Continuing to put up steady results across its TV and film operations, 21st Century Fox posted a dip in earnings in its fiscal second quarter while reporting “significant progress” toward the closing of the Disney merger.
Total revenue of $8.5 billion matched Wall Street’s consensus estimate, while earnings per share of 37 cents beat analysts’ forecast for 33 cents. Earnings per share declined 12% from the same period a year ago, a drop the company blamed on the sale of its position in Sky to Comcast.
Fox said the Sky sale netted it $15.1 billion and a pre-tax gain of $10.8 billion. When Disney completes its $71.3 billion purchase of most of Fox, those proceeds will go on Disney’s books.
As regulators in South America continue to conduct their review of the Disney-Fox deal following signoff from governments in the U.S., UK, China and elsewhere, Fox said it is ready to start trading as Fox Corp. An SEC Form 10 officially registering the newly pared-down Fox Corp. took effect February 5. Fox and Disney (which reported its quarterly results yesterday) both have reiterated their expectation that the merger will close in the first half of 2019.
Fox’s cable networks and film studio paced its quarterly performance, with operating income on the cable side rising 7% to $1.45 billion. The film division, powered by Bohemian Rhapsody theatrical revenue and pay-TV fees for The Greatest Showman, reported a 47% increase in operating income, to $193 million, a 47% increase.
The Television segment, which includes the Fox broadcast network, had a soft quarter due to the expense of Thursday Night Football, which Fox debuted as part of a multi-year deal last fall. Television swung to a $22 million loss, with 19% revenue growth on advertising, affiliate and content sales offset by a 24% spike in expenses.
The broadcast network, along with Fox News, FS1 and the portfolio of local TV stations, are remaining under the Fox umbrella after the Disney deal closes.
“Our company delivered another strong quarter of financial results, underpinned by distribution and advertising revenue increases at our domestic cable networks and broadcast businesses and the substantial gain on our sale of Sky,” Executive Chairmen Rupert and Lachlan Murdoch said in the earnings release. “These results reflect our continued commitment to excellence in all aspects of our business. There has also been significant progress regarding the transaction with Disney and the spin-off of Fox Corporation including the effectiveness of the Form 10.”