The U.S. presidential race and baseball’s World Series contributed to earnings growth for 21st Century Fox in the quarter ended 31st December.
The company reported total quarterly revenues of $7.68 billion, up 4 percent year on year. There were higher affiliate and advertising revenues at both the cable network programming and television segments, partially offset by lower content revenues at the filmed-entertainment segment.
Quarterly total segment OIBDA of $1.99 billion increased by 15 percent from the prior-year period, with higher contributions from all of the company’s operating segments and particularly strong growth reported at the television and filmed-entertainment segments.
Cable network programming quarterly segment OIBDA increased 6 percent to $1.33 billion, lifted by a 7-percent revenue gain on higher affiliate and advertising revenues, though there was an 8-percent increase in expenses. Domestic affiliate revenue gained 7 percent, while domestic advertising revenue grew 12 percent from the prior-year period on higher ratings at Fox News and higher post-season baseball ratings at FOX Sports 1.
International affiliate revenue increased 5 percent, with double-digit growth reported at both Fox Networks Group International (FNGI) and STAR India, partially offset by negative currency impacts from the strengthened U.S. dollar. International ad revenue was down 6 percent, as local currency growth at FNGI was more than offset by lower local currency advertising revenues at STAR India. Quarterly OIBDA at the international cable channels decreased 13 percent, primarily from lower ad revenues and the negative impact of foreign exchange rates.
The Impact of Demonetization in India has resulted in Star India’s ad revenue dropping to the tune of $30 million in quarter ending 31st December that resulted in 21t Century Fox declaring a 6 percent drop in its international ad revenue.
“Advertising revenues declined 6% on a reported basis and 3% on a local currency basis versus the prior year. This primarily reflects an approximate $30 million decline at Star’s entertainment channels principally due to the negative impact from the demonetisation policy implemented in India in early November” said John Nallen – CFO of the 21st Century Fox.
Television saw quarterly segment OIBDA of $376 million, up 35 percent. Quarterly segment revenues were 12-percent higher than the prior-year period, thanks to higher sports advertising revenues, higher local political advertising spending at the TV stations, higher retransmission consent revenues and higher content revenues at the FOX Broadcast Network. Strong growth in sports advertising revenues came from the success of the World Series (which benefited from two additional games as compared to the prior year as well as strong ratings). The overall revenue increase was partially offset by higher expenses led by higher NFL and college football sports programming costs, and increased entertainment programming and marketing costs with the launch of the fall broadcast season.
In filmed entertainment, OIBDA of $389 million represented a 29-percent increase from the same period a year ago. There were increased contributions from the film studio, with lower theatrical releasing costs from a comparatively lower number of films released in the current quarter, the worldwide theatrical and home-entertainment performance of Miss Peregrine’s Home for Peculiar Children and the worldwide home-entertainment and pay-TV performance of Deadpool. Quarterly segment revenues were down by $92 million to $2.27 billion, as the lower worldwide theatrical revenues were partially offset by higher TV production revenues led by the SVOD licensing of certain titles.
Executive Chairmen Rupert and Lachlan Murdoch said: “We delivered a second consecutive quarter of double-digit earnings growth, driven by solid increases in affiliate and advertising revenues across cable and television. Our record-breaking post-season baseball run underscores the immense value of our sports programming, as well as the broader competitive advantage we have built through our other leadership positions in entertainment and news. We also continue to excel creatively, with our television studio producing the number one series on six networks, FX Networks leading all networks in Golden Globe wins and our film studio recognized with seven Academy Award nominations. Additionally, during the quarter we announced an offer to purchase the approximate 61-percent interest in Sky we do not already own. We expect the transaction will generate significant adjusted earnings per share and free cash-flow accretion, and it provides clarity on our near-term capital allocation priorities.”