Higher sports rights fees and the cost of launching WWE’s “Smackdown” took a bite out of Fox Corp.’s earnings in the last lap of 2019.
The company disclosed Wednesday that it delivered revenue of $3.78 billion for the quarter ended Dec. 31, a gain of 5%. Net income soared to $314 million, compared to $24 million in the comparable year-ago quarter. But higher costs for Fox Sports’ NFL rights, the “Smackdown” launch last October and the absence of UFC bouts took a toll on Fox’s results for its fiscal second quarter.
More from Variety
- WWE Co-Presidents Forced Out in Management Shakeup
- Rocky Johnson, WWE Hall of Famer and Dwayne Johnson's Dad, Dies at 75
- WWE Launches on TikTok, Will Let Users Make Videos With Entrance Themes for Wrestling Stars
“Our results reaffirm that Fox Corporation is delivering on the operational and financial objectives that we established less than twelve months ago,” Fox Corp. CEO Lachlan Murdoch said. “Our brands are exhibiting strength in a competitive marketplace and delivering healthy top-line growth as we continue to invest strategically to expand the reach of our portfolio and further diversify our revenue streams. Meanwhile, we are taking a balanced approach to capital allocation, including the return of $500 million to shareholders in the form of share repurchases since our last earnings release. Coming off an incredibly successful Super Bowl LIV and with the buildup to the November Presidential Election ahead of us, we look forward to continuing our momentum through calendar 2020.”
Fox’s broadcast TV segment posted a loss of $214 million, compared to a loss of $14 million in the prior-year quarter. Affiliate revenues spiked by $72 million to $479 million. Advertising revenue was up 2% despite tough year-over-year comparisons to the election-year activity in the comparable period in 2018. Fox noted that investments in entertainment programming also put a dent in earnings.
Cable networks delivered a modest 2% gain in revenue to $1.47 billion. Affiliate revenue gains were also slim, up 2% and hit by subscriber losses, Fox disclosed. Advertising revenues dropped 5% due to “the impact of higher preemptions
associated with breaking news coverage” and the loss of UFC from Fox Sports 1.
On a conference call, Murdoch told analysts that he was confident Fox’s TV outlets would prosper in the second half of this calendar year because of the outpouring of political advertising. Fox’s 28 local TV stations are scattered in a number of swing states.
“We’re well-placed in swing states where there will be a significant amount of advertising spent this election,” he said.
Pressed for any insight in to the next round of NFL TV rights negotiations, Murdoch said the conversations have begun but cautioned that it was “early days.” He noted that Fox’s senior executives spent a lot of time with the league’s leaders last week during the build-up to Sunday’s Super Bowl telecast. The big game generated some $600 million of “gross revenue” for Fox, underscoring the importance of pigskin rights to the health of Fox Corp.
“We feel we’re in a good place to work with them as our most important partner,” Murdoch said.
Best of Variety
- How Does Oscar Voting Work?
- Oscars 2020 Predictions: Who Will Get Nominated?
- The Best Music Books of 2019 (a Lot of Them, Anyway)