• by Gavin O'Malley  @mp_gavin, May 10, 2007

Although overshadowed by movie and cable earnings, interactive was still a bright spot for News Corp. last quarter. The owner of MySpace said Wednesday that fiscal third-quarter profit rose to $871 million, or 27 cents per share--from $820 million, or 26 cents per share, a year ago. Revenue, meanwhile, rose 21% to $7.53 billion.

"The popularity of our Internet assets is translating into improved results, and we have just begun to scrape the surface of their potential," said Rupert Murdoch, News Corp. chairman and CEO.

The company expects that it will match or exceed full-year interactive revenue of $500 million, primarily derived from MySpace. Other interactive initiatives, however, are now in place as well, said Murdoch.

"We announced, along with NBC Universal, the launch of the largest Internet video distribution network ever assembled," he said. "And separately, we finalized a joint venture combining Jamba and Fox Mobile Entertainment assets to form a leading global provider of mobile entertainment. Both of these transactions ideally complement our existing asset base and further solidify our position as a leader in the evolving media landscape."

MySpace, still the most popular social network by far, is estimated to generate $525 million in the U.S. this year, according to new estimates released yesterday by eMarketer. The research firm also increased its estimate of U.S. ad spending on social networks overall to $900 million for this year.

Facebook is expected to generate $125 million, and both should continue to see healthy revenue increases. Combined, MySpace and Facebook will account for 72% of U.S. social network ad spending in 2007 and 75% in 2008.

Between 2007 and 2011, U.S. ad spending on social networks will grow 180% to $2.5 billion, eMarketer projects.

Overall, News Corp.'s growth was fueled by its filmed entertainment unit, which posted an 82% rise in operating income to $410 million, helped by the release of DVDs such as "The Devil Wears Prada" and "Little Miss Sunshine."

Cable network programming saw a 34% increase in operating income to $282 million, helped by growth at Fox News, the FX network and regional sports networks.