News Corp missed Wall Street profit expectations on weaker movie box office output compared to a year ago and struggling newspapers despite a strong performance by its cable and television business.

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 its fiscal third quarter compares with a year ago when it benefited from the record-breaking performance of Hollywood blockbuster 'Avatar'.

Despite the expected solid earnings News Corp's operations have been overshadowed in recent months by speculation about the company's dealmaking and the controversy surrounding its phone hacking scandal at its UK weekly tabloid News of the World.

The New York-based company is in the process of trying to buy the 61 percent of BSkyB it doesn't already own.

News Corp made a 700p a share offer last June and the BSkyB board said it's looking for around 800p or a valuation of $14 billion.

But BSkyB shares have risen some 60 percent since News Corp's offer to around 850p as investors have since piled in to the London-based company expecting News Corp to raise its bid even higher than 800p, following much improved earnings results since News Corp first made its bid.

However News Corp Chief Operating Officer Chase Carey has repeatedly said the company's bid was fair and full. He suggested opportunistic speculators had pushed up the price above reasonable value levels.

The movement in the Sky stock price is clearly troubling. The Sky stock was trading between 500p and 600p before we made our offer and that already represented a significant premium to its peer(s), he said.

Carey said while Sky's recent strong results validated last summer's premium but not a whole new premium on top of the preexisting premium.

In the absence of Murdoch on a conference call with analysts Chief Financial Officer Dave Devoe reiterated a previous outlook of low double-digit range of operating income growth rate despite the worse-than-expected March quarter.

We are anticipating strong earnings growth in our fourth fiscal quarter, said Devoe. Now with only two months to go, we feel very confident in achieving this growth rate.

The company's net profit was down from a year ago to 26 cents after adjusting for one-time charges. Analysts had on average forecast profit of 27 cents, according to Thomson Reuters I/B/E/S.

Revenue dropped 6 percent to $8.26 billion.

These were largely solid results with the revenue better than we had expected driven by gains at TV and cable, said Collins Stewart analyst Thomas Eagan. This stock has been about fiscal year 2012 for sometime because then you will no longer have the tough comparisons with Avatar.


News Corp's overall cable and television business, which enjoyed a resurgence in advertising revenues and rising cable affiliate fees like other rivals at CBS Corp and Time Warner Inc . The two segments saw operating income rise some 48 percent.

The Fox television business received a huge bump from its coverage of this year's football Super Bowl and broadcast retransmission fees, boosting its revenue by 23 percent.

News Corp's filmed entertainment operating income fell by 50 percent to $248 million, compared with the quarter a year ago with 3D movie Avatar, the biggest selling movie of all time.

Publishing operating profits was down to $36 million a drop of $207 million due a $125 million charge at its marketing service business but primarily due to advertising revenue declines at Australian and UK newspapers.

News Corp is also in the process of assessing buyout offers for its struggling entertainment site Myspace, a one-time pioneer of social networking which has long fallen far behind Facebook. News Corp said Myspace continued to rack up increasing losses during the third quarter.

(Reporting by Yinka Adegoke, editing by Bernard Orr and Sofina Mirza-Reid)