×
You will be redirected back to your article in seconds

Cable Growth Drives 21st Century Fox Earnings Amid Softness in Broadcast, Studio Units

A strong performance from the Fox Networks Group cable wing powered 21st Century Fox’s fiscal third-quarter earnings amid softness and tough year-to-year comparisons for the broadcast TV and studio divisions.

Fox’s adjusted earnings per share fell shy of analysts’ expectations, coming in at 49 cents a share versus estimates of 51-53 cents per share. Revenue was down 2% year-over-year to $7.42 billion while operating income also ebbed 2% to $1.89 billion. Net income was up 8% from the year-ago quarter to $876 million. Higher employee compensation costs associated with its pending sale of major assets to Disney accounted for a $60 million charge during the quarter. Fox’s share of Hulu’s red ink in the quarter also hit earnings as higher programming and marketing costs widened the loss to $148 million, from $62 million in the year-ago frame.

The status of Fox’s plan to sell 20th Century Fox, FX Networks, National Geographic Worldwide and other assets to Disney has become murky in the past two weeks amid signs that Comcast is gearing up for a possible rival offer. 21st Century Fox executive chairman Lachlan Murdoch dismissed a question about future scenarios in a conference call with analysts Wednesday

“We’re not going to engage in a lot of speculation around this. We are committed to our agreement with Disney and working through the conditions to bring us to a closing,” Murdoch said. Fox expects to hold a shareholder vote on the transaction by the summer, he added.

Lachlan Murdoch is expected to steer the New Fox that will consist of Fox News, Fox Sports and Fox Broadcasting after the Disney deal is complete. He had no details of New Fox to share on Wednesday’s call but promised to “keep you posted on programming plans, the leadership team and organizational structure.”

In the first quarter of 2018, the Cable Networks Group’s gains were fueled by contractual affiliate fee rate increases and improvements in ad rates at Fox News and other channels in the group that encompasses Fox News, Fox Sports, FX Networks, and National Geographic Worldwide. Cable’s 16% hike in operating income to $1.68 billion accounted for the lions’ share of the entire company’s operating income.

Fox News delivered the best quarterly earnings in its 22-year history in the first quarter of 2018, 21st Century Fox CFO John Nallen said. Murdoch noted that last month marked a year since former Fox News star Bill O’Reilly was hastily fired from his top perch at Fox News. The fact that Fox News ratings have basically held steady in primetime “is a testament to the strength of the brand and the strength of the talent on air,” he said.

Broadcast TV had a tough outing against last year when Fox carried the Super Bowl. Television saw operation income plunge 59% to $78 million, from $112 million in the Super Bowl-inflated quarter. Earnings in the unit were also dented by the decline in NFL ratings and the fact that the year-ago quarter had three more NFL games than this year. Lachlan Murdoch cited the “strategic investment” made to snare “Thursday Night Football” rights away from CBS and NBC as a sign of New Fox’s commitment to stay in TV’s big leagues.

On the studio side, the big bucks licensing deal set last year with Netflix for FX’s “The People V. O.J. Simpson: American Crime Story” made for difficult year-to-year comps. The studio also recorded a $20 million loss on the release of its first mobile game effort, “Marvel Strike Force.” Solid worldwide theatrical performances from “The Greatest Showman,” “The Shape of Water,” and “Maze Runner: The Death Cure” were offset by lower worldwide TV syndication revenues.

Murdoch also addressed the deal unveiled earlier in the day for Fox to acquire seven TV stations from Sinclair Broadcast Group as that company seeks to close its acquisition of Tribune Media. Fox is shelling out $910 million for Fox affiliate stations owned at present by Tribune in plum NFL markets including Seattle, Miami, Denver, and Cleveland.

Murdoch said the sale price works out to an attractive 7.5 times earnings when Fox’s ability to squeeze higher retransmission content fees from those stations is factored in. The seven stations should deliver $350 million more in revenue to the Fox Television Stations group, and about $112 million in earnings. The station deal should take about six to nine months to complete, Murdoch said.

More Film

  • Bohemian Rhapsody

    'Bohemian Rhapsody,' 'Marvelous Mrs. Maisel' Among Cinema Audio Society Winners

    Queen biopic “Bohemian Rhapsody” won the Cinema Audio Society’s top prize for sound mixing at Saturday night’s 55th annual CAS Awards. The film is Oscar-nominated for sound mixing this year along with “Black Panther,” “First Man,” “Roma” and “A Star Is Born.” In a surprise over heavy-hitters “Incredibles 2” and “Spider-Man: Into the Spider-Verse,” Wes [...]

  • Oscars Placeholder

    Make-Up and Hair Stylist Guild Applauds Academy's Stance on Airing Every Oscar Winner

    Rowdy boos were followed by triumphant cheers at the Make-Up Artists and Hair Stylists Guild Awards on Saturday in Los Angeles, as the Hollywood union touched on a week of controversy over a reversed decision to hand out four Oscars during the show’s commercial breaks. Hair and makeup was one of the four categories that would [...]

  • Marvelous Mrs Maisel Vice

    'Vice,' 'The Marvelous Mrs. Maisel' Lead Make-Up and Hair Stylists Guild Awards Winners

    Adam McKay’s Dick Cheney biopic “Vice,” starring Oscar nominees Christian Bale, Amy Adams and Sam Rockwell, won two awards at the sixth annual Make-Up and Hair Stylists Guild Awards Saturday night. The film won for best period and/or character makeup as well as special makeup effects. “Mary Queen of Scots” received the prize for period [...]

  • Bette Midler

    Bette Midler to Perform on the Oscars (EXCLUSIVE)

    Bette Midler will perform “The Place Where Lost Things Go” at the Oscar ceremonies on Feb. 24, Variety has learned. Midler, a longtime friend of composer-lyricist Marc Shaiman, will sing the song originally performed by Emily Blunt in “Mary Poppins Returns.” The song, by Shaiman and his lyricist partner Scott Wittman, is one of five [...]

  • Olmo Teodoro Cuaron, Alfonso Cuaron and

    Alfonso Cuarón Tells Why His Scoreless 'Roma' Prompted an 'Inspired' Companion Album

    Back around the ‘90s, “music inspired by the film” albums got a bad name, as buyers tired of collections full of random recordings that clearly were inspired by nothing but the desire to use movie branding to launch a hit song. But Alfonso Cuarón, the director of “Roma,” is determined to find some artistic validity [...]

  • Berlin Film Festival 2019 Award Winners

    Berlin Film Festival 2019: Nadav Lapid's 'Synonyms' Wins Golden Bear

    Israeli director Nadav Lapid’s “Synonyms,” about a young Israeli man in Paris who has turned his back on his native country, won the Golden Bear at this year’s Berlinale on Saturday. The Silver Bear Grand Jury Prize went to François Ozon’s French drama “By the Grace of God,” a fact-based account of the Catholic Church [...]

More From Our Brands

Access exclusive content