Fox Corp. beat Wall Street’s estimates for its fiscal first quarter, with total revenue reaching $2.67 billion.
Adjusted earnings per share of 80 cents beat analysts’ consensus estimate for 69 cents. Given the Disney-Fox deal, which closed in March, pure year-to-year comparisons are still a couple of quarters away. On a pro-forma basis, revenue gained 5% on the same period of 2018.
Core divisions housing cable and broadcast operations posted single-digit growth. Cable Network Programming saw revenue inch up 2% to $1.3 billion. Pay-per-view boxing and higher sports sublicensing boosted results, but affiliate revenues were flat as contractual price increases were offset by net subscriber declines. Advertising revenue drifted down $10 million, or 4%, with the company blaming fewer FIFA World Cup matches and the absence of UFC, which decamped for ESPN at the end of 2018.
The Television segment had revenue of $1.36 billion, an increase of $79 million (6%). Affiliate and “other” revenue offset declines in advertising.
Net income fell to $513 million from $615 million a year ago, a drop the company blamed on difficult comparisons between the 2018 quarter and the current one. Specifically, a gain from the company’s investment in Roku a year ago set a high bar.
“Fox Corp.’s first full fiscal year is off to a solid start,” CEO Lachlan Murdoch said. “The company delivered strong financial results in the quarter and we are making tremendous progress on the operational goals and strategic initiatives that we outlined at our Investor Day in May.”
Along with the financials, the company announced a $2 billion stock buyback as well as an agreement with the Murdoch Family Trust.
The deal with the family limits the potential accretion of voting power by the trust and Murdoch family members through market purchases or as an indirect result of repurchases by the company of shares of Class B common stock. Under the deal, Fox will not take actions that would result in the trust and family together owning more than 44% of the outstanding voting power of the Class B common stock, or would increase the MFT’s voting power by more than 1.75% in any rolling 12-month period.
The trust would also forfeit votes to the extent necessary to ensure that the MFT and the Murdoch family collectively do not exceed 44% of the outstanding voting power of the Class B Shares. One exception would be a case where a Murdoch family member votes their own shares differently from the trust on any matter.
Since Fox began trading as a new, stand-alone entity in March, its Class A shares have fallen 17%. They have perked up in recent days and gained nearly 1% on Wednesday to close at $33.10.