‘Fantastic Four’ Failure Takes Bite Out of Fox’s Earnings

Courtesy of 20th Century Fox

The failure of films like “The Fantastic Four” knocked the wind out of 21st Century Fox’s quarterly earnings.

Revenues at the company behind 20th Century Fox and Fox broadcasting slid 6% to $6.08 billion, while profits hit $678 million, down from more than $1 billion in the year ago quarter. Earnings per share of 38 cents also fell, declining by a penny.

Profits were in line with Wall Street’s projections, although revenues missed the mark. Analysts were expecting the conglomerate to report earnings per-share of 37 cents and revenue of $6.42 billion.

“Fantastic Four” was intended to reboot the comic book series and inspire a new set of sequels, but bad reviews and reports of on-set clashes between the studio and director Josh Trank doomed the project. It grossed less than $170 million worldwide, and stands to lose more than $80 million for the studio.

Other films released during the three months ending in September, such as “Paper Towns” and “Maze Runner: The Scorch Trials,” couldn’t compensate for the flop. The unit was also negatively impacted by the absence of earnings from Shine, which Fox combined into a new joint venture with Apollo’s Endemol and Core Media. The production company’s revenues are no longer consolidated into the film division’s results. All told, revenues at Fox’s filmed entertainment unit dipped $691 million to $1.79 billion, while operating income fell $309 million to $149 million.

Timing worked against the division in other ways. “The Martian” is a major hit for the company, grossing $430 million globally, but advertising costs were included in this quarter’s report, despite the fact that the film opened in October, after the earnings period had ended.

It’s also a time of generational change at Fox. Last summer, Rupert Murdoch elevated his sons James and Lachlan to top management roles. Lachlan has been named executive chairman alongside his father, while James will serve as CEO.

The earnings results of Fox and its media and entertainment brethren like CBS and Time Warner, both of which reported quarterly numbers this week, are being closely monitored. Three months ago, lower ad sales and ratings drops prompted a stock sell=off across the sector as investors grew concerned that viewers were cutting the cable cord in favor of digital forms of entertainment. The cable bundle, which allows companies like Fox to charge providers hefty retransmission fees for their channels, has been good to the business and an important source of profits. Its destruction could be catastrophic.

Like many media companies, Fox has tried to harness digital platforms to its advantage. It owns a stake on Hulu and offers up shows like “Scream Queens” on the service. In a call with analysts following the earnings release, James Murdoch acknowledged that it can be difficult to balance growing digital businesses with protecting the core components of Fox’s revenue streams, its broadcast and cable unit. In particular, he admitted that Fox’s willingness to participate in an ad-free Hulu program, which allows customers to stream shows without interruption provided they interact with a sponsorship message at the beginning of an episode, was the subject of internal debate. He still seemed to side with experimentation.

“We have to be disruptors if we’re going to grow,” he said.

The good news for Fox was that the fiscal picture at its cable and television segments brightened. The company’s broadcast arm saw operating income climb 13% to $196 million thanks to lower programming expenses. There was a 5% decline in advertising revenues due to a shorter run of National Football League broadcasts and fewer political spots.

Advertising did improve at Fox’s cable network programming unit, propelling the segment’s operating income up 26% to $1.31 billion. Revenue for the unit rose 7% to $3.46 billion.

Still, investors didn’t seem too impressed with the results. Shares of Fox fell 1.59% to $31.00 in pre-market trading.

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  1. alfred lex says:

    Doing the Ultimate Fantastic Four was a great idea. Things that killed the movie; 1) Casting Johnny Storm as a black guy. 2) Ben Grimm actor’s personality was killed by the Grimm Reaper. Plus him not wearing pants looked especially ugly and fake. 3) Sue and Reed had 0 chemistry. 4) Viewers for movies are not necessarily comic readers, but making the villain for the third movie as Doctor Doom again is doomed to fail. 5) Josh Trank shouldn’t tweet and should be banned from making movies. Chronicle was frankly quite boring. 6) Fantastic Four franchise is the richest of all Marvel franchises. They had Galactus and the silver surfer (stupid portrayal as a cloud in FF2 movie), Dr Doom (Don’t do a doom again especially when directors don’t read comics), Annihilus of the negative zone, Prince Namor (Who is a Mutant and can be linked to Fox X-men franchise), mole man and his mole army, the Inhumans, Super Skrull. Even in Ultimate fantastic four they went toe to toe with zombie fantastic four and Reed created the cosmic cube paradox for Thanos. Fantastic Four done without changing TOO MUCH of the CRUCIAL characters, should be able to SELL. I hope Fox gets it right with the 4th try. After all its all about 4. 7) Fox Should not have OVER ADVERTISED this movie. Just like they OVER ADVERTISED AMAZING SPIDERMAN 2 WHICH I THOUGHT WAS A GREAT MOVIE ONLY TO FIND OUT IT BOMBED AND WAS NOT GONNA CONTINUE. Critics will show no mercy like when the Rhino Scene was less than a minute. And the REPEATED hobgoblin on the flying machine was disappointing. NOBODY WANTS TO WATCH THE SAME THING AGAIN. They should have done the ultimate hulk like green goblin and not advertise him. LOOK AT JURASSIC WORLD, they didn’t advertise Indominous Rex and the movie SOLD.
    On Consolation, Things that were done right: The idea of Ultimate FF where they are younger and restricted by the Government. The close beginning scene to the comics (it hooked me to watch more only to be disappointed). The concept of making FF a dark and sad story… leading to Reed becoming the Maker would be quite cool to watch in a Movie.

    • John says:

      Or have Ben Grimm become his purple energy form like in the Ultimate storyline and have Dr. doom come back with metal skin and goat hooves and I sent a letter to marvel studios to see if they can get the current fantastic 4 cast including dr doom into the MCU and get them fixed up.

  2. 85wzen says:

    Boy it’s a shame about the FF Movie, I bought a ticket for it, even though it was said to be not that good. I wish these ‘guys’ making these had read a comic book in the 70’s… they’d know then that a comic book movie is about 70% Action and 30% of the other stuff. They just don’t know what they are doing in Hollywood, they got not FIRE… !!!

  3. Paully says:

    So disrespecting the comic book fans (FF) will cost you.. WB take a note..

  4. patricnasty says:

    Maybe viewers did NOT want to see an ethnically cleansed Fantastic Four.

    • 85wzen says:

      I hear what you’re saying and fact is it matters if you make Nick Fury Black and here they made the Torch Black… which is cool… still the original was a white guy… there is something to be said for keeping things the same. I don’t mind the change, because in like 50 years they will be making Nick Fury into a Mexican and The Torch into an Asian… all that is cool… I’m really not afraid of any difference in human beings… even though they all see themselves in an odd manner.

      • alfred lex says:

        how about if they cast captain america as a asian dude? some characters don’t suit changes and johnny storm being black is one.

      • 85wzen says:

        I hear what you are saying, lex, but let these people experiment some… not like they are gonna change anything… they actually think something is wrong or something…

  5. Fox can blame their meddling for how poor that film was. Also, the insistence on hiring young actors was hilariously misguided.

    • Alex says:

      Very much agreed. They’re boxing themselves in by acting like people only want to see young typically attractive people in starring roles. In this case it conflicts with the source material, but even if it didn’t it still makes things very homogeneous and boring.

  6. bkbeach4x4 says:

    There was zero chemistry between the stars which meant they had zero chance of developing any with the audience.

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