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A strong performance from the Fox Networks Group cable wing powered 21st Century Fox’s fiscal third-quarter earnings amid softness and tough year-to-year comparisons for the broadcast TV and studio divisions.
Fox’s adjusted earnings per share fell shy of analysts’ expectations, coming in at 49 cents a share versus estimates of 51-53 cents per share. Revenue was down 2% year-over-year to $7.42 billion while operating income also ebbed 2% to $1.89 billion. Net income was up 8% from the year-ago quarter to $876 million. Higher employee compensation costs associated with its pending sale of major assets to Disney accounted for a $60 million charge during the quarter.
“We continue to make operational and financial progress against near-term objectives as we also work to close our strategic transactions,” Rupert and Lachlan Murdoch said in a statement. “Our cable segment delivered its highest earnings ever in our fiscal third quarter, propelled by sustained double-digit gains in domestic affiliate revenues. Creatively, we are firing on all cylinders. Our stand-out programming continues to drive up the value of our video brands to distributors, as well as build our direct relationship with consumers, as we’re demonstrating with the successful inaugural season of Indian Premiere League on STAR Sports and Hotstar platforms. Our film studio delivered boxoffice and awards momentum that we expect to continue with the upcoming release of Deadpool 2.”
The Cable Networks Group’s gains were fueled by contractual affiliate fee rate increases and improvements in ad sales. Cable’s 16% hike in operating income to $1.68 billion accounted for the lions’ share of Fox’s operating income.
Broadcast TV had a tough outing against last year when Fox carried the Super Bowl. Television saw operation income drop to $78 million, from $112 million in the Super Bowl-inflated quarter. Earnings in the unit were also dented by the decline in NFL ratings and the fact that the year-ago quarter had three more NFL games than this year.
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