Fox Slides After Cord-Cutting Fears Overshadow Results
Fox’s affiliate fees grew across both its broadcast television and cable businesses.
(Bloomberg) -- Fox Corp., the media company left over after a megadeal with Walt Disney Co. earlier this year, topped analysts’ earnings estimates after surging affiliate revenue helped make up for sluggish ad sales.
Still, the shares slid 5.2% Thursday after cord-cutting headwinds and escalating costs overshadowed the media company’s strong quarter.
Excluding some items, profit amounted to 62 cents a share, beating Wall Street estimates by 3 cents. Revenue also came in ahead of projections, a sign that investments in sports and entertainment programming are letting the company wring more money from its TV partners.
Fox’s affiliate fees grew across both its broadcast television and cable businesses. That helped offset a decline in advertising revenue, a drop Fox blamed on fewer World Cup matches and a lull in political-ad spending.
The shares dropped to $35.13 on Thursday, marking the biggest decline since May. The stock had been down 2.5% since it listed in March through Wednesday’s close.
This is only the second earnings report since Fox emerged from the Disney deal, and the company aims to reassure investors that it’s on the right track. Led by Rupert Murdoch’s eldest son, Lachlan, Fox bought financial marketplace Credible Labs earlier this month in a bid to drive engagement on its digital platforms with fans of Fox News and Fox Business Network.
Lachlan Murdoch’s vision for the New York-based company has been to overhaul its entertainment segment and use live sports events as a springboard for shows launching on the network.
On a call with analysts, he said that overall subscriber declines were about 1%, but that was better than the overall market, which he estimated dropped closer to 3%.
Super Bowl Demand
The CEO pointed to strong demand from advertisers like pharmaceutical companies, which are once again looking to spend on marketing after some regulatory concerns, he said. Ad pricing and volume for the Super Bowl, held in February, also has been encouraging.
Murdoch also lashed out at the TV upstart Locast, which offers broadcast channels online for free. Fox is suing the company, alongside other major broadcasters, describing it as a “rogue streaming service violating the copyright laws for commercial gain.” Fox is confident in the merits of its claim against Locast, he said.
To contact the reporter on this story: Anousha Sakoui in los angeles at asakoui@bloomberg.net
To contact the editor responsible for this story: Nick Turner at nturner7@bloomberg.net
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