The first glimpse of the new 21st Century Fox Inc. isn't all pretty.
Sure, the Fox News cable network had a solid quarter, with higher subscriber fees via pay-TV companies. But a drop in political spending, higher college football costs and lower audience ratings depressed results at the Fox broadcast network and local stations that carry its programs.
Those businesses will be a much larger part of the new, smaller Fox when founder and media billionaire Rupert Murdoch completes his $52.4 billion sale of the 20th Century Fox film and TV studios, the cable channel FX and other assets to Walt Disney Co. Built on Fox News, broadcasting and sports programming, the new company will confront strong headwinds as viewers and sponsors abandon conventional TV for new entertainment options.
Fiscal second-quarter profit at Fox fell to 42 cents a share, excluding some items, the New York-based company said Wednesday in a statement. That beat the 38-cent average of analysts' estimates. The results exclude a $1.34 billion tax windfall from the recent reforms enacted in Washington.
The good news for investors was that Fox was supported once again by its cable business, led by Fox News, which will become a key profit contributor for the company if the Disney deal goes through. Rising subscriber fees at networks including Fox News and FX boosted total revenue to $8.04 billion, beating Wall Street estimates of $7.95 billion.
In the U.S., cable networks benefitted from higher subscriber fees, while ad sales declined, because of lower ratings for entertainment programming. Advertising and subscriber fees grew internationally. Overall, cable profit grew 2.6 percent.
The film division, also slated to become part of Disney, posted lower profit because of releasing and marketing costs for movies such as "The Greatest Showman" and awards campaigns for Oscar hopefuls such as "The Shape of Water." Revenue was little changed.
Broadcast TV, including the Fox network and local stations, is a trouble spot. Ratings for the Fox network are down almost 20 percent in prime time this season, according to Nielsen data, hurt by lower World Series ratings and National Football League audiences that aren't what they use to be after two years of decline.
Shares of Fox fell 2 percent to $36.06 at the close in New York. They fell 4.1 percent on Jan. 31 after the company agreed to pay more than $3 billion for five years of rights to "Thursday Night Football," a deal that significantly expands the company's NFL commitment.
-- Bloomberg News