Streamlined 21st Century Fox posts higher revenue and profit
Unshackled from its publishing properties, Rupert Murdoch’s pared-down entertainment company, 21st Century Fox, generated higher fiscal fourth-quarter profit and revenue.
Murdoch’s former News Corp. empire divided on June 28 into two separately traded companies: 21st Century Fox, the television and film entertainment company, and the new News Corp., which contains the newspapers, including the Wall Street Journal, and book publishing businesses.
For the quarter ended June 30, 21st Century Fox produced net income of $977 million, or 42 cents a share, compared with $596 million, or 25 cents, in the same period a year earlier.
Fueled by its cable television business, revenue swelled 16% to $7.2 billion. That compared with revenue of $6.2 billion during the year-earlier period. The revenue gains surpassed analyst expectations.
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With adjustments for special items, including equity stakes in international TV companies, the company delivered earnings of 31 cents a share. That fell short of analysts’ estimates of 34 cents.
Cable television, which includes Fox News Channel, FX, National Geographic and the Fox regional sports networks, now provides the financial heart of the company.
Cable TV revenue increased 16% to nearly $3 billion, compared with $2.5 billion in the year-earlier period. Operating income increased 25% to $1.1 billion.
Subscriber fees for the profitable domestic channels increased 9%, with increases by Fox News Channel and regional sports channels. Cable ad revenue was up 4%.
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Broadcast TV experienced a tough quarter, with revenue down slightly to $1.1 billion despite lower programming costs. The division suffered because ratings plummeted 20% for Fox Broadcasting’s franchise “American Idol.” Advertising revenue declined 7% for the quarter.
“‘Idol’ did not deliver in the way we hoped and we put new leadership in place,” Fox Chief Operating Officer Chase Carey told analysts Tuesday in a conference call. The network has said it will replace the producers and all of the judges except Keith Urban for next year.
Carey noted that Fox has installed its former chairman of Fox Sports, David Hill, to oversee “American Idol” following the departure of Mike Darnell, the network’s longtime head of reality programming. The company also is investing heavily in new series for the upcoming TV season.
“Hit content is more valuable than ever,” Carey said.
The Filmed Entertainment division, which includes the 20th Century Fox movie studio and 20th Century Fox Television production, generated $2 billion in revenue, up 3%. However, profits were lower. Operating income came in at $117 million compared with $140 million in the year-earlier period.
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Although the company benefited from its relationship with DreamWorks Animation, which released “The Croods” during the quarter, the Vince Vaughn-Google themed movie “The Internship” was a disappointment. A bigger drag on the results came because of a $35-million write-down after recalibrating the value of the Mary Tyler Moore TV library, which the company acquired in the 1990s.
When factoring in newspaper and book publishing operations, the company recorded a $371-million loss for the quarter. However, that was a substantial improvement from the $1.6 billion loss that the consolidated News Corp. took in the fourth quarter of 2012.
During that period, the company reduced the value of its publishing operations, including its Australian properties that have been reeling from ad revenue declines because of a weak Australian economy.
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