Twenty-first Century Fox Inc (NYSE:FOXA) has reported disappointing quarterly revenue but analysts appeared to accept the company’s explanation that its results were stacked against strong box office results in the year-ago period.
The Rupert Murdoch-owned firm said total revenue increased almost 5% to US$7.5bn in the third quarter ended 31 March, supported by ad revenue for the Super Bowl in its TV division. However, revenue fell short of analysts’ expectations of US$7.6bn.
Its film division saw sales drop nearly 3% to US$2.26bn as releases like Logan grossed less than hit Deadpool did in same quarter a year ago.
The lack of a box office hit, combined with the absence of cricket broadcasts in India and flat advertising at its US cable networks, saw profits fall 5% to US$799mln.
Shares rise as analysts weigh Fox results
Some analysts seemed to swallow the group’s reason for the decline. Tuna Amobi at CFRA Research agreed that the results "were mainly constrained by tough film comparisons".
Shares edged up 2.15% to US$28.45 in US pre-market trading.
Advertising revenue was hit after many clients abandoned the Fox News channel this year amid claims of sexual harassment and mismanagement, which saw the departure of presenter Bill O’Reilly and former chairman Roger Ailes.
Fox spent about US$45mln related to the sexual harassment litigation in the nine months to March, according to a filing with the US Securities and Exchange Commission.
The company said settlements or future claims related to the lawsuits were not expected to have a material impact on its finances.
James Murdoch sounded a confident note on an investor call, saying the Fox News would continue to dominate ratings.
Sky takeover deal to close this year...
Executive chairmen Lachlan and Rupert Murdoch also expressed optimism on the company's bid to take full ownership of Sky plc (LON:SKY). They said the deal should close this year.
“We remain confident the proposed transaction will be approved by the end of the calendar year following a thorough review process," they said in a joint-statement.
Fox already owns about 39% of Sky and its £11.6bn bid to take over full control is being reviewed by UK regulators.