21st Century Fox, working to complete two major transactions, reported higher net income in the March quarter as its cable network unit produced a 16% increase in profits.
Net income rose to $858 million, or 46 cents a share, compared to $799 million, or 43 cents a share a year ago.
Fox has agreed to sell most of its cable and studio assets to the Walt Disney Co. It is also looking to acquire the shares of Sky it doesn’t already own.
[Disney Net Rises Despite Declines at TV Networks]
Operating income before depreciation and amortization reflects an approximate $60 million charge from higher compensation expenses due to the modification of equity awards resulting from the proposed Disney and New Fox transactions, which negatively impacted adjusted earnings per share by $0.02 per share.
On Fox’s earnings call, executive chairman Lachlan Murdoch declined to comment on market rumors that Comcast’s higher bid for Sky and a possible bid for the Fox assets that Disney wants to buy.
He said “planning for the new Fox is well underway,” noting that the company was making strategic investments, including an agreement to acquire stations from Sinclair Broadcast Group and rights to Thursday Night Football from the NFL.
Revenues were down 2% to $7.56 billion. The company said the drop was caused mainly because of a comparison to the prior year when Fox broadcast the Super Bowl.
“We continue to make operational and financial progress against near-term objectives as we also work to close our strategic transactions. Our cable segment delivered its highest earnings ever in our fiscal third quarter, propelled by sustained double-digit gains in domestic affiliate revenues,” executive chairmen Rupert and Lachlan Murdoch said. “Creatively, we are firing on all cylinders. Our stand-out programming continues to drive up the value of our video brands to distributors, as well as build our direct relationship with consumers, as we’re demonstrating with the successful inaugural season of Indian Premiere League on STAR Sports and Hotstar platforms. Our film studio delivered boxoffice and awards momentum that we expect to continue with the upcoming release of Deadpool 2.”
Cable network operating income rose 16% to $1.684 billion from $1.446 billion as revenues rose 10% to $4.419 billion from $4.024 billion.
Operating income at the U.S. cable channels was up 15%. Domestic affiliate revenue increased 10%. Domestic cable advertising revenue rose 3%, reflecting higher pricing at Fox News, offset by fewer original episodes at FX.
Television operating income fell to $78 million from $190 million. Revenue dropped to $1.149 billion from $1.69 billion. Not having the Super Bowl hurt. On top of that Fox aired three fewer NFL games than the prior year.
The company reported a $148 million loss on Hulu. That was more than double the $62 million loss reported a year ago.
Retransmission consent revenue was up by double digits.
