Investments in new cable networks and year-earlier success of 'Ice Age' sequel cited as having financial impact
21st Century Fox said its net income in its fiscal first quarter declined, reflecting investments the company made to launch new cable outlets like FXX and Fox Sports 1 as well as comparisons with the year-earlier period, when it enjoyed the success of “Ice Age: Continental Drift” in theaters as well as a swell in political advertising at its Fox News Channel.
The company, controlled by Rupert Murdoch, said net income fell to $768 million, or 33 cents a share, compared with $2.25 billion, or 95 cents a share, in the year-earlier period. Stripping out one-time items that include a year-earlier gain on the sale of an ownership stake in NDS Group Limited, net income came to approximately $769 million, or 33 cents a share, compared with $896 million, or 38 cents a share, in the year-earlier quarter.
21st Century Fox said revenue in the fiscal first quarter increased 18% to $7.06 billion, compared with $6 billion in the year-earlier period.
At the company’s cable networks, revenue grew 12%, but was offset by an increase of 22% in expenses from the investments in new cable outlets. ”Approximately two-thirds of the expense increase was attributable to the net costs associated with the launches of new channels, including Fox Sports 1 and FXX,” the company said in a prepared statement, as well as investments in newly acquired businesses.
Advertising revenue at U.S. cable channels grew 6% in the quarter, owing to growth at the company’s FX Networks unit, as well as its National Geographic Channels and regional sports networks, and was partially offset by lower advertising revenue at Fox News Channel owing to the absence of 2012 presidential election. International cable channels’ advertising revenue increased 21%.
Television revenue rose to about $1.048 billion from about $972 million in last year’s quarter. The company said retransmission consent revenue doubled in the period, while advertising revenue was flat, with higher ad rates and increased sports ratings helping to offset lower general entertainment ratings, led by declines from “The X Factor” at Fox, as well as lower political advertising at the company’s TV stations.
Revenue from filmed entertainment rose to $2.12 billion from about $1.94 billion. The company said the increase came largely from growth at its TV-production business, led by the syndication of “Modern Family” and higher SVOD revenue from the sale of the first two seasons of “New Girl” to Netflix. The quarter lacked the activity of hit “Ice Age: Continental Drift” in the year-earlier quarter.