21st Century Fox Inc. posted fiscal fourth-quarter profit that exceeded analysts' estimates on the strength of its broadcast TV business, registering gains that overshadowed stalled cable earnings and a drop in film.
Profit excluding some items rose to 45 cents a share, New York-based Fox said Wednesday in a statement. Analysts were projecting 37 cents, the average of estimates compiled by Bloomberg. Revenue grew 7.1% to $6.65 billion in the period ended June 30, missing analysts' projections of $6.68 billion.
Fox is benefiting from rising ad sales and affiliate fees at both of its TV businesses -- broadcast and cable. Profit from cable was held back by rising program costs, for sports and political coverage during the U.S. president election. The division has also been rattled by the ouster of news chief Roger Ailes, who was sued for sexual harassment by former anchor Gretchen Carlson.
During an earnings call with analysts CEO James Murdoch said Fox News will operate business as usual. "There is no desire to shift the position it has in the market," he said. While the network will transition to new leadership, it will not change "the underlying positioning or the strategy of the channels," he added.
"Despite the management turmoil at Fox News, this quarter's results illustrate that Fox is well-positioned with leading positions in broadcast and cable network and filmed entertainment," said Paul Sweeney, a Bloomberg Intelligence analyst.
Broadcast TV revenue was $1.04 billion, up 5.5%. Profit in the division rose 27% to $144 million from $113 million. Revenue from cable TV, the company's biggest business, grew 9.9% to $3.92 billion. Profit fell slightly to $1.21 billion. Sales in filmed entertainment expanded 6.9% to $2.04 billion, while earnings slumped 39% to $164 million. Total operating income fell 6% to $1.45 billion.
The broadcast TV business, made up of the Fox Broadcast Network and local stations, was buoyed by higher retransmission fees and advertising in the entertainment division. Ad revenue at Fox Broadcast Network rose 9% from the quarter a year prior.
Fox said it spent heavily on cable programming, driven by soccer rights costs at FNG International and Major League Baseball, as well as streaming rights costs at regional sports networks. The company also had higher entertainment programming expenses at FNG International, higher marketing and digital costs at Star India and higher spending for political coverage Fox News.
Domestic affiliate revenue grew 6% for the cable division, while U.S. ad sales increased 13%, reflecting higher ratings and pricing at Fox news Fox Sports 1.
Film studio profit fell as the division absorbed release costs for movies including "Independence Day" and "X-Men," two expensive summer sequels that struggled at the box office. The company said higher sales reflected rising TV production revenue and gains in theaters, partly offset by currency fluctuations.
"Independence Day: Resurgence" generated worldwide ticket sales of $372.8 million, according to researcher Box Office Mojo. That's a disappointing performance given the film's $165 million production budget and the tens of millions more the studio spent promoting the feature.
-- Bloomberg News with Ad Age staff