Today, News Corporation (NWS) reported better-than-expected second-quarter 2010 results on the heels of an improved advertising environment, and significant cost-cutting initiatives taken by management to combat the downturn.

The quarterly earnings of 25 cents a share outdid the Zacks Consensus Estimate of 20 cents, and surged 66.7% from 15 cents delivered in the year-ago quarter. News Corporation’s quarterly earnings topped the Zacks Consensus Estimate by 25%.

Estimate Revisions & “Avatar”

In the last 30 days, the Zacks Consensus Estimate has shown a substantial increase of 11.1% with 8 out of 19 analysts covering the stock raising their estimates. This was buoyed by the release of blockbuster film “Avatar” from News Corporation’s 20th Century Fox film studio late in the company’s fiscal second quarter 2010. The company booked much of the costs of releasing the film and a small percentage of profit in the quarter.

The profit from the film will begin to roll out in the third-quarter of 2010. The current Zacks Consensus Estimate for third-quarter 2010 is 19 cents a share.

EPS & Revenues

On a reported basis Incorporatedluding one-time items, quarterly earnings came in at 10 cents a share, compared to a loss of $2.45 posted in the prior-year quarter.

After declining 4.1% in first-quarter 2010, News Corporation reported a double-digit jump in the top-line, reflecting recovery in the advertising market. Total revenue rose 10.3% year-on-year to $8,684 million driven by the strength in all major reporting segments: Filmed Entertainment (up 27.8%), Television (up 10%), Cable Network Programming (up 17.7%), Direct Broadcast Satellite Television (up 9.3%), Integrated Marketing Services (up 2.5%), Newspapers and Information Services (up 10%), and Book Publishing (up 24.9%). The Other segment revenue fell 39.8%.

Outlook for 2010

Total operating income, excluding one-time items, soared 44.5% to $1,212 million. Based on the robust second-quarter results and the box office records set by “Avatar,” News Corporation raised its outlook, and now expects fiscal year 2010 operating income to increase in the low 20% range up from high-single digit to low double-digit percentage range previously anticipated. The company also raised its quarterly dividend by 25% to 7.5 cents a share.

Results by Segment

Filmed Entertainment posted a second quarter operating income of $324 million up from $112 million delivered in the prior-year quarter driven by the worldwide theatrical success of “Ice Age: Dawn of the Dinosaurs,” “X-Men Origins: Wolverine” and “Night at the Museum: Battle of the Smithsonian.”

The Television segment reported operating income of $29 million versus a loss of $2 million in the year-ago quarter, reflecting a rise in contributions from the Fox Television Stations (FTS) due to a revival in advertising trends mainly in the telecom and retail sectors, and improved performance at MyNetworkTV, partially offset by lower contributions from FOX Broadcasting Company.

Operating income at Cable Network Programming jumped 34.8% to $604 million due to a rise in contributions from FOX News Channel, the Fox International Channels, STAR and the Regional Sports Networks.

The Newspapers and Information Services segment reported an operating income of $259 million, an increase of 29.5%. Higher advertising revenue at The Wall Street Journal and a fall in operating expenses were the major drivers.

Book Publishing posted an operating income of $65 million, compared to an operating income of $23 million in the prior-year quarter.

Direct Broadcast Satellite Television (or SKY Italia) posted an operating loss of $30 million, compared to an operating income of $10 million in the prior-year quarter due to the loss of subscribers.

Integrated Marketing Services also reported an operating loss of $414 million Incorporatedluding a litigation charge of $500 million, compared to an operating income of $86 million in the quarter earlier.

Zacks Investment Research

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