In what could be its last full quarter in its current form, 21st Century Fox topped Wall Street’s profit estimates for the third quarter, but softness at the film studio kept revenue from hitting the target.
Income from continuing operations hit $1.29 billion, or 69 cents a share, up 54% from $839 million in the year-earlier quarter. Analysts had expected earnings of 52 cents a share.
Revenue of $7.18 billion rose 2% over $7 billion a year ago, but fell short of Wall Street forecasts of $7.22 billion.
The company had already announced it will not conduct its customary quarterly earnings call with analysts to discuss the financial results. In the earnings release, it reiterated its expectation that the $71.3 billion deal to sell two-thirds of Fox to Disney will close in the first half of 2019 (though sources have strongly indicated it could happen early in the new year). Yesterday, the merger cleared a significant hurdle, gaining European Commission approval, with conditions.
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Film operations dinged Fox’s overall quarter, with revenue sliding 7% to $1.82 billion on weaker box office. Operating earnings gained 8% to $277 million, reflecting progress in licensing animated TV shows to subscription streaming services, the company said.
Losses at Hulu, in which Fox has a 30% stake that will soon transfer to Disney, reached $113 million, according to the quarterly report. That computes to an annual loss of $1.5 billion, red ink that Disney will need to reconcile with its plan to ramp up original content once it takes majority control of the streaming giant.
Television, which includes the broadcast network and stations, had a stellar quarter, with operating income of $168 million surging 38% over the prior-year quarter as revenue climbed 20%. The company credited a 22% advertising upswing on World Cup soccer matches and more NFL games than in the year-ago period, plus midterm political ad spending on its local TV stations.
Cable Network Programming, for the time being the largest unit of Fox, had a 2% gain in operating income to $1.54 billion, with revenue ticking up 4% on higher affiliate and advertising revenues. In the U.S., higher affiliate and ad revenue drove a 7% rise in sales, though that was partly offset by lower content revenue due to lower third-party licensing of scripted content at FX Networks.
Domestic affiliate revenue increased 9% because of ongoing contractual rate increases across the board. U.S. ad revenue increased 7%, which the company credited to higher pricing at Fox News.
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