Fox News Bolsters Parent Company's First-Quarter Earnings

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James Murdoch

But the conglomerate controlled by Rupert Murdoch falls short on revenue after a weak performance by the film studio, and shares slide 6 percent in after-hours trading.

21st Century Fox met profit expectations in its second fiscal quarter — courtesy in part to nice ratings at the Fox News Channel, host of some GOP primary debates — but revenue fell short in part due to weakness in movies.

The conglomerate controlled by Rupert Murdoch earned 44 cents per share, after certain items, on $7.38 billion in revenue, while analysts expected 44 cents on $7.51 billion.

Earnings are down from the same quarter a year ago, partially because foreign currency exchange rates have been negatively impacting the bottom line of every company that does significant business overseas. The company also cited lower revenue for filmed entertainment due to falling home-entertainment sales.

While FX has scored a hit with The People vs. O.J. Simpson: American Crime Story, stocks of the conglomerates heavily invested in television have been beaten down lately amid withering competition from online streaming. Analysts, therefore, asked CEO James Murdoch about the state of TV — beyond the juggernaut that is Fox News — during a conference call Monday, and he said that cord-cutting hasn't been an issue, at least not in the latest renewal negotiations.

21st Century Fox shares closed 2 percent lower on Monday and are off 11 percent this year. After the closing bell, shares were off another 6 percent, in part because the company also offered up lackluster guidance. Of the seven major media-entertainment conglomerates, only Time Warner and Comcast are trading higher this year.

James Murdoch was made CEO seven months ago, the same day his brother, Lachlan, was made co-executive chairman with his father Rupert, and the Murdoch brothers have instituted cost-cutting measures that include $250 million in staff reductions.

Cable network programming is the company's largest segment, and it showed the most revenue growth in the quarter, rising to $3.7 billion from $3.4 billion a year ago. Television revenue was $1.7 billion, up from $1.6 billion, and filmed entertainment revenue fell to $2.4 billion from $2.8 billion.

Overall, revenue was off 8 percent, with much of that owed to the absence of Sky Italia and Sky Deutschland, which were sold a year ago. Even taking the sale of the satellite assets into account, though, revenue was still down 1 percent.

The only segment to show growth in operating income was cable network programming, which came in at $1.3 billion, up from $1.2 billion. Not only did Fox News perform well, so did FS1 and the regional sports networks. 

Television reported $279 million in operating income, down from $290 million. While retransmission ads grew, so did the price of licensing sports.

Filmed entertainment was at $302 million, down from $336 million. The Martian did well theatrically, but home entertainment suffered by comparison, as the year-ago quarter included Dawn of the Planet of the Apes and X-Men: Days of Futures Past.

James Murdoch acknowledged weakness at the film studio and said there aren't plans for a short-term fix as much there is a long-term strategy for growth. That said, he offered enthusiasm for the current slate, including Deadpool which opens Friday, X-Men: Apocalypse in May and Independence Day: Resurgence in June. Murdoch was asked when Avatar 2 is due, but he would not offer a date.