The newly-created 21st Century Fox had its first earnings call on Tuesday afternoon, and, perhaps befitting its status as half of the old News Corp., took half as long as most earnings calls with 15 minutes of presentation and another 15 minutes allotted for a Q&A.
The entertainment company, healthy but a few cents off from predictions for quarterly earnings, started off on a somber note with 21st Century Fox evp and chief financial officer John Nallen warning investors that the next few quarters would be rougher. “In 2014 our growth will be impacted by several strategic initiatives, including the launch of several sports networks here and in Asia, and the launch of FXX,” Nallen said.
(An 18-year News Corp. veteran, Nallen on June 30 replaced retiring CFO David DeVoe.)
Fox will be investing some $150 million in its broadcast network, according to chief operating officer Chase Carey, who added that he was pleased with the company’s overall ad growth. Carey stopped short of offering percentage figures for upfront gains, saying only that “premiums at our cable channels were in the high-single digits.”
Indeed, Wells Fargo analysts today wrote that “roughly 17 percent of [the company’s] net advertising revenues come from regional sports networks,” which helped offset a tough season for the broadcast network’s American Idol and The X Factor.
Carey suggested that Fox should enjoy a quick turnaround in 2013-14, boasting that the network came in “No. 1 in pilot season.” There may be some truth to that, as critics at TCA last week were particularly receptive to many of the network’s new fall shows, including Sleepy Hollow and Brooklyn Nine-Nine.
Seth MacFarlane’s Dads? Not so much.
The Fox broadcasting unit saw ad dollars fall 7 percent in FY 2013, as 18-49 deliveries dropped 22 percent. On the flip side, the cable nets grew full-year sales 6 percent, thanks to stong showings by FX Networks, National Geographic Networks and the RSNs.
The company is particularly bullish on its RSNs, into which it will doubtless be pouring money for broadcast rights as it launches new cable channels across the country. Along with FX and Fox News Channel, the RSNs also helped drive annual domestic affiliate revenue growth of 12 percent. And of course, big things await the soon-to-be-launched Fox Sports 1, which is designed to take on ESPN in the 24/7 cable sports universe.
Even with desirable properties and a robust film division, there was a write-down of some $308 million due to the split between Fox and its legacy print businesses. As breathtaking as that number is, though, it's a significant reduction of the same cost last year, which came to more than $1.5 billion.