21st Century Fox turned in fiscal second-quarter earnings marked by higher revenue and profit as the company neared the finish line of its $71.3 billion acquisition deal with Disney.
Fox reported total quarterly revenues of $8.50 billion, up 6% from the prior year quarter. The company attributed the increase to higher affiliate revenues at its cable networks and television segments and higher advertising revenue in television.
Quarterly income from continuing operations rose to $11.55 billion, way ahead of the $703 million reported in the prior year quarter, but that huge increase was primarily due to the $10.8 billion pre-tax gain on the sale of Sky.
“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 the Form 10,” said Rupert and Lachlan Murdoch, executive chairmen at Fox, in a statement.
Filmed entertainment saw the most growth during the quarter – thanks to the success of Queen biopic “Bohemian Rhapsody” – but cable networks also saw an uptick. Cable network programming saw its operating income climb 7% to $1.45 billion thanks to revenue growth led by higher affiliate revenues. Domestic advertising revenue increased 6% from the prior year period largely due to higher pricing at FOX News.
Meanwhile, Fox’s television segment saw its quarterly operating income swing to a loss of $22 million, down from $56 million one year ago. Fox’s 19% segment revenue growth from increases in advertising, affiliate and content revenues were wiped out by a 24% increase in expenses due to higher sports programming costs related to Fox’s first season of NFL Thursday Night Football. While sports costs rose for Fox, the company managed to lower its entertainment programming expenses.
While Thursday Night Football caused programming expenses to spike, it also heavily contributed to advertising growth. Fox’s television segment advertising revenue rose 15% during the quarter.
Fox’s equity losses also increased to $109 million (up from a $33 million loss one year ago) as Hulu losses increased to $115 million and equity earnings from Sky (which totaled $120 million in the year ago quarter) were no longer available to Fox.