Fox’s cable TV business made up the vast majority of News Corp’s profits for the quarter ending March 31, contributing $993 million of the $1.36 billion in operating income for the period. Total revenues were $9.54 billion, up 14 percent over the previous year.

The overall home video market is up five percent and “we’re up a bit more than that,” Carey said. “The driving force is digital…the overall marketplace continues to grow really well, and digital is becoming a growing part of what we do.” He also said that the DVD business has stabilized, “with Blu-Ray offsetting the decline in the older formats,” and that “really low-priced rentals” through services like Redbox  are “becoming less of a force.”

In response to an analyst’s question about the future of Hulu, Carey said that the service has “great momentum,” and “we’re particularly excited about subscriptions” through Hulu Plus. “There’s an important role for Hulu Classic in the marketplace,” he said, but “we need to develop the dual-revenue side of it.” In a few years, he said, “Hulu will look a bit different than it does today,” partly in response to changes in Netflix’s business: “Netflix talks about evolving their business to somewhat different business models” (he didn’t elaborate on what those are).

When asked to offer general advice to the broadcast networks, Carey said they are still the “viewership leaders,” but acknowledged the networks might need to “be a bit more targeted in the types of series [they] invest in…networks have been more about the volume game, stuck in historical practices…Do you need to break some of those rules? The answer is clearly yes.”

“Do you really need 100,000 titles? I mean, really?”

Davis said that he doesn’t want to compete with Netflix on catalog size, but rather have an HBO Go-like approach with fewer titles that matter more. Except you probably won’t see many TV shows on Redbox Instant either, as Davis hinted at movies being the core focus.

Of course Netflix CEO Reed Hastings has been comparing his own company to HBO for a long time, and used that analogy to justify massive investments into original and exclusive content. Coinstar quickly realized that it couldn’t match those investments on its own, which is why the company partnered with Verizon, Davis said.

Redbox Instant by Verizon is currently doing an invite-only alpha test, and is scheduled to launch before the end of the year. Pricing and possible tie-ins with Redbox DVD rentals are still unannounced.

On Thursday, Coinstar reported second-quarter revenue growth of 22 percent to $532.2 million and profit of $26.7 million, driven by a 26 percent income spike to $458 million by its Redbox DVD kiosk business.

Also read: Verizon/Redbox video service has name and exec team, begins testing

No new information about Redbox’s joint venture with Verizon was given during Thursday’s earnings call with investors.

During the second quarter, Redbox closed its purchase of rival kiosk operator NCR and also launched into Canada.

According to Coinstar, the kiosk operator’s U.S. share of the DVD and Blu-ray rental market — where it operates 38,500 kiosks — has reached 42.5 percent, up 8 percent year over year.

As outlined by a just-launched website, the joint venture has been christened “Redbox Instant by Verizon” and is under the direction of CEO Shawn Strickland, who previously served as an executive for Verizon’s FiOS pay TV service.

A Verizon representative confirmed to us that the service — which combines traditional Redox DVD and Blu-ray kiosk rentals with streaming over Verizon’s network — is in an invitation-only “alpha” testing stage.

Also read: A new ‘stream team’? Verizon and Redbox take on Netflix

Beyond Strickland, the website also outlines the Redbox Instant executive team. However, no information is given as to what type of programming the new service will provide. Will there be TV shows? New-release movies? A premium cable deal of some kind?

The service was announced in February, with Verizon claiming a 65 percent share and Coinstar 35 percent.

“Despite our initial skepticism about the Verizon Redbox joint-venture, we continue to sense the venture will be an increasingly aggressive player in the online video streaming world,” blogged BTIG Research analyst Richard Greenfield Tuesday

“This is going after some FiOS customers, but this is really meant for the launch across the United States to the Redbox population and their 30 million customers,” said Verizon chief financial officer Fran Shammo Thursday morning, speaking in Boston at the 40th annual J.P. Morgan Global Technology, Media and Telecom Conference.

Also read: A new ‘stream team’: Verizon and Redbox take on Netflix

Shammo said Verizon’s impetus for the joint venture was not so much to transition video content licensed for the fiber-optic-fueled FiOS’ roughly 4.4 million subscribers, a la TV Everywhere, “but to expand our capability outside FiOS’ footprint.”

As for the Redbox footprint, it’s actually much bigger than 30 million. With Coinstar conducting a separate financially oriented event Thursday, “analyst’s day,” its Redbox unit tallied nearly 39 million customers at the end of the first quarter.

It’s about to take over the 10,000 Blockbuster Express kiosk locations it acquired in February. And the company has plans to expand into Cananda, the third biggest disc-rental market in the world.

As for the streaming venture, Shammo said it will showcase Verizon’s new proprietary digital distribution platform, Verizon Digital Media Services (VDSM), which he believes has advantages over the content delivery networks utilized by Netflix and Hulu.

“Utilizing that backbone, we’re able to deliver content at a much cheaper rate than people out there today,” Shammo said.

Driven by significant revenue growth from subscription streaming as well as Blu-ray disc sales and rentals, U.S. home entertainment spending rose 2.5 percent to around $4.45 billion in the first quarter, according to the Digital Entertainment Group (DEG), a research operation funded by Hollywood’s major studios.

It was the second out of the last three quarters that DEG talled growth for the sector — a third-quarter uptick of around 5 percent in 2011 was the industry’s first black ink in three years.

Since peaking at around $21.8  billion in 2004, the U.S. home entertainment industry has seen steady declines, descending to $18.4 billion last year.

Blu-ray, which has long under-performed in its expected role as the high-definition successor format for the aging DVD, has finally started to deliver on some of its promise. Revenue from Blu-ray sales and rentals increased 23 percent in the first quarter, according to DEG.

In fact, sales increases of Blu-ray titles almost offset the continued cratering of the traditional DVD market, with physical media sales dropping just 0.62 percent in the quarter. Overall, Blu-ray accounts for about a quarter of the sell-through disc market now. And with 2.4 million Blu-ray player devices sold in the first quarter, the format has reached 40.8 million U.S. homes.

Subscription streaming was another big driver in the quarter, with DEG tabulating a 549 percent year-to-year increase to $548.6 million. Netflix, of course, accounts for the lion’s share of this bounty, reporting subscription streaming revenue of $507 million during its first-quarter earnings call last week.

As Netflix builds its streaming business at the expense of online disc rental, the overall home entertainment rental business has taken a hit — it was down nearly 18 percent in the first quarter.

That number would have been much worse if not for the offset provided by the red-hot kiosk rental business led by Redbox, which was up 30 percent during the three-month period. Last week, Coinstar reported 39 percent first-quarter revenue growth of $502.9 million for its Redbox division.

Of course, having in-demand titles helps — DEG reported that the total box-office performance of new home entertainment movie releases in the quarter was up 12.5 percent compared to those titles put out in the first quarter of 2011.

Meanwhile, with the DEG also providing a marketing role for the home entertainment industry’s digital cloud endeavor, UltraViolet, the group reported that the initiative now has 2 million subscribers, doubling its tally from February.

On Thursday, Redbox’s parent company, Coinstar, reported a 34 percent uptick in revenue to $568.2 million during the first quarter, driven by 39 percent earnings growth of Redbox to $502.9 million.

In January, Netflix CEO Reed Hastings said his company would no longer invest resources into growing its DVD operation. The result of that posture may have emerged just three months later. On Monday, during its own first-quarter earnings report, Netflix revealed that it had lost over 1 million DVD/Blu-ray subscribers in the quarter and that disc-rental revenue had gone from accounting for 52.4 percent of total earnings in Q4 to just 45.4 percent in Q1.

Redbox, however, seems to have become the beneficiary of Netflix’s strategic moves regarding DVD/Blu-ray dating back to July, when Los Gatos, Calif.-based Netflix controversially upped prices on online disc rentals.

In an Oct. 12 research note reported on by Home Media Retailing, for example, Michael J. Olson, senior research analyst with Piper Jaffray, noted that web traffic to Redbox.com was up 46 percent year over year during September, when the price change took effect.

“Search trend data from Google supports a dramatic uptick in web activity surrounding Redbox as consumers look at alternatives to replace or supplement new-release movies from Netflix,” Olson wrote.

Eager to steer consumers away from lower-margin rental transactions and back to movie purchasing, Warner has been the most aggressive studio in pushing rental outlets like Netflix and Redbox to accept release delays. The studio was successful in getting Netflix to double its 28-day delay in January, but Redbox resisted a similar demand. Cut off from Warner’s special rental pricing since Feb. 1, the kiosk chain has been buying Warner new-release titles through consumer retail channels, making them available for rent one to two weeks after their disc premiere.

Speaking to an investor conference in San Francisco earlier this week, Paul Davis, CEO of Redbox parent company Coinstar, said the company was satisfied with this work-around — paying top dollar at retail for Warner titles has increased costs, he said, but Redbox has enjoyed higher customer uptake of Warner titles by offering them earlier in the release window.

In a note to investors the same day, Wedbush Securities analyst Michael Pachter expressed doubts that Redbox could ply its buy-it-retail strategy across multiple suppliers. He suggested the chain would either give in to extended windows with Universal when Redbox’s current contract with the studio expires next month — or it would have to cave to Fox (NSDQ: NWS) when that deal times out next year.

As it turned out, however, Redbox is no Netflix, which has publicly indicated its unwillingness to further promote and grow its DVD and Blu-ray rental business.

Disc rentals remain a booming business for Redbox, which just signed on to be the physical packaged media component to a Netflix-like video business being jointly launched with Verizon. Redbox just enjoyed fourth-quarter revenue increases of 40 percent to $445.6 million, driven by the installation of new kiosk outlets, and reflecting an increasing market share of an overall home entertainment business that remains in decline. With that comes some leverage in studio negotiations, apparently.

Other possible points of leverage for Redbox: The chain, out of courtesy, had been delaying the rental release of Warner titles like A Very Harold and Kumar Christmas for several weeks after street date. However, it has been threatening Warner with the prospect of no delay at all.

But at least one analyst thinks Redbox may be in for a rougher 2012.

Shares of Redbox’s parent company, Coinstar, which had risen 51 percent since Jan. 9 to a 15-month high of $62.10 Tuesday, dove nearly 4 percent Wednesday after Wedbush Securities analyst Michael Pachter expressed a number of concerns about Redbox. He also dropped the company from his “Best Ideas” list.

Pachter told investors that Wedbush still doesn’t have enough information about how much revenue the new streaming venture with Verizon will bring Redbox in the near term. “We’re still reluctant to model any kind of contribution,” he wrote. Redbox announced on Feb. 6 that it will contribute the physical DVD and Blu-ray rental infrastructure to a new movie-rental service being jointly developed with Verizon to compete head-on with Netflix.

He also questioned Redbox’s decision earlier this month to draw a line in the sand by not agreeing to new windowing terms with Warner Bros. Those terms stipulate that Redbox wait 56 days after DVD and Blu-ray release dates to begin renting Warner titles at its kiosks. Redbox could face similar disputes with two other studios when they renegotiate over the next year, and Pachter said that embarking on this new venture in light of that might not be such a good idea.

The hardline move by Redbox– which cut Redbox off from Warner’s video rental fare — was in sharp contrast to an earlier capitulation by Redbox rival Netflix (NSDQ: NFLX), which agreed in January to let Warner essentially double its rental window on its service from 28 days. Speaking at an investor conference in San Francisco Tuesday, Coinstar CEO Paul Davis said the company was “very pleased” with the results of a work-around to its little Warner Bros. problem, which essentially involves Redbox staffers buying Warner titles like A Very Harold & Kumar Christmas at mainstream retail outlets like Wal-Mart (NYSE: WMT). It’s costing Redbox more to pay top dollar at retail for Warner discs, Davis conceded, but the chain is making up for a lot of that expenditure by being able to rent Warner DVDs without a window.

While many in the home entertainment industry see Redbox as making a bold stand that Netflix would not, Pachter told investors that Redbox’s “work-around” isn’t a viable strategy for the longterm — not with an agreement with Universal calling for a 28-day window set to expire in April, and a similar deal with Fox (NSDQ: NWS) due to time out next year.

“We expect Universal and Fox to potentially follow suit, making a work-around far more difficult to manage,” Pachter wrote Wednesday, noting that earlier windows disputes with Warner, Fox and Universal also sent Redbox stock tumbling back in 2009.

“While we don’t necessarily expect a repeat of the last workaround, especially given that the current one is working from day 28 to day 56, we are concerned that the outcome could be messy,” he added.

In documents filed Friday in Seattle, investors led by a Rhode Island pension fund proposed a $6 million settlement to compensate them for losses they incurred in January, 2011.

At that time, Coinstar’s stock price tanked in response to the company’s revelation that major studios had forced Redbox to delay new releases by 28 days. The studios imposed the delay as part of a “windowing” strategy to ensure Redbox’s $1 rentals didn’t undercut store sales.

The delay hurt Redbox’s business strategy and, by extension, Coinstar, which counted on Redbox for 80% of its revenue.

In a series of lawsuits filed in early 2011, investors claimed Coinstar and its executives committed securities fraud when when they failed to disclose the delay and instead issued artificially rosy earnings predictions.

The proposed settlement claims that $6 million is a reasonable recovery of the $96 million that investors allegedly lost when Coinstar’s share price fell.

The settlement, which came after months of negotiations, must be approved by the court. If a judge gives the go-ahead, the money will then by divided proportionally among investors who file claims. Lawyers typically take 25 percent of any class action award.

Coinstar’s video rival Netflix (NSDQ: NFLX) is embroiled in a similar lawsuit. Last month, investors sued Netflix and its executives on the grounds that they failed to disclose that the company would be forced to pay significantly more for its content.

Coinstar did not immediately return a request for comment. The company’s share price closed today at $58.22 which is approaching the $66 high it reached in fall of 2010.

Proposed Coinstar Settlement