlook

* Ups dividend payout by 25 pct to 7.5 cents/share

* In early talks for Avatar sequel; not interested in MGM

* Murdoch: Amazon prepared to renegotiate e-book pricing.

* Shares up 5.7 pct.
(Adds comments from conference call, byline)

By Yinka Adegoke

NEW YORK, Feb 2 (BestGrowthStock) – News Corp’s (NWSA.O: ) results
beat expectations thanks to “Avatar” and improved advertising
sales, and the company raised its outlook and dividend in a
sign of confidence for the battered media sector.

The 25 percent dividend increase announced on Tuesday by
Rupert Murdoch’s media conglomerate would have been unthinkable
a year ago, when crumbling ad revenue decimated TV and
newspapers, and sales of DVD and books also cratered.

While the media business still has obstacles, fortunes have
started to improve with the economy. Investor interest in media
has also been rekindled by a new generation of devices from the
likes of Amazon.com (AMZN.O: ) and Apple Inc (Read more about Apple stock future.) (AAPL.O: ).

News Corp Chief Executive Rupert Murdoch was extremely
bullish on a conference call with Wall Street analysts and
journalists, saying the company’s future would benefit from the
willingness of customers to pay for quality content.

“Content is not just king, it’s the emperor of all things
electronic,” he said.

News Corp shares, which have risen 21 percent in the last
six months, gained another 5.7 percent after the rosy quarterly
results. The company also raised its outlook, saying fiscal
2010 income should climb in the low 20 percent range.

Perhaps nothing points to a recovery in the entertainment
business as clearly as the success of the blockbuster 3-D movie
“Avatar,” which has had more than $2 billion in ticket sales,
overtaking “Titanic” to become the biggest movie of all time.

It earned nine Oscar nominations [ID:nN02236971] and News
Corp said 50 percent or more of the profit from the James
Cameron-directed film would show up over the next two or more
quarters. News Corp said it was in early talks for a sequel.

“Jim has ideas for one,” said Murdoch. “We haven’t come to
any agreement with him or budgets or timing or anything.”

But Murdoch made clear that News Corp would not be
interested in acquiring film studios of MGM at reported
valuations or Walt Disney Co’s (DIS.N: ) Miramax. Both film
companies are said to be up for sale.

“At the right price, we’d be interested,” Murdoch said on
MGM. “But it appears that other people are more interested so I
think you can count us out of that one altogether.”

NEWSPAPER BUSINESS IMPROVED

Behind the strength of “Avatar” and better ad climate, News
Corp posted fiscal second-quarter net income of $254 million,
or 10 cents a share. That includes a $500 million litigation
settlement payout to Valassis Communications (VCI.N: ).

A year earlier, News Corp posted a net loss of $6.4
billion, or $2.45 a share, which reflected a major writedown
for its purchase of Dow Jones, and other items.

Excluding charges in both periods, second-quarter adjusted
profit was 25 cents a share, up from 15 cents a year ago.
Analysts were expecting 20 cents a share on average, according
to Thomson Reuters I/B/E/S.

Revenue rose a better-than-expected 10 percent to $8.7
billion.

“Basically every division outperformed, the ad market is
back and newspapers are probably the best outperformer on the
operating incoming,” said Miller Tabak analyst David Joyce.

The dividend increase shows the confidence management has
in growing operating income for the fiscal year, Joyce said.
News Corp will raise the quarterly dividend to 7.5 cents.

Operating income at News Corp’s Hollywood studio business
nearly tripled to $324 million, while the Fox cable programming
unit posted 35 percent growth in operating profit. And ad sales
improved at both the television and newspaper divisions.

The newspaper unit posted a 30 percent rise in operating
income because of higher ad revenue at The Wall Street Journal,
lower expenses and favorable foreign exchange rates.

Murdoch had been among the most vocal advocates of the
newspaper industry moving to a paid digital model, and has
blazed a trail with WSJ.com. He said more digital-newspaper
subscription models would be rolled out in the coming months.

He has also set his focus on mobile devices — the most
buzzed-about growth area for TV shows, newspapers, movies and
books — and complained that Amazon’s book pricing for e-reader
devices like the Kindle devalues the publishing industry.

Murdoch said Amazon.com was prepared to renegotiate over
e-book pricing. [ID:nN02118253]

Though the company does not break out numbers for MySpace,
the unit that houses the social networking site saw its
earnings contributions decrease by $32 million during the
quarter because of lower search and advertising revenue.

Shares rose to $13.49 in late trade, after closing the
regular session at $12.76, up 1.84 percent.

Stock Basics

(Additional reporting by Paul Thomasch; Editing by Robert
MacMillan, Gary Hill)

UPDATE 3-News Corp profit up on ad recovery, Avatar