Rupert Murdoch’s 21st Century Fox revealed its first quarter 2018 results showing the cable network programming division as a clear profit engine. For the three months ended 30 September 2017, the global media giant reported total quarterly revenues of $7 billion, an 8% year-on-year increase reflecting growth across all operating segments, led by higher affiliate revenues at both the cable network programming and television segments and higher content revenues at the filmed entertainment segment. Operating income for the quarter was $1.3 billion, up 5% annually.
However, it was clear that higher profit contributions from the cable network programming segment were offset by lower contributions from the company’s television and filmed entertainment segments.
Cable network programming quarterly segment OIBDA increased 9% to $1.51 billion, driven by a 10% revenue increase on higher affiliate and advertising revenues partially offset by an 11% increase in expenses. The increase in expenses was primarily due to higher global sports programming costs reflecting the inaugural broadcasts of Big Ten college football at FS1 and Argentine Football Association matches at Fox Networks Group International as well as contractual rights increases for Major League Baseball at the domestic sports channels and higher Conmebol soccer rights at FNG International.
Domestic cable network programming affiliate revenue increased 11%, driven by contractual rate increases across the company’s domestic brands, while advertising revenue increased 3% over the prior year period led by growth at the domestic sports channels. International affiliate revenue increased 11%, driven by rate and subscriber growth at both FNG International and Star India, and the sub-segment’s advertising revenue increased 10% led by double digit growth at Star India and continued growth at FNG International.
By contrast, quarterly segment OIBDA at the television division tumbled 36% annually to $$122 million. Quarterly segment revenues were 3% higher than the corresponding period in the prior year due to higher retransmission consent revenue and higher FOX Broadcast Network sports advertising revenues being partially offset by lower cyclical political advertising revenues at the TV stations. 21st Century Fox said that the decrease in segment OIBDA was primarily driven by higher contractual sports programming costs at the FOX Broadcast Network, including a higher volume of college football and National Football League games broadcast in the current year quarter, that more than offset the higher revenues.
Commenting on the results, 21st Century Fox executive chairmen Rupert and Lachlan Murdoch said: “The company’s double-digit gains in affiliate revenues demonstrate our strength in the dynamic global market for distinctive video brands and content, across both established distributors and new entrants. We delivered top-line growth at all of our businesses, backed by stand-out storytelling, sports and news, as well as a product focus that will drive greater consumption and compelling opportunities for financial returns on our content investment. Our solid first quarter performance puts us on track to achieve our overall financial and operational objectives for this fiscal year.”
