Murdoch’s ‘Fox News’ tops profit estimates on sports, political ads
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Los Angeles: Sports and politics were good businesses to be in for 21st Century Fox Inc., helping Rupert Murdoch’s TV and film company overcome currency troubles and tough times at the box office.
The parent of the 20th Century Fox film studio posted second-quarter profit that beat analysts’ estimates, benefiting from strong advertising sales from the seven-game 2016 World Series won by the Chicago Cubs and growth in advertising on cable, including Fox News and FX.
Fox had strong winds at its back in the quarter, including high TV ratings for baseball and an election year that drew a lot of political advertising to the company’s local stations and Fox News. The broadcast division also carried Monday night’s Super Bowl, which will add to results in the current period.
“It seems like they do have tailwinds in the TV networks,” Brett Harriss, analyst at Gabelli & Co., said in an interview. The turnaround in broadcast TV follows a couple of challenging years as Fox sought to replace American Idol, he said.
The strong performance of the sports business looks set to continue, with Lachlan Murdoch, co-chairman, saying on a call with analysts that the Super Bowl delivered the company’s first-ever $500 million day. The game drew an estimated audience of 111.3 million viewers, down slightly from last year.
Second-quarter profit excluding some items grew to 53 cents a share, New York-based Fox said on Monday in a statement. Analysts were predicting 49 cents, the average of estimates compiled by Bloomberg.
Revenue in the period ended 31 December rose 4% to $7.68 billion, missing estimates of $7.73 billion as demonetisation in India reduced international ad sales and the company’s film studio came up short with fewer releases. Currency fluctuations reduced revenue by $84 million, the company said, and contributed to a 6% drop in international ad sales.
The impact of India’s demonetisation will continue into the current quarter, executives said on the call.
Shares of Fox were little changed in extended trading after results were announced. They fell 1.1% to $31.06 at the close in New York and have gained 24% in the past year, in line with the S&P 500 Media Index.
Foxs cable division, the company’s largest business, generated growth from both advertising sales and the fees it collects from pay-TV services that carry its programming. Ad sales grew 12%, while affiliate fees increased 7%.
Fox is mounting a second effort to buy Sky Plc, offering $14.6 billion bid for the 61% of shares it doesn’t own. The company has also shaken up its Fox News talent lineup in recent months after the departure of anchor Megyn Kelly, and signed a new programming deal with Comcast Corp. that restored the YES Network, a sports outlet, in some markets. The deal struck in January brings the New York Yankees back on the Comcast TV dial.
The film studio had a mixed run in the quarter, scoring successes with the animated Trolls and R-rated comedy Why Him? while other movies like Assassin’s Creed were a disappointment. The studio released eight films in the quarter, compared with nine a year earlier, including the Matt Damon space adventure The Martian. The segment was also boosted by the home entertainment performance of Miss Peregrine’s Home for Peculiar Children and Deadpool.
Hidden Figures, a contender for best picture at this year’s Academy Awards, was released in December, but registered most of its $127.5 million in worldwide ticket sales in 2017.
John Nallen, chief financial officer, said the film studio faces tough comparisons in the second half of the fiscal year. In last year’s second half, Fox released the superhero hit Deadpool and issued The Martian for home entertainment. Bloomberg