Fox Results Weaken as Focus Shifts to Disney-Comcast Tussle

(Bloomberg) -- 21st Century Fox Inc., Rupert Murdoch’s film and TV company, reported weaker earnings in its latest quarter, even as a looming deal to offload most of its entertainment assets took the focus off the results.

Excluding some items, profit amounted to 51 cents a share last quarter, New York-based Fox said Wednesday. That missed the average of analysts’ estimates of 53 cents a share.

Fox had fewer National Football League games in the period -- and no Super Bowl -- making the quarter a tough comparison with a year earlier. A shift in timing of cricket matches also hurt advertising revenue for its international operations.

Fox Results Weaken as Focus Shifts to Disney-Comcast Tussle

Total revenue decreased 2 percent to $7.42 billion, compared with an average estimate of $7.44 billion. But the money coming in from TV affiliates grew in the double digits. Domestic advertising gained 3 percent, driven by the continuing dominance of Fox News.

“This quarter’s results were a mixed bag,” said Paul Sweeney, an analyst at Bloomberg intelligence.

The shares fell less than 1 percent to $37.37 in extended trading following the results. They have climbed 9.2 percent this year through Wednesday’s close.

The big question mark hanging over Fox is its plan to sell about $52 billion of entertainment assets to Walt Disney Co.

Comcast Corp., the largest U.S. cable channel, is said to be preparing financing for a potential counterbid for the Fox operations.

Summer Vote?

Fox said on Wednesday that it plans to seek shareholder approval for the Disney deal by the summer. It declined to comment on reports that Comcast was preparing a rival bid.

Meanwhile, Fox continues to add TV stations. On Wednesday, Sinclair Broadcast Group agreed to sell seven U.S. stations to Fox, including ones in Seattle and Miami, for about $910 million.

Those assets should help the company wring more profit from its sports rights and boost the prospects for “New Fox” -- the business that will remain after it sells the movie studio and other entertainment divisions to Disney.

Fox’s film business was helped by hits like “The Greatest Showman,” along with awards contenders such as “The Post” that were released at the end of December. In the current quarter, the company expects a “Deadpool” sequel to fuel results.

Wild Card

The other major wild card for Fox is an attempt to buy the portion of U.K. satellite broadcaster Sky Plc that it doesn’t already own. But Comcast submitted a higher bid for the business last month.

James Murdoch, Fox chief executive officer, said U.K. regulators should approve its Sky purchase in the next month or two. That suggests Fox is in a better position than Comcast, whose bid could still take several months to gain regulatory approval, Murdoch said. A review “would be appropriate given the important role of Sky and Sky News play in the U.K. media market.”

One consequence of Disney’s bid for Fox is a $60 million charge that Fox had to take in the period as part of a modification of its equity awards.

Investors have been trying to assess how much Fox wants to complete both the Sky and Disney deals, Sweeney said. Fox said on Wednesday that it remains committed to buying Sky.

“Comcast is a formidable bidder, and their presence may push up deal values for both assets,” he said.

©2018 Bloomberg L.P.