Jessica Toonkel and Aishwarya Venugopal
(Reuters) – Rupert Murdoch-controlled Twenty-First Century Fox Inc’s quarterly profit edged past analysts’ estimates, but revenue fell just short of expectations, hurt by the lack of box office hits from its movie studio.
The media company, which is seeking regulatory approval to completely buy out Sky Plc, said revenue at its filmed entertainment division fell 11.5 percent to $1.80 billion in the fourth quarter.
Fox said the lower home entertainment revenue was due to the strong performance of superhero movie “Deadpool” in the year-ago quarter. The company’s shares were roughly flat in after hours trading.
Fox reported fourth-quarter results as investors questioned whether it would gain British government approval for its $14.5 billion bid to buy the nearly 61 percent of UK-based pay-TV group Sky it does not own.
That deal is still under review by British regulators and is likely to be referred to the competition watchdog for a full investigation.
Its approval has been met with a number of roadblocks, including British media secretary Karen Bradley’s reservations that it gives the Murdoch family too much influence over the media.
James Murdoch CEO of Fox said on a post-earnings call that Fox was confident the deal would be approved, but more likely in the first half of 2018 than this year.
Fox reported that revenue from its cable division, which houses the Fox News and FX channels among others, rose 10.4 percent and accounted for more than half of total revenue.
Fox expected to see high single digit domestic affiliate fee growth every quarter in fiscal 2018, the company said on its call.
Overall, executives expressed optimism about the growth of “skinny bundles,” or streaming services with smaller groups of networks at a cheaper price than cable and satellite services, and their effect on Fox’s business.
However, the company did not rule out launching its own direct to consumer online streaming service.
“We remain very open-minded about an independently priced direct-to-consumer offering as well,” Murdoch said.
Net income attributable to Fox shareholders fell to $476 million, or 26 cents per share, from $567 million, or 30 cents per share. The year-ago results included a tax benefit of $60 million.
Excluding items, the company earned 36 cents per share.
Fox said total revenue increased 1.5 percent to $6.75 billion.
Analysts on average were expecting a profit of 35 cents per share and revenue of $6.77 billion, according to Thomson Reuters I/B/E/S.
Reporting by Aishwarya Venugopal in Bengaluru; Editing by Savio D’Souza and Andrew Hay