No gain without pain, I guess — and Fox‘s investments in services including FXX and Fox Sports 1 pinched in the quarter that ended September 30. The company just reported net income of $1.26B, -43.8% vs the same period last year, on revenues of $7.06B, +17.6%. The revenue number was well ahead of the $6.8B that analysts anticipated. But the bottom line, at 33 cents a share, was two cents lower than the consensus forecast. The disparity between revenue and profit is clearest at the Cable Network Programming unit, where sales were +12.3% to $2.8B while cash flow fell 2.4% to $991M. Domestic affiliate fees were +10% while ad sales here were +6%, despite a drop at Fox News, which was helped last year by the presidential campaign. Still, expenses rose 22%, the company says, with two-thirds of the increase going toward the new channels. Filmed Entertainment also had a mixed quarter, with revenues +9.5% to $2.1B while cash flow fell 24.3% to $328M. As studios typically say in these situations, Fox attributes the profit fall to “difficult comparisons” with last year, which included Ice Age: Continental Drift. The revenue increase was helped by syndication of Modern Family and Netflix payments for the first two seasons of New Girl. The broadcast TV unit held its own as retransmission consent fees doubled — outweighing weak ad sales from lower ratings including at X Factor, and the loss of political commercials. Revenues were +7.8% to $1B with cash flow +29.8% to $231M. Fox’s satellite TV operations had a great quarter with revenues +67.9% to $1.4B with cash flow doubling to $190M. “The investment we are making” in new channels “will drive future sustained growth toward our stated 2016 target of $9B of OIBDA [cash flow] and beyond,” CEO Rupert Murdoch says.
A big step up for Randy Freer, who’s considered one of the most influential execs in TV sports. He’ll continue to oversee sports at Fox but with “a broad strategic and operational role across FNG” including Fox Broadcasting, reporting to FNG CEO Peter Rice, the company says. Freer seems to have a halo from the launch of Fox Sports 1 in August. Rice praised Freer’s “impressive skills as both an operator and builder of businesses” and said he’ll be “a key partner for me in overseeing and driving continued growth of our global channels business which spans nearly 400 channels in 200 countries.” Execs who’ll now report to Freer include Michael Biard, President of Distribution at Fox Networks; Toby Byrne, President of National Ad Sales at Fox Broadcasting Company, Fox Sports Media Group; Lou LaTorre, President of Advertising Sales at Fox Cable Entertainment Networks, Fox Hispanic Media Group; and Kyle Sherman, EVP Home Team Sports. FNG finance & business development, corporate communications, legal and human resources functions will report jointly to Rice and Freer.
Here’s the company’s release:
Listen to (and share) episode 48 of our audio podcast Deadline Big Media With David Lieberman. David talks with host David Bloom about Fox’s big bet on the pay-TV status quo with its heavily promoted Fox Sports 1 channel launch; a possibly game-changing deal in the making between Viacom and Sony Electronics; and that big “for sale” sign hanging around the metaphorical neck of troubled phone maker Blackberry.
UPDATE: Fox Sports 1 Will Run On DirecTV, Dish Network, And Time Warner Cable While Deal Talks Continue
UPDATE, 9:30 AM: I’m hearing that while DirecTV, Dish Network and Time Warner Cable will carry Fox Sports 1 programming this weekend, they don’t have new deals in place for the network. The distributors permitted Fox to upgrade Speed to FS1 as long as they don’t have to …
I’ve been waiting to see if any analyst would slam News Corp’s decision to launch Fox Sports 1, the national general sports makeover for the company’s Speed channel. You can make a compelling case that the pay TV sports bubble is about to pop, especially if cable and satellite companies follow through on their threats to cut high-priced sports channels from the basic cable bundle. But the investment pros continue to bet that the current system will remain intact, and that Fox Sports 1 will be a winner. Several raised their target price for News Corp stock. The consensus view is that pay TV distributors will agree to pay about $1 a month for each subscriber — up from the the estimated 22 cents the company currently collects for Speed — raising affiliate revenues to $1.1B a year from $312M. News Corp will have several opportunities to push for higher rates: about 30% of its current pay TV deals expire by mid 2014, and another 40% will be due the following year, Barclays Equity research’s Anthony DiClemente notes.
Fox Sports 1 and boxing icon Mike Tyson today announced that their new series Being Mike Tyson will spearhead programming on the newly announced “national multi-sport network”. Tweeted @FoxSports: “The first big …
The Fox Sports Media Group has an upfront presentation scheduled for this afternoon and is expected to use that platform to announce the launch of its first national cable sports network, Fox Sports 1. The all-sports network will go live in August, timed to the start of college football season and David Hill, the former head of the Fox Sports Media Group, has been brought in to oversee the creation and launch. Plans for the channel have been brewing for some time – News Corp. COO Chase Carey last month called it the “world’s worst kept secret” – but up to now details were scant including what sports the network would carry. According to The New York Times, Fox Sports 1 will have Nascar, Major League Baseball, college basketball and football, soccer (including the 2018 and 2022 World Cups) and UFC fights. Also, an in-studio show will be hosted by Regis Philbin who last week hinted at the prospect.
What News Corp COO Chase Carey recently called the “world’s worst kept secret” – Fox’s still-unannounced plans to turn its Speed channel into a national general sports network called Fox Sports 1 — just became a little …
Nomura Equity Research’s Michael Nathanson does a nice job this morning of laying out the likely business arrangements for News Corp‘s still unannounced but widely expected plan to convert its Speed channel into a national network to be called Fox Sports 1, with Fuel to be rebranded as Fox Sports 2. Rupert Murdoch is betting on “what the company believes will be increasing value of live sports over the next couple of decades,” Nathanson says. Advertisers spent a record $13.3B on broadcast and cable sports last year, confident that viewers would watch them live — instead of recording the shows to zip past the commercials. News Corp’s sports initiatives also seem to make sense according to Nathanson’s calculations of pay TV fees: Speed and Fuel together collect about $300M a year. Under what the analyst calls his “blue sky scenario,” the company could see nearly $1.5B in additional revenue from cable and satellite companies (and, presumably, their customers) as Fox hikes their prices once the channels are rebranded.