No gain without pain, I guess — and Fox‘s investments in services including FXX and Fox Sports 1 pinched in the quarter that ended September 30. The company just reported net income of $1.26B, -43.8% vs the same period last year, on revenues of $7.06B, +17.6%. The revenue number was well ahead of the $6.8B that analysts anticipated. But the bottom line, at 33 cents a share, was two cents lower than the consensus forecast. The disparity between revenue and profit is clearest at the Cable Network Programming unit, where sales were +12.3% to $2.8B while cash flow fell 2.4% to $991M. Domestic affiliate fees were +10% while ad sales here were +6%, despite a drop at Fox News, which was helped last year by the presidential campaign. Still, expenses rose 22%, the company says, with two-thirds of the increase going toward the new channels. Filmed Entertainment also had a mixed quarter, with revenues +9.5% to $2.1B while cash flow fell 24.3% to $328M. As studios typically say in these situations, Fox attributes the profit fall to “difficult comparisons” with last year, which included Ice Age: Continental Drift. The revenue increase was helped by syndication of Modern Family and Netflix payments for the first two seasons of New Girl. The broadcast TV unit held its own as retransmission consent fees doubled — outweighing weak ad sales from lower ratings including at X Factor, and the loss of political commercials. Revenues were +7.8% to $1B with cash flow +29.8% to $231M. Fox’s satellite TV operations had a great quarter with revenues +67.9% to $1.4B with cash flow doubling to $190M. “The investment we are making” in new channels “will drive future sustained growth toward our stated 2016 target of $9B of OIBDA [cash flow] and beyond,” CEO Rupert Murdoch says.
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