News Corp. (NASDAQ:NWSA) is expected to report slightly lower fiscal third-quarter profits Wednesday despite higher revenue as Sky Italia continued to struggle with a subscriber exodus and the Fox Broadcasting Company took a hit from ratings weakness at the once-indomitable “American Idol.”

Analysts polled by Thomson Reuters expect the New York-based multinational media conglomerate to report net income of $831.43 million, or 36 cents per share, for the period ended March 31, down from $921 million, or 37 cents per share, a year earlier. Revenue is expected to rise more than 8 percent to $9.08 billion from $8.4 billion last year. The company will report results at 4 p.m.  EDT after U.S. markets close. A live webcast is scheduled for 4:30 p.m.

Following a second quarter in which it hemorrhaged subscribers, Sky Italia, News Corp.’s Italian satellite-television platform, continued to create headwinds for the company’s satellite TV unit. Sky Italia lost an estimated 28,000 subscribers last quarter, a consequence of Italy’s struggling economy, which News Corp.’s chief operating officer, Chase Carey, conceded isn't expected to improve in the short term. In the U.S., meanwhile, the viewership free fall that hit “American Idol” during its 12th season has signaled that the end may be near for the enduring franchise, a ratings powerhouse for more than a decade.

Despite such challenges, News Corp. has remained a top media pick for the third quarter, according to Tim Nollen, an analyst with Macquarie. The company took significant steps to strengthen its profitable entertainment and media assets in advance of the company’s split, which is set to be finalized in the next few months. At that time, News Corp.’s struggling publishing unit will become a separately traded public company. The publishing side will retain the name News Corp., while the media side will go by the name 21st Century Fox, it announced in April. Rupert Murdoch will serve as chairman of both companies and also as CEO of 21st Century Fox.

“We are bullish on NWSA shares as we still see upside to the post-split Fox Group,” wrote Nollen in an April research note.

With the exception of Walt Disney Pictures, virtually every movie studio struggled during the quarter, and 20th Century Fox was no exception. Its two major releases -- the Mark Wahlberg thriller “Broken City” and the Bruce Willis actioner “A Good Day to Die Hard” -- both underperformed. “City” brought in a mere $19.7 million on a $35 million budget, while “Die Hard” brought in $67 million on a $92 million budget. The quarter is typically the slowest of the year for the movie industry as a whole.

Perhaps the biggest news from News Corp. came in March, when the company announced that it will launch Fox Sports 1, a sports-only cable network that it hopes will go head to head with the market leader, ESPN, a unit of the Walt Disney Co. (NYSE:DIS). Sports programming has emerged in recent years as the television industry’s most-sought-after asset. According to Forbes, the affiliate fees paid by cable providers to carry sports programming have jumped 44 percent between 2007 and 2011, and sporting events stand as one of the last vestiges of DVR-proof programming.

Analysts say News Corp.’s solid financial shape puts it in a better position than either CBS Corp. (NYSE:CBS) or Comcast Corp. (NASDAQ:CMCSA), both of which have their own sports networks in the works. Nonetheless, competing against ESPN -- which has gone virtually unchallenged in the marketplace -- will be an uphill climb. 

“We [still] believe there is an enormous gap for News Corp. to overcome,” wrote Morningstar analyst Michael Corty in a March research note.

News Corp. shares closed on Monday at $32.01.

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