Rupert Murdoch’s 21st Century Fox Inc. film and television company reported fiscal first-quarter profit that missed analysts’ estimates after a tough quarter for the film division and investments in cable networks.
Profit from continuing operations fell to $768 million, or 33 cents a share, from $2.25 billion, or 95 cents, a year earlier, New York-based Fox said in a statement (FOXA:US) yesterday. Analysts expected 35 cents, the average of 23 estimates (FOXA:US) compiled by Bloomberg. Operating income rose 1.8 percent to $1.62 billion.
Murdoch is converting cable channels with smaller audiences into networks with a potentially bigger draw. In August, the racing channel Speed become Fox Sports 1 and Fox Soccer converted to FXX, networks that will take a year or more to increase revenue and to recoup higher programming costs. Fox is also spending to develop programs for its Fox broadcast network, where viewership tumbled in the season ended in May.
“The investment we are making, including the launch of FXX and Fox Sports 1, will drive future sustained growth,” Murdoch said in the statement.
Sales increased 18 percent to $7.06 billion, beating the $6.82 billion average of 20 analysts’ estimates.
Fox, owner of the Twentieth Century Fox film studio and satellite pay-TV systems in Germany and Italy, fell 1.7 percent to $33.50 in extended trading yesterday. The stock lost 0.2 percent to $34.09 at the close in New York and has increased 51 percent this year compared with a 24 percent gain for the Standard & Poor’s 500 Index.
Murdoch, 82, split off his slower-growing News Corp. newspaper publishing company on June 28 from the film and TV operations of Fox. The print-media business includes the Wall Street Journal and the New York Post.
Operating income (FOXA:US) at Fox’s cable division, excluding depreciation and amortization, fell 2.4 percent to $991 million, while sales increased 12 percent to $2.81 billion. Costs increased 22 percent in the period, with two thirds of that due to start-up expenses for Fox Sports 1 and FXX, as well as acquisitions of ESPN Star Sports and SportsTime Ohio, the company said.
Television profit gained 30 percent to $231 million from a year earlier, on double the amount of retransmission fees from pay-TV systems, the company said. Sales in the division rose 7.8 percent to $1.05 billion.
Profit at filmed entertainment (FOXA:US) fell 24 percent to $328 million, as revenue increased 9.4 percent to $2.12 billion. Titles in the period had tough comparisons to last year’s “Ice Age: Continental Drift,” the company said. The revenue gains were driven by sales of “Modern Family” reruns and older episodes of “New Girl” to Netflix Inc. (NFLX:US), Fox said.
The company’s satellite-TV unit doubled profit to $190 million, while sales jumped 68 percent to $1.39 billion. The results were driven by the consolidation of Sky Deutschland after the acquisition of a controlling stake, Fox said.
Net income (FOXA:US) for the quarter amounted to $1.26 billion, or 54 cents a share, including a gain of $487 million from discontinued operations. Fox had year earlier net income of $2.23 billion, or 94 cents a share, including a gain from the sale of a stake in NDS Group Ltd.
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