We've Got Hollywood Covered

Films Boost News Corp. Total Profit 44%

Rupert Murdoch addresses “Avatar” sequel, paid content plan, Conan-to-Fox and cable war with Time Warner

News Corporation reported strong earnings on Tuesday for its fiscal second quarter, a sign that the media giant is emerging from the recession.

"From crisis comes clarity," chairman and chief executive Rupert Murdoch told investors during a conference call Tuesday afternoon.

News Corp.’s operating income was $1.2 billion during the last three months of 2009, or about a 44 percent increase over the same period the year before.

The company said the jump was primarily the result of growth in its film, television, cable, newspaper (including a 5 percent advertising increase at the Wall Street Journal) and book businesses, which helped offset a slide in its satellite business and a digital division that includes the problem child MySpace.

"Please excuse the immodesty," Murdoch said, referring to News Corp. as the "preeminent content" company in the world.

"Content is not only king, it is the emperor of all things electronic," he said. "Machines are not powered by batteries — they are powered by creative ingenuity."

Murdoch touted the company’s willingness to “take prudent, creative risks like ‘Avatar’ that lead the industry forward.”

Operating income from its film segment that includes 20th Century Fox studio was $324 million, nearly tripling its $112 million from the same period in 2008. News Corp. said the results were driven by the DVD release of “Ice Age: Dawn of the Dinosaurs” and “X-Men Origins: Wolverine.”

The company stressed that the financial results largely did not include receipts from "Avatar," but did include its launch costs. "Profits will begin to flow over the next two quarters," Murdoch said.

He said News Corp. would like to release "Avatar" on DVD "as soon as possible."

"We’re not going to yank it out of theaters doing $30 million a weekend," News Corp. COO Chase Carey said. However, the executives told investors not to expect a 3D "Avatar" DVD this year. "The technology is not quite there yet," Carey said.

When asked about an "Avatar" sequel, Murdoch said the company is in "very early talks about a sequel. Jim (Cameron) has ideas, but we haven’t agreed on anything yet." Still, he said, "we’ll be pushing for it."

Murdoch said the company was not ready to make an announcement on its much-anticipated online pay wall, but hinted one could be coming within the next "two months."

Murdoch also addressed Fox’s agreement with Time Warner Cable, saying that News Corp. intends to renegotiate distribution deals with all cable operators "as contracts expire in the coming years." (Carey said that the company has 10 contracts with carriers, eight of which will be renegotiated.)

It wasn’t all gravy for News Corp., though. The contribution of News Corp.’s digital media group (read: MySpace) fell $32 million “principally due to lower search and advertising revenue."

Nonetheless, Murdoch said the unit began "to see signs of traffic stabilization" under MySpace’s new management team.

And as far as Conan O’Brien-to-Fox, Murdoch said he’d be interested "if we could do it and make a profit," but batted down rumors that News Corp. has been negotiating with the ex-"Tonight Show" host about a return to late night. "I’m sure there have been talks, but no negotiations."