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Star, Fic boosts 21st Century Fox’s Q1 intl affiliate revenue

MUMBAI: Twenty-First Century Fox has reported financial results for the three months ended 30 September, 2014.

The company reported quarterly revenues of $7.89 billion, an $826 million or 12 per cent increase over the $7.06 billion of revenue in the prior year quarter. This primarily reflects a 15 per cent increase at the Cable Network Programming segment from higher affiliate and ad revenues.

Reported international affiliate revenue increased by eight per cent, driven by strong local currency growth at the Fox International Channels (Fic) and Star channels which was partially offset by an eight per cent adverse impact from the strengthened US dollar, primarily in Latin America.

This was coupled with a 17 per cent growth at the film segment led by higher theatrical revenues. Reported international ad revenue increased by 13 per cent due to strong growth at the Star channels.

For Twenty-First Century Fox, the quarterly total segment operating income before depreciation and amortization (OIBDA) grew by 10 per cent to $1.78 billion as compared with prior year quarterly OIBDA of $1.62 billion. This improvement principally reflects OIBDA growth at the company’s Film, Cable Network Programming and Direct Broadcast Satellite Television segments which was partially offset by lower contributions from the Television segment.

The company reported quarterly income from continuing operations attributable to stockholders of $1.04 billion ($0.48 per share), as compared to $768 million ($0.33 per share) reported in the corresponding period of the prior year. Current year quarterly results included a $287 million increase in Equity earnings from affiliates primarily reflecting the company’s share of BSkyB gain on the sale of shares in ITV.

The company’s chairman, CEO Rupert Murdoch said, “Our strong earnings and revenue growth in the quarter were driven by continued momentum at our Cable Network Programming and Filmed Entertainment segments, reflecting sustained increases in affiliate fees as well as the global box office success of ‘Dawn of the Planet of the Apes’ and ‘The Fault in Our Stars’. Additionally, we continued our focus on driving long-term value through our planned investments in a number of our growing brands, most notably our new channels FXX, Fox Sports 1 and Star Sports.”

Cable network programming quarterly segment OIBDA increased by five per cent to $1.04 billion, driven by a 15 per cent revenue increase on strong affiliate and advertising revenue growth. The revenue improvement was partially offset by a 21% increase in segment expenses, nearly half of which reflected the combined impact of the planned investments in the new sports channels launched in the prior year, coupled with the consolidation of the Yankees Entertainment and Sports Network. The expense growth at the new sports channels principally reflected increased rights fees related to the broadcast of the India versus England cricket series at Star Sports and the inaugural broadcast of regular season Major League Baseball games at Fox Sports 1.

In addition to the continued investment in these channels, quarterly segment expenses included increased programming and marketing costs at the FX Networks for additional hours of original programming including The Strain, Tyrant and Sons of Anarchy at FX and the exclusive cable rights to air all 552 episodes of The Simpsons at FXX. Segment OIBDA growth was adversely impacted by 4% from foreign exchange rate fluctuations, primarily in Latin America.

In the US affiliate revenue grew by 18 per cent reflecting the combination of sustained growth at the regional sports networks (RSNs), FX Networks and Fox News Channel, the contribution from Fox Sports 1, as well as the consolidation of the YES Network. Domestic advertising revenue grew by 10 per cent in the quarter over the prior year period driven by the consolidation of the Yes Network and solid growth at the FX Networks and Fox News Channel.

OIBDA from the domestic channels increased by 15 per cent from the corresponding period in the prior year, reflecting OIBDA growth at the Fox News Channel and the RSNs, which included the impact of the consolidation of the Yes Network. This quarterly domestic growth was partially offset by lower contributions from the FX Networks due to the increased investment in programming and marketing. Reported quarterly OIBDA at the company’s international cable channels’ declined by 28 per cent from the corresponding period of the prior year as strong double-digit local currency growth at FIC was more than offset by the timing of the continued investment in Star Sports and a 19 per cent adverse impact from the strengthened US dollar.

Television: The Television division generated quarterly segment OIBDA of $174 million compared with the $231 million reported in the prior year quarter. Quarterly segment revenues were consistent with those from the corresponding period in the prior year as strong retransmission consent revenue growth was counterbalanced by a five per cent decline in advertising revenues primarily reflecting the impact from lower general entertainment ratings at the Fox Broadcast Network. The decline in segment OIBDA principally reflects segment expense growth driven by higher programming costs at the Fox Broadcast Network from the investment in additional hours of original scripted content, higher programme cancellation costs and higher rights fees related to the new National Football League contract.

Film: The film division generated record first quarter segment OIBDA of $458 million, a 40 per cent increase over the $328 million reported in the same period a year-ago, driven by a $356 million or 17 per cent revenue increase. This growth was led by the performance of several successful worldwide theatrical releases in the quarter including ‘Dawn of the Planet of the Apes’ and ‘Maze Runner’, which have grossed over $700 million and over $300 million in worldwide box office to date, respectively, continued contributions from the worldwide theatrical and domestic home entertainment performance of ‘The Fault in Our Stars’, and the worldwide home entertainment performance of ‘Rio 2’.

As a result of these successful releases, the film studio became the first to cross the $4 billion mark in worldwide box office this year. Quarterly results also reflect higher contributions from the television production businesses, driven by higher syndication and SVOD revenues.