Feb. 7 (Bloomberg) -- News Corp., owner of Twentieth Century Fox studios, said second-quarter profit fell 24 percent from a year earlier, when it had a gain from asset sales. Revenue jumped 18 percent on the box-office hit ``Borat.''

Net income at the world's third-largest media company dropped to $822 million, or 26 cents a share, from $1.08 billion, or 33 cents, a year earlier. Revenue rose to $7.84 billion, the company said in a statement, beating the $7.35 billion average estimate of 11 analysts in a Bloomberg survey.

Sales of film and DVDs from the company's studios and revenue from MySpace, the social-networking Web site, made up for losses at MyNetwork TV. ``Borat: Cultural Learnings of America for Make Benefit Glorious Nation of Kazakhstan,'' was made for $18 million and generated $248 million in ticket sales worldwide.

``The quarter was better than we expected, driven by the film studios,'' said Aryeh Bourkoff, an analyst at UBS AG in New York who is among 12 analysts with a ``buy'' rating on the shares. He said he doesn't own them. ``And it looks like MySpace started to be a contributor to the growth of the company.''

Profit of 26 cents in the three months ended Dec. 31 matched the average estimate. In the same quarter a year earlier, News Corp. recorded a $381 million gain on the sale of its TSL Education Ltd. division. Excluding that sale, profit was 21 cents a year earlier.

Class A shares of New York-based News Corp., which also owns the Fox television network and more than 175 newspapers worldwide, rose 36 cents, or 1.6 percent, to $23.34 at 4 p.m. in New York Stock Exchange composite trading. They have gained 48 percent in the past year.

MySpace Gains

The results show Chairman Rupert Murdoch is reaping the benefits of his $580 million bet on MySpace and an effort by Twentieth Century Fox to make cheaper films.

``MySpace is the big star at the moment,'' Murdoch said today on a conference call with analysts. ``It will be a very big profit driver for the overall company in the coming years, if we get it right and keep it right.''

Revenue from MySpace tripled to $75 million, Chief Financial Officer David Devoe said on the call. News Corp.'s Internet unit will break even this year, President Peter Chernin said.

Profit at News Corp.'s film unit rose 57 percent to $470 million, beating the average estimate of $385 million, based on five analysts surveyed by Bloomberg.

The division's revenue were also lifted by ticket sales from ``Little Miss Sunshine,'' which received an Academy Award nomination for best film.

Time Warner, Disney

New York-based Time Warner Inc., the largest media company, reported a 34 percent rise in fourth-quarter profit on Jan. 31, led by its cable TV business.

Burbank, California-based Walt Disney Co., the second- largest, is likely to report a 7.6 percent gain in sales after the markets close today, based on the average of 13 estimates.

Profit at News Corp.'s Fox television network fell 39 percent to $112 million.

Chernin, 55, said on Dec. 4 he was `` wholly dissatisfied'' by the fall season at Fox, which ranked last among the four biggest networks among viewers aged 18 to 49. Fox canceled three of its five new shows because of poor ratings. Fox has since made up for the shortfall with ``American Idol,'' which drew 37 million viewers at its premiere last month, and ``24.''

MyNetwork TV, started in September with soap operas based on Spanish language telenovelas, failed to gain viewers and News Corp. will probably change the programming next season, Bourkoff said. Last month, News Corp. named Greg Meidel, a former CBS Corp. programming executive, as president of the unit.

The ratings were ``far below expectations,'' Murdoch said in today's statement.

Fox News

Fox News, the U.S. most-watched cable news network posted a 25 percent rise in profit. The network, created in 1996, is renewing its 10-year contracts with cable operators and garnering higher fees.

Cable network programming profit rose to $275 million from $262 million. News Corp. plans to start its new Fox Business Channel in the second half of the year and will announce more details in the next few weeks, Chernin said.

The satellite-TV division recorded a narrower loss of $12 million, compared with $53 million a year earlier. That includes a 39 percent stake in British Sky Broadcasting Group Plc and a 38 percent stake in DirecTV.

Murdoch, 75, agreed in December to swap assets including News Corp.'s stake in DirecTV Group Inc. for Liberty Media Corp.'s News Corp. shares. The deal will strengthen Murdoch's grip on his company.

DirecTV said today its profit in the quarter almost tripled to $356 million, as subscriber growth and average sales per customer increased more than analysts estimated. The shares jumped as much as 8.8 percent. Sales gained 16 percent to $4.18 billion.

Bonds Gain

Profit more than doubled to $170 million at the company's newspapers, including the New York Post and The Times of London.

News Corp.'s 6.4 percent bonds maturing 2035 gained 1.7 cents to 101.7 cents on the dollar, according to Trace, the bond-price reporting system of the NASD. The yield narrowed to 6.27 percent.

The perceived risk of owning News Corp's bonds fell. Credit-default swaps based on $10 million of the company's bonds declined to $17,355 from $18,250 yesterday, according to data compiled by CMA Datavision in London.

The five-year contracts, which investors use to speculate a company's ability to repay debt, have fallen from a year-high of $47 in February 2006.

To contact the reporter on this story: Cecile Daurat in New York at cdaurat@bloomberg.net

Last Updated: February 7, 2007 16:20 EST