Fox results weaken as focus shifts to Disney-Comcast tussle

Bloomberg

21st Century Fox Inc., Rupert Murdoch’s film and TV company, reported weaker earnings in its latest quarter, even as a looming deal to offload most of its entertainment assets took the focus off the results.
Excluding some items, profit amounted to 51 cents a share last quarter, New York-based Fox said. That missed the average of analysts’ estimates of 53 cents a share.
Fox had fewer National Football League games in the period — and no Super Bowl — making the quarter a tough comparison with a year earlier. A shift in timing of cricket matches also hurt advertising revenue for its international operations.
Total revenue decreased 2 percent to $7.42 billion, compared with an average estimate of $7.44 billion. But the money coming in from TV affiliates grew in the double digits. Domestic advertising gained 3 percent, driven by the continuing dominance of Fox News.
“This quarter’s results were a mixed bag,” said Paul Sweeney, an analyst at Bloomberg intelligence.
The shares fell less than 1 percent to $37.37 in extended trading following the results. They have climbed 9.2 percent this year through the close. The big question mark hanging over Fox is its plan to sell about $52 billion of entertainment assets to Walt Disney Co.
Comcast Corp., the largest US cable channel, is said to be preparing financing for a potential counterbid for the Fox operations.
Fox said that it plans to seek shareholder approval for the Disney deal by the summer. It declined to comment on reports that Comcast was preparing a rival bid.
Meanwhile, Fox continues to add TV stations. Sinclair Broadcast Group agreed to sell seven US stations to Fox, including ones in Seattle and Miami, for about $910 million. Those assets should help the company wring more profit from its sports rights and boost the prospects for “New Fox” — the business that will remain after it sells the movie studio and other entertainment divisions to Disney.
Fox’s film business was helped by hits like “The Greatest Showman,” along with awards contenders such as “The Post” that were released at the end of December. In the current quarter, the company expects a “Deadpool” sequel to fuel results.
The other major wild card for Fox is an attempt to buy the portion of UK satellite broadcaster Sky Plc that it doesn’t already own. But Comcast submitted a higher bid for the business last month. James Murdoch, Fox chief executive officer, said UK regulators should approve its Sky purchase in the next month or two. That suggests Fox is in a better position than Comcast, whose bid could still take several months to gain regulatory approval, Murdoch said. A review “would be appropriate given the important role of Sky and Sky News play in the UK media market.”
One consequence of Disney’s bid for Fox is a $60 million charge that Fox had to take in the period as part of a modification of its equity awards.