UPDATED: Powered by higher affiliate and advertising revenues and increased revenues from its film studio, 21st Century Fox produced higher than expected earnings in the fourth quarter.
The media conglomerate posted earnings of 45 cents a share, compared to 39 cents for the last quarter of 2015 — the current quarter besting analysts consensus of 36 cents a share. Fox’s revenues of $6.65 billion marked a 7% increase over the prior year and also fractionally bested analysts’ projections.
Fox’s earnings per share for the year of $1.73 were in line with 2015’s finish of $1.72 per share, with the conglomerate boasting the success of “Deadpool,” the highest-grossing R-rated film ever, with a box office take of more than $782 million worldwide. Despite challenges during the election cycle from perpetual laggard CNN, Fox News also remained the top rated basic cable channel and saw its total day viewership reach new heights.
But co-chairman Lachlan Murdoch also noted that there had been disappointments on the film front, including recent sequels, like “X-Men: Apocalypse” that fell flat. He noted the movie flops and added: “We expect to be much more consistent going forward.” He later added that “ultimately it’s about having higher quality story telling and making better movies.” His brother James Murdoch, the conglomerate’s CEO, added: “It’s clear we have work to do at the film studio.”
The Murdoch’s earlier this year designated Stacey Snider to take over as Chariman and CEO of the 20th Century Fox film studio, to replace Jim Gianopulos. Lachlan Murdoch suggested other changes are likely in the offing, but he did not suggest what they would be. He also said the pressure on the film operation had been reduced somewhat by staff reductions that had reduced 20th Century Fox’s costs.
In a joint statement about overall performance, the conglomerate’s co-executive chairmen Rupert and Lachlan Murdoch touted the year’s performance, noting that the improvements came despite pressure from foreign exchange rates and the relative success of their 2015 film slate. “Our brands are an indispensable part of any consumer offering, whether from a traditional distributor or a new entrant like Hulu’s upcoming live and on-demand service, which will benefit greatly from Time Warner’s investment and participation,” the statement read, in part.
Fox has been the beneficiary this year of a wave of political advertising in a presidential campaign year. The ads hit a record $11.4 billion this year, up $2 billion from the 2012 election cycle, according to the research firm Borrell Associates.
The earnings report arrives not long after scandal rocked the Fox News Channel, with its longtime CEO Roger Ailes was forced to resign after allegations of sexual harassment by multiple former employees. The avalanche was kicked off when host Gretchen Carlson sued Ailes for harassment incidents that she said extended over many years.
Lachlan Murdoch briefly addressed the scandal during the earnings call. Noting the departure of Ailes, he added: ““We have moved quickly and decisively to protect the business, to protect its employees and to protect the unique and important voice of Fox News.”
Rupert Murdoch, filling in as temporary CEO at Fox News, previously had offered reassurances that the Ailes departure will not hurt one of his corporation’s most consistent earnings winners. “The power of the brand has never been stronger, and I look forward to working with all of you to continue the momentum,” he said in an email to Fox News employees.
With the scandal erupting during the Republican National Convention, Murdoch went on to tell employees that the channel remained a ratings winner that “beat all broadcast and cable networks, scoring our highest rated 10 p.m. hour for convention coverage ever.”
Fox shares moved up incrementally after the report, in after hours trading, to $27.42 a share.
More to come. . . .