Income Statement and Share Recommendation of 21st Century Fox

Income Statement and Share Recommendation of 21st Century Fox

This year, 21st Century Fox reported a 2017 Q4 earnings that surpassed expectations and a revenue that missed its projection narrowly.

This is an overview of its performance against a comparison of Wall Street’s expectations:

  • Earnings per share 36 cents vs. 35 cents, as recorded by Thomson Reuters
  • Revenue: $6.75 billion vs $6.77billion, also by Thomson Reuters

The company EPS dropped from 45 cents to 36 cents in the quarter of a year-ago. However, its revenue rose from $6.6 billion to $6.75 billion in the same period from last year.

21st Century Fox credited this growth in revenue to increased cable network advertising revenue and programming affiliate, which it reported was slightly offset by lower television ad revenue and lower filmed entertainment content.

The revenue from cable network programming rose from $3.92 billion to $4.33 billion from the year-ago quarter. There was a decrease in television revenue from $1.04 billion to $1 billion in the same time last year, and revenue from filmed entertainment also fell from $2.04 billion to $1.80 billion.

The revenue of domestic affiliate increased by 10%, and 21st Century Fox credited this to higher pricing costs shared across its cable brands. The domestic revenue also appreciated by 6% in the same period in 2016.

According to co-chairman Lachlan Murdoch in a press announcement, the advantage came from the growth of ad-free and on-demand viewing, as well as the popularity of live news and sports worldwide. He also said that sports and live-news, which are the least likely to be viewed on delayed-time, accounted for over half of the company’s advertising revenues.

The CEO, James Murdoch expressed optimism that 21st Century Fox’s acquisition of European Satellite company, Sky was expected to fall through sometime in the second quarter of 2018 rather than by the end of this year.

However, 21st Century Fox’s quest was met with minor setbacks as Karen Bradley, the UK’s culture secretary, said she was seeking more advise from Ofcom, a media regulator.

The Chief Financial Investor, John Nallen told investors that the momentum of the company’s cable networks is expected to continue rising in the forthcoming fiscal year. The cable company recently concluded into two new sports deals with the FIFA World Cup and college sports conference, the Big Ten.

21st Century Fox is currently looking at options of using Media Networks to operate local television stations while dropping Sinclair Broadcast Group as its affiliate partner.

 Is 21st Century Fox share a good choice for investors?

21st Century Fox reported more than expected earnings for its 5th consecutive quarter at the Q4 2017 fiscal results.

Although its EPS dropped from the same time last year, its revenue increased. The share position rose upwards by 1.5% after hours last week. In the past 12 months, its stock has earned 6.7% in comparison with the industry’s 2.9% increase.

The company’s whole segment operating income before depreciation and amortization (OIBDA) was reported at $1.45 billion flat y-o-y. An OBIDA increase from Cable Network Programming was outdone with a fall in OIBDA from Film Entertainment and Other, Television, Corporate and Eliminations.

OIBDA input from domestic increased by 22% y-o-y because of the growth in input from Fox News, the FS1 and RSNs.

In domestic cable channels, affiliate revenues appreciated by 10%, attributed to sustained growth across FX Networks, FS1, RSNs and Fox New Channels. Domestic advertising income rose by 6% y-o-y mainly due to higher Fox News ratings.

With these figures, it is safe to say that 21st Century Fox’s shares is bound for a promising future, and here’s why:

According to the co-chairman, Lachlan Murdorch ad-free content and on-demand viewing is taking the centre stage. Live news and sporting events are determining growth in the cable TV industry. With the company’s latest deal with FIFA, the 2018 World Cup promises to boost its earnings next summer.

The FIFA World Cup is not the only positive indication for a promising investment year. 21st Century Fox’s intended acquisition of SKY cable network is bound to raise its earnings per shares. Investors are therefore likely to notice a bump in the value of their investments. If the acquisition pulls through, 2018 has the potential to be rewarding year for 21st Century Fox investors

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