Fox Q2 Earnings Beat Expectations; Murdochs Reiterate Value Of Live Sports

Dawn C. Chmielewski

UPDATED with comments from earnings call: 21st Century Fox exceeded Wall Street’s expectations in its second-quarter earnings. It reported revenue of $8.04 billion for the quarter, ahead of analyst estimates of $7.94 billion. The media giant’s adjusted per share earnings of 42 cents exceeded projections of 38 cents a share.

The company said total revenue rose 5% from a year ago, thanks to higher affiliate, syndication and advertising revenue.

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The cable group, fueled by powerhouse Fox News, posted operating income of $1.37 billion, up 11% from a year ago. Fox Sports saw viewership gains, as well. Executive chairman Lachlan Murdoch described live sports — in particular, the NFL — as “integral” to the company’s strategy.

“Having the most important sports rights over a longer term has always served us well,” Murdoch said.

Fox recently doubled down on professional football, striking a five-year deal with the NFL for Thursday Night Football, to “concentrate” the audience on the network. There’s a scarcity of national events that draw large audiences — and Fox wants to be the home for that content.

The broadcast television group saw its operating income fall 85% from a year ago to $56 million. The higher retransmission fees were offset by a drop in ad revenue at the television stations, and a smaller audience for this year’s World Series, in which the Houston Astros defeated the Los Angeles Dodgers, which failed to attract as many viewers as tuned in to watch Chicago Cubs break the team’s century-long title drought in 2016.

The film group posted an operating income of $131 million, a 66% drop from a year ago. The results were dragged down by the costs of releasing a heavier than normal holiday movie slate that included Oscar Best Picture nominees The Shape of Water and Three Billboards Outside Ebbing, Missouri.

In December, Disney reached an agreement to buy many of Fox’s film and television assets. Disney Chief Executive Bob Iger talked about the deal on Disney’s earnings call, saying Fox would deliver more content to enhance the company’s planned direct-to-consumer offerings.

The pending $52.4 billion deal requires regulatory approval. Disney said Tuesday that it had no updates on that front.

“The first thing to remember is we’ve got a ways to go, and regulatory approval to be obtained,” said Fox CEO James Murdoch in discussing the Disney sale.

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