BENGALURU: Rupert Murdoch’s media conglomerate 21st Century Fox has three segments–cable network programming (CNP) that contains Star India and Fox Networks Group International (FNG International), television and filmed entertainment (films). 21st Century Fox reported 4.6 per cent yoy growth in revenue for its second quarter ended 31 December 2017 (Q2 2018, the quarter under review) as compared with the corresponding year ago quarter (Q2-2017, prior year quarter). Of its three segments, it was only for CNP that Fox reported growth in revenue and increase in profits as operating income before depreciation and amortisation (OIBDA), for the other two divisions, the company reported decline in revenue combined with an even steeper decrease in segment OIBDA.

21st Century Fox revenue for the quarter under review increased by 4.6 per cent yoy to USD 8,037 million from USD 7,682 million. OIBDA reduced 27.9 per cent yoy to USD 1,438 million from USD 1,994 million. However, net income attributable to Fox shareholders more than doubled (2.14 times) to USD 1,831 in Q2 2018 from USD 856 million because of a tax benefit of USD 1.84 billion. Quarterly income from continuing operations before income tax benefit of USD 703 million decreased 49.2 per cent yoy from the USD 1,385 million reported in the prior year quarter.

Commenting on the results, 21st Century Fox executive chairmen Rupert and Lachlan Murdoch said, “We delivered another quarter of solid top-line revenue growth including the further acceleration of gains in global affiliate revenues and despite challenging revenue comparisons for our TV segment. Our results also reflect increased investment behind higher volumes of global sporting events as well as film releases from our studio, which led the industry in Golden Globe awards and Oscar nominations. Looking ahead, we are focused on continuing to deliver value to our shareholders through achieving our near-term growth plans, completing our proposed acquisition of the balance of Sky, obtaining the required approvals for the successful completion of our transaction with Disney and planning for the exciting launch of the new ‘Fox’.”

CNP

CNP quarterly segment OIBDA increased by 2.6 per cent as compared with the prior year quarter to USD 1,365 million driven by an 11 per cent revenue rise on higher affiliate, syndication and advertising revenue partially offset by a 15 per cent jump in expenses. The increase in expenses was primarily due to higher global sports programming costs reflecting the inaugural broadcasts of Big Ten college football at FS1 and Argentine Football Association matches at FNG International as well as the impact of contractual increases and more National Basketball Association games at the regional sports networks due to the earlier start of the season and a shift in timing of cricket matches at Star India.  

Domestic affiliate revenue rose by 12 per cent driven by contractual rate increases across all of 21st Century Fox’s domestic brands. Domestic advertising revenue decreased 3 per cent from the prior year period due to lower general entertainment ratings primarily reflecting a lower volume of original series in the current quarter. Domestic OIBDA contributions increased 1 per cent over the prior year quarter as higher contributions from Fox News were partially offset by lower contributions from the domestic sports networks and National Geographic.

International affiliate revenue increased 13 per cent driven by rate and subscriber growth at both FNG International and Star. International advertising revenue increased 14 per cent led by double digit growth at Star and continued growth at FNG International. International OIBDA contributions were 8 per cent higher than the prior year quarter as higher contributions at FNG International and Star entertainment networks were partially offset by lower contributions at Star sports networks where higher sports programming costs more than offset the higher reported revenues.

Television

Television reported quarterly segment OIBDA of USD 56 million, a decrease of 85 per cent against the USD 376 million reported for the prior year quarter. Quarterly segment revenue was 5.8 per cent lower yoy in Q2 2018 at USD 1,806 million than the USD 1,918 million in the corresponding period in the prior year. 21st Century Fox says that revenue declined as higher retransmission consent revenue was more than offset by lower advertising revenues reflecting lower cyclical political revenues at the TV stations, lower National Football League and World Series ratings and the absence of revenue generated in the prior year quarter by the granting of a licence of one of 21st Century Fox’s television stations to permit the commercial use of adjacent wireless spectrum in that market. The decrease in segment OIBDA was primarily driven by the lower revenues as well as higher contractual sports programming costs at the Fox Broadcast Network, including a higher volume of college football and National Football League games broadcast in the current year quarter.

Films

Films generated quarterly segment OIBDA of USD 131 million, a 66.3 per cent decrease from the USD 389 million reported in the prior year quarter. 21st Century Fox says that the OIBDA decrease was driven primarily by higher theatrical releasing costs which more than offset higher theatrical revenues in the quarter under review to support a heavier theatrical film release slate which included Murder on the Orient Express, Ferdinand, The Greatest Showman, The Shape of Water, Three Billboards Outside Ebbing, Missouri and The Post. Partially offsetting these higher expenses were higher television production contributions reflecting higher subscription video-on-demand revenue. Quarterly segment revenue of USD 2,246 million was similar (1 per cent yoy decline) to USD 2,269 million of the year-ago quarter as higher television production revenue offset lower film studio revenue reflecting lower home entertainment and pay and free TV licencing revenue says 21st Century Fox.

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