In one of its last financial reports as a stand-alone company, 21st Century Fox topped Wall Street estimates for its fourth fiscal quarter, posting earnings of 57 cents a share on an adjusted basis and revenue of $7.94 billion.
Analysts had called for earnings per share of 54 cents and revenue of $7.56 billion.
Growth came from several areas of the company. Cable Network Programming and Filmed Entertainment overcame softness in Television.
Operating income in cable network programming rose 12% to $1.61 billion, driven by 14% higher revenue from affiliate and advertising growth. On the other side of the ledger was a 15% increase in expenses, primarily due to sports broadcasts and higher programming and marketing costs at FX Networks with more original series episodes airing in the quarter.
Deadpool 2 paced the film unit, helping swing it from a year-ago loss to an operating profit of $289 million. Strong home entertainment numbers for The Greatest Showman also helped the cause. Revenue shot up 27% to $2.3 billion, reflecting higher SVOD revenue at the television studio and higher home entertainment, TV and theatrical revenue.
Television had a much more lackluster period, with operating income dropping 23% to $106 million. At fault was a 20% rise in expenses due to the cost of airing the World Cup and higher entertainment programming costs.
“We start a new fiscal year with tailwinds from last quarter’s double-digit topline growth across our business segments,” executive chairmen Lachlan and Rupert Murdoch said in a joint statement. “As we move closer to combining our businesses with Disney and establishing new ‘Fox,’ we are convinced that the paths we are creating for our iconic businesses will drive enduring and growing value for our shareholders.”
Fox’s stock has drifted downward over the past month and closed today at $45.46, down a fraction. It surged more than 30% in June and July as the bidding war between Disney and Comcast for Fox’s studio, network and Hulu assets gained intensity and boosted the price by almost $20 billion. Shareholders of Fox and Disney on July 27 overwhelmingly approved the merger, which still has a few international regulatory hoops to jump through before being reaching the projected close in early 2019.
During their conference call with Wall Street analysts to discuss the results, executives were likely to field questions on a range of others topics, including the state of its pursuit of European pay-TV giant Sky. Already an owner of 39% of the satellite company, Fox has been bidding against Comcast for full control.
There is also a fast-changing dynamic in the local TV station sector, which is being upended by the looming failure of the Sinclair-Tribune merger. Some or all of Tribune could end up with “New Fox,” many insiders believe. That is the working name of the remainder company that will carry on post-Disney-deal, owning the Fox Broadcasting Company, Fox News, FS1 and a revenue-generating collection of local stations.
Sports is another evergreen topic for Fox from an investor standpoint. Wall Street will be poring over World Cup-related financials from the end of the quarter, which ended June 30. The company has also been in a stare-down with Comcast for carriage of its Big Ten Network ahead of an August 31 contract deadline. The Fox broadcast network has also made major deals to secure pro wrestling and NFL football to replace the expected loss of scripted prime-time programming given the separation of the studio and network assets in the Disney merger.