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21st Century Fox: “Cable drives Q4 growth”

21st Century Fox has reported financial results for the three months ended December 31st 2015.

The Company reported total quarterly revenues of $7.38 billion, a decrease of $49 million, or 1 per cent, from the $7.42 billion of adjusted revenues reported in the prior year. The decline compared to last year’s adjusted revenues reflects higher affiliate and advertising revenues at the Cable Network Programming and Television segments that were more than offset by lower revenues generated at the Filmed Entertainment segment due to lower home entertainment revenues and the absence of revenues from Shine in the current quarter. The adverse impact of foreign exchange rates in the current quarter impacted adjusted revenue growth by $207 million, or 3 per cent in total.

Quarterly total segment operating income before depreciation and amortisation of $1.73 billion increased $35 million, or 2 per cent, from the $1.70 billion of adjusted OIBDA reported in the prior year. The increase compared to last year’s adjusted OIBDA primarily reflects 8 per cent growth at the Company’s Cable Network Programming segment partially offset by reduced contributions from the Filmed Entertainment segment. The adverse impact of foreign exchange rates impacted adjusted OIBDA growth by $109 million, or 6 per cent.

Commenting on the results, Executive Chairmen Rupert and Lachlan Murdoch said: “During the quarter, our cable business continued to drive our growth, delivering sustained increases in domestic affiliate fees and gains in advertising revenue, underscoring the power of our global brands and distinctive programming. In addition, we are encouraged by progress at the FOX Broadcast Network, which delivered significant advertising gains from both our sports and entertainment programming. At our television production business, we deliberately invested in a higher number of new original series this quarter in support of the network’s new primetime schedule and in creating valuable long-term assets for the Company. We continued with our top priority of delivering standout storytelling and are proud of our industry-leading Academy Award nominations as well as Golden Globe wins across both our film and television businesses.”

CABLE NETWORK PROGRAMMING

Cable Network Programming quarterly segment OIBDA increased 8 per cent to $1.25 billion, driven by a 9 per cent revenue increase on strong affiliate revenue growth and higher advertising revenues partially offset by a 10 per cent increase in expenses. The increase in expenses was primarily due to the impact from the consolidation of newly acquired National Geographic Partners businesses as well as higher planned sports programming costs led by soccer, Major League Baseball and college football rights. Foreign exchange fluctuations, primarily in Latin America and Europe, adversely impacted segment OIBDA growth by 5 per cent.

Domestic affiliate revenue increased 10 per cent reflecting continued strong growth at FS1 and Fox News and sustained growth across all of the other domestic cable networks. Domestic advertising revenue grew 3 per cent over the prior year period reflecting solid growth at Fox News and the Regional Sports Networks, led by higher ratings for National Basketball Association games, partially offset by lower advertising revenues at FX Networks from lower ratings. Domestic OIBDA contributions increased 7 per cent over the prior year led by higher contributions from Fox News and the domestic sports channels.

International affiliate revenue decreased 1 per cent as 11 per cent local currency growth at STAR and the Fox International Channels was more than offset by a 12 per cent adverse impact from the strengthened US dollar. Despite an 11 per cent adverse impact from the strengthened US dollar, international advertising revenue increased 15 per cent as the STAR and FIC channels generated strong local currency growth. Quarterly OIBDA at the international cable channels increased 8 per cent reflecting strong local currency growth partially offset by the adverse impact of the aforementioned strengthened US dollar.

TELEVISION

Television generated quarterly segment OIBDA of $279 million, an $11 million decrease over the $290 million reported in the prior year quarter. Quarterly segment revenues were 6 per cent higher than the corresponding period in the prior year due to strong retransmission consent revenue growth and a 4 per cent increase in advertising revenues, primarily reflecting low double digit advertising growth at the FOX Broadcast Network, which benefited from higher national pricing and increased audiences for both the National Football League and the new primetime schedule led by Empire, partially offset by lower cyclical political advertising revenues at the TV stations. The decrease in segment OIBDA was driven by higher contractual sports programming costs at the FOX Broadcast Network that more than offset the higher revenues.

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