News Corp and Time Warner profit up on cable

British newspapers are displayed at a newsagent's stand in central London January 22, 2011.

NEW YORK (Reuters) - News Corp and Time Warner both posted higher revenue and profit in the December quarter, boosted by surging advertising revenue at their cable network units.

Both companies benefited from a wider rebound in the advertising business and both said the outlook looked particularly promising for the year ahead.

Rupert Murdoch's News Corp, which owns broadcaster Fox and publishes newspapers including the Wall Street Journal and the UK's News of the World, said profit rose to $642 million, or 24 cents a share, in its fiscal second quarter from $254 million, or 10 cents a share, a year earlier.

After adjusting for one-time charges primarily related to a restructuring of MySpace, its social networking business, News Corp's profit was 29 cents a share. That was a penny better than analysts' average forecast of profit of 28 cents a share, according to Thomson Reuters I/B/E/S.

News Corp said revenue was flat at $8.76 billion.

Operating income at its U.S. cable networks -- including FX, National Geographic and Fox Sports -- rose by 16 percent, while operating profit at its international networks -- such as Star TV and Fox Deportes -- jumped by 37 percent.

News Corp Chief Operating Officer Chase Carey said on a conference call that the cable networks business would perform even stronger in the second half of its fiscal year.

Carey also said the company is now considering its strategic options for MySpace following a restructuring. Carey said MySpace, which was a leader in social networking just three years ago, could benefit from having a new owner.

Earlier in the day, News Corp unveiled The Daily, a new electronic newspaper solely for tablets like Apple's iPad.

Time Warner Inc forecast better-than-expected 2011 earnings, pointing to the same surge in advertising sales for cable TV programs that powered its fourth-quarter results.

Alongside its earnings, Time Warner also raised its quarterly dividend by 11 percent and increased its stock buyback plan to $5 billion.

Time Warner's soaring advertising revenue from its cable networks division, which includes CNN, TNT and TBS, highlighted a quarter in which overall revenue rose 8 percent and profit climbed 22 percent.

Both its profit and revenue surpassed expectations at a time when the media industry is undergoing radical change, facing threats from newer video services such as Netflix Inc and potentially Apple Inc and Google Inc.

"It's a sign of just how strong the cable advertising network market is," said Alan Gould, an analyst with Evercore Partners, who added it should bode well for other media companies like Viacom, Discovery Communications and Scripps Networks.

Shares of Time Warner jumped 8.6 percent to close at $35.10 on the New York Stock Exchange after it gave its results. Shares of News Corp edged up slightly following its earnings report, after closing at $16.00, up 2.6 percent on Nasdaq.

(Additional reporting by Paul Thomasch; Editing by Derek Caney, Phil Berlowitz, Gary Hill)