21st Century Fox second quarter earnings exceed expectations

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The 21st Century Fox second quarter financial report highlights two key facts –stronger-than-expected second quarter earnings and an expectation that the sale of its media assets to Walt Disney will be completed in the first half of this year.

The quarterly income from continuing operations attributable to 21st Century Fox stockholders has been reported at $10.83 billion ($5.81 per share) as against $1.84 billion ($0.99 per share) during the corresponding period last year, states the report. “The Company reported quarterly income from continuing operations attributable to 21st Century Fox stockholders of $10.83 billion ($5.81 per share) compared to $1.84 billion ($0.99 per share) reported in the prior year quarter. The current quarter’s income from continuing operations attributable to 21st Century Fox stockholders per share included a $5.62 impact related to the net gain on the Company’s sale of its investment in Sky plc (“Sky”),” the report states.

Commenting on the results, Executive Chairmen Rupert and Lachlan Murdoch said: “Our Company delivered another strong quarter of financial results, underpinned by distribution and advertising revenue increases at our domestic cable networks and broadcast businesses and the substantial gain on our sale of Sky. These results reflect our continued commitment to excellence in all aspects of our business. There has also been significant progress regarding the transaction with Disney and the spin-off of Fox Corporation including the effectiveness of Form 10. Lastly, it is a fitting tribute that our film and television production businesses were recently recognized with industry leading Golden Globe wins and Academy Award nominations. Our achievements, including the value we have delivered for shareholders, are a credit to all our talented colleagues. Thanks to their hard work, we have created durable businesses for the long term, and strong momentum as we near the creation of Fox Corporation and the combination with Disney.”

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Among other highlights, Fox shares edged 0.3% higher to close at $49.43 (yesterday) in Wednesday ‘s trading, trimming the stock’s three month gain to about 5.2% and valuing the New York-based media group at about $91.3 billion.

However, the $71.3 billion mega-deal with Disney still needs final regulatory approval as regulators in America continues to conduct their review. After the finalisation, Fox will be left with Fox Broadcasting, Fox News, and a few other channels.

Filmed entertainment revenue, however, has slipped 3.8% from the same period last year to $2.246 billion, while cable network programming revenues edged 3.56% higher to $4.562 billion.

“This increase principally reflects higher affiliate revenues reported at the cable network programming and television segments and higher advertising revenue reported in the television segment partially offset by lower home entertainment revenue reported at the filmed entertainment segment. The impact of foreign exchange rates adversely impacted revenue growth by approximately $195 million, or 2 percent in total,” the earnings release states.

As the company saw cable network programming expense increase 7 percent to $1.45 billion from its local sports acquisitions, it was partially offset by lower cricket rights costs by Star. “Reported international advertising revenue decreased 9 percent as the adverse impact from the strengthened US dollar and lower local currency advertising revenue at FNG International more than offset local currency advertising growth at Star,” the release also added.

The film division, powered by “Bohemian Rhapsody” theatrical revenue and pay-TV fees for ”The Greatest Showman”, reported a 47 percent increase in operating income. Television revenues surged nearly 19 percent to $2.148 billion but reported $22 million loss due to higher sports programming costs.

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