Fox’s profit for the quarter falls short of mark
Weak results come as Comcast tries to spoil Disney’s quest to buy Murdoch firm’s assets.
Twenty-first Century Fox reported weak overall financial results for the fiscal third quarter that ended in March, with earnings falling short of analyst estimates because of sharp declines in the company’s film and broadcast television units.
The New York-based Fox is in the midst of what is shaping up to be a tug of war as Comcast moves to make a rival bid that could spoil Walt Disney Co.’s $52- billion deal for most of Fox’s assets.
Though the Philadelphia cable operator has yet to formally make the rival bid, Comcast is expected to submit an all-cash offer this summer that would exceed the Disney deal.
On Wednesday’s call with analysts, Fox Chairman Lachlan Murdoch said: “We are committed to our agreement with Disney.” But when asked about Fox’s fiduciary responsibility to weigh the Comcast bid, Chief Executive James Murdoch said: “The directors are very aware of their responsibilities.”
For the quarter, Fox posted adjusted earnings of 49 cents a share, below the estimate of 53 cents a share from analysts polled by Factset.
Revenue was $7.42 billion for the period, which was slightly better than analysts’ prediction of $7.40 billion.
The quarterly results represent declines from the year-ago quarter, which saw earnings of 54 cents a share on revenue of $7.56 billion.
The main culprit was Fox’s television group, which saw a nearly 60% drop in operating income for the quarter.
Fox noted in Wednesday’s earnings announcement that the decline was attributable to Super Bowl advertising revenue, as well as lower NFL postseason ratings and three fewer NFL broadcasts versus the yearago quarter.
Fox also said it took a $60-million charge during the period from higher compensation expenses involving equity awards related to the Disney-Fox acquisition.
Twentieth Century Fox Film saw hits such as “The Greatest Showman,” Oscarwinning “The Shape of Water” and “Maze Runner: The Death Cure.”
But it wasn’t enough to lift the overall filmed entertainment business, which was weighed down by the television production business.
The segment saw higher deficits related to more new drama series, resulting in a nearly 23% drop in operating income to $286 million in the quarter.
Fox’s best-performing segment for the quarter was its cable network business, which saw revenue rise nearly 10% year over year to $4.42 billion. The company attributed the growth to gains in domestic affiliate revenues.
On Wednesday, Fox also announced that it will acquire seven television stations from Sinclair Broadcasting Group for about $910 million. The deal would increase Fox Television Stations’ national reach to nearly half of all U.S. households, according to the company.
Shares of Rupert Murdoch’s media conglomerate were unchanged in afterhours trading Wednesday.
Shares of Fox closed down 29 cents, or 0.3%, to $37.70 in regular trading Wednesday.