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SYDNEY, March 8 (Reuters) - Seven Network Holdings Ltd. (ASX: SEV.ax) , Australia's second-largest television broadcaster, said first-half profit rose 69 percent, driven by higher ratings, and flagged further growth in audience and revenue share despite forecasting cost growth above inflation.

Seven, whose screenings of U.S. series "Desperate Housewives" and "Lost" delivered Australia's highest-rating TV debuts, said its audience share was up 4 percent so far this year as rivals, PBL Ltd.'s (ASX: PBL.ax) Nine Network and Ten Network Holdings Ltd. (ASX: TEN.ax) lost audience share.

"Seven's performance in the opening weeks of the new television season provides the architecture for continuing improvements in audience and revenue share," the company said in a statement to the Australian Stock Exchange on Wednesday.

Seven shares opened up 2.24 percent at A$9.11 on the slightly-better-than-expected profit and by 2315 GMT were trading up 3.25 percent at A$9.20 in a weaker overall market.

Seven said net profit for the six months ended Dec. 24, 2005 rose to A$65.5 million ($47.8 million) from A$38.8 million a year ago -- just ahead of analyst forecasts for an underlying profit of A$64.9 million.

But Seven, 43-percent-owned by billionaire Kerry Stokes, said TV costs, excluding selling costs and the Olympic Games, rose 12.5 percent during the half and forecast full-year cost growth of 5-7 percent.

Seven, whose biggest rival is the Packer family's Nine Network, said legal costs associated with a court case it has launched over the failure of its pay-TV station C7 were A$27 million for the half, in line with an estimate of A$25 million to A$30 million it provided in November.

Seven is seeking up to A$1.1 billion in damages over the failure of C7. It is taking on 22 parties including Australia's biggest pay-TV group Foxtel. Foxtel is 50 percent owned by Telstra Corp. Ltd. (ASX: TLS.ax) , while News Corp Ltd. NWS.AXNWS.N and PBL each have a 25 percent stake.

Analysts have said the legal costs are a key uncertainty facing the network which warned it might be "some time" before the case concludes.

Seven said earnings before interest, tax, depreciation and amortisation at its TV division rose 49 percent and by 15.7 percent at its magazines publishing business.

($1=A$1.35)

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