21st Century Fox Posts Lower Profit on Flat Revenue


Fox’s movie unit was a standout. “Kingsman: The Secret Service” has brought in $401.4 million since its February release. Colin Firth, left, plays Harry Hart, and Taron Egerton is Eggsy Unwin.

Jaap Buitendijk/Twentieth Century Fox

LOS ANGELES — Quarterly profit declined at 21st Century Fox as continuing struggles at the Fox broadcast network, higher sports costs and unfavorable foreign exchange rates combined to overshadow strength in movies and climbing cable fees.

For its third fiscal quarter, which ended on March 31, 21st Century Fox on Wednesday reported net income of $975 million, or 46 cents a share, compared with $1.05 billion, or 47 cents a share, in the same period a year earlier. Revenue totaled $6.84 billion, roughly flat from a year ago, after adjusting for comparability.

Results at the company, which is controlled by Rupert Murdoch, surpassed Wall Street’s expectations. Analysts forecast earnings in the most recent quarter of 39 cents.

The financial results reflect a company excelling in some areas, film in particular, but struggling at the heart of its business: finding a new generation of successful broadcast and cable programming. Advertising revenue at the Fox broadcast network fell 7 percent because of lower entertainment ratings. Lower ratings at the FX and National Geographic cable networks also reduced earnings.

The pressure on a new management team at the Fox broadcast network to turn things around is clearly extreme. Chase Carey, 21st Century Fox’s chief operating officer, repeatedly told analysts in a conference call that the network’s performance was not acceptable. But he promised improvement.

“We’re not the first broadcast network to fight through a turnaround, and we are confident we are on our way,” he said, noting the success of two shows, “Empire” and the drama “Gotham.”

The division that includes Fox had operating income of $141 million in the quarter, a 51 percent decrease from the year-earlier period, when the broadcast network benefited from broadcasting the Super Bowl. Higher costs from new programming, including “Empire,” a prime-time soap set in the African-American music industry, also affected results, the company said.

Operating income in 21st Century Fox’s biggest division, cable television, increased 5 percent, to $1.23 billion, because of growth in fee payments from affiliates, in particular from regional sports networks. Sports programming costs and unfavorable currency exchange rates dragged down the results, however.

Domestic cable advertising revenue was flat, as increases at Fox News Channel and Fox Sports 1 were offset by declines at FX and National Geographic.

That left the company’s 20th Century Fox movie studio as an unabashed bright spot. Operating income climbed 8 percent, to $382 million, reflecting the successful release of “Kingsman: The Secret Service,” an R-rated action adventure that took in $401.4 million worldwide, and “Taken 3,” which generated $325.8 million in ticket sales. The studio also benefited from fees related to “Penguins of Madagascar.”

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