Fox Corp. beat Wall Street estimates in its first full quarter as a stand-alone company, with affiliate revenue and digital licensing powering the performance.
Adjusted earnings per share came in at 62 cents, which was 3 cents greater than Wall Street analysts’ consensus but 7% lower than the 67 cents reported in the pro forma prior-year results. Fox blamed the downturn on higher net interest expense, which it said was partially offset by higher revenues.
Revenue of $2.51 billion beat the Street’s outlook of $2.47 billion. Fox credited affiliate revenue growth of 7%, driven by an 18% increase in its television unit. Another boost came from a 78% increase in other revenues, primarily due to higher digital content licensing revenues in the TV unit. Advertising revenue declined 6%, however, a drop that management blamed on fewer FIFA World Cup matches and lower cyclical political revenue compared with the 2018 period.
The results reflect the first full quarter of operations for the new company after the March close of Disney’s $71.3 billion deal to acquire most of 21st Century Fox. Left behind after that landscape-altering merger were the Fox broadcast network, Fox News, FS1 and a lucrative portfolio of about two dozen local TV stations, many in major markets.
“The strategic rationale for the formation of Fox Corporation, with our unique set of assets, is underscored by our strong Fiscal 2019 operational and financial results,” CEO Lachlan Murdoch said in the earnings release. “We are strongly positioned as we enter our first full fiscal year.”
The quarterly numbers landed on the same day that the Fox broadcast network, under the leadership of entertainment chief Charlie Collier, presented its upcoming shows during the TCA summer press tour in Los Angeles.
During his executive session, Collier made the against-conventional-wisdom argument in favor of smaller scale. “We get to determine whether bigger is necessarily better,” he said. The company’s mission, he added, is to “win in a different way.”