Buoyed by the success of 'Avatar,' the science fiction blockbuster that has become the highest-grossing movie to date, the News Corp. reported a quarterly profit on Tuesday that surpassed the expectations of Wall Street analysts. But the financial success was reduced by the effect of a recent $500 million payment to settle three lawsuits against one of its lesser-known units, News America Marketing, which sells in-store advertising in supermarkets and publishes coupon inserts. 'Avatar,' made by James Cameron and released by News Corp.'s 20th Century Fox film studio, has generated nearly $600 million at the North American box office, and more than $2 billion worldwide, making it the highest grossing movie to date in dollars not adjusted for inflation. It surpassed 'Titanic,' another film from Cameron, that had topped the list of moneymakers. Because of the success of 'Avatar,' several Wall Street analysts raised their earnings estimates for the News Corp. in recent days. The News Corp. reported revenue of $8.68 billion in its fiscal second quarter, ended Dec. 31, up 10 percent from the quarter a year earlier. Excluding the effect of the $500 million settlement, the company reported operating income of $1.2 billion, up from $839 million a year earlier. The second-quarter net income was $254 million, or 10 cents a share, in contrast to a net loss of $6.4 billion, or $2.45 a share, in the quarter a year earlier. In a conference call with analysts, Rupert Murdoch, News Corp.'s chairman, described the company's performance as 'extraordinary' given that 'we've endured the most severe recession since the Great Depression.' Adjusted second-quarter earnings were 25 cents a share. On average, Wall Street analysts had expected the company to earn 20 cents a share in the quarter, according to Thomson Reuters. In addition to its Hollywood studio, the News Corp. owns a wide range of media assets, including the Fox broadcast television network, Fox News Channel, satellite services in Britain and Asia, and several newspapers, including The Wall Street Journal and The New York Post. All four of the company's biggest businesses -- broadcast TV, cable TV, newspapers and movies -- reported increases in both revenue and operating income. At the company's newspaper unit, which is central to the company and close to Murdoch's heart, operating income increased from $200 million to $259 million. Revenue increased from $1.5 billion to $1.65 billion. The company attributed the profit gain to 'increased advertising revenues at The Wall Street Journal and lower operating expenses throughout the newspaper businesses from prior year restructuring efforts,' according to a company statement. The cable network division contributed the most to the company's overall profit, largely because of the success of Fox News, which has emerged as the growth engine of the News Corp. Operating income from the unit increased to $604 million, from $448 million. In film, the News Corp. reported an increase in operating income to $324 million, from $112 million. While 'Avatar' certainly helped, the film will probably be a larger contributor in the third quarter. The film was released on Dec. 18, so it was only in theaters for 13 days during the quarter. 'In the quarter we booked much of the film's costs but only a small portion of its receipts,' Murdoch said. On the call, Murdoch defended the value of content, especially journalism, in the face of the Internet and new technologies, which have upended traditional media models. He said that new devices, like Apple's recently introduced iPad, and smartphones would be 'empty vessels without any great content.' 'Content is not just king,' Murdoch said, 'it is the emperor of all things electronic.' 