Twenty-First Century Fox gains as cable revenue rises 10%

Fox is pricey, real pricey right now: Pro

Twenty-First Century Fox said Wednesday its cable business posted its "highest earnings ever" in the fiscal third quarter.

Executive chairmen Rupert and Lachlan Murdoch said in a statement that double-digit growth in domestic affiliate revenue helped drive strength in its cable division.

Fox's cable unit reported revenue of $4.42 billion, topping a StreetAccount consensus estimate for $4.39 billion. That represents nearly 10 percent year-over-year growth for Fox's cable network programming.

Here's what each business unit reported in revenue compared with what analysts expected, according to StreetAccount consensus estimates:

  • Cable network programming: $4.42 billion vs. $4.39 billion expected
  • Television: $1.15 billion vs. $1.25 billion expected
  • Filmed entertainment: $2.24 billion vs. $2.19 billion expected

The Murdochs said Fox is creatively "firing on all cylinders." They said they expect continued momentum with the upcoming release of "Deadpool 2."

Fox's earnings come as investors look for updates on a pending sale of most of the company. In December, Fox's board approved Disney's $52 billion stock bid to acquire Fox assets including television and film studios, cable channels including FX and National Geographic, and 22 regional sports networks.

While Disney Chairman and CEO Bob Iger said he's confident that the Fox deal would close, Comcast is interested in those same parts of the Murdoch media empire. CNBC reported Monday that Comcast plans to make a competing all-cash bid for Fox if the Justice Department approves AT&T's acquisition of Time Warner.

In a Wednesday call with analysts, the Murdochs declined to comment on "a further offer" for Fox assets.

If a sale is completed, Fox would also shed its stake in Hulu and international properties Star India and Sky. Fox has a 39 percent stake in U.K.-based satellite broadcaster Sky and is trying to win regulatory approval to buy the 69 percent it does not currently own.

In its Wednesday release, Fox said it remains committed to that bid and expects regulators to sign off on the deal. Fox emphasized that Comcast has "just begun its regulatory process" and that it's "reasonable" for Comcast to go through a "robust regulatory review."

Fox's management is said to believe that a smaller company focused on news and sports would be more competitive in the current media landscape.

Fox News has dominated Nielsen ratings, consistently ranking as the most watched cable news network in America. And Fox Sports said in January it would pay more than $3 billion to broadcast "Thursday Night Football" for five seasons.

CNBC previously reported that fear of being outspent on content was one of the main reasons Murdoch considered selling much of Fox. Tech giants like Netflix and Amazon have committed billions to licensing and producing content for their streaming services, making the bidding wars increasingly competitive.

Keeping up with Silicon Valley-style cash burn requires a certain footprint that Fox doesn't have. In November, CNBC also reported that Fox's senior management didn't see a way to gain the necessary scale through acquisition.

Here's how the company did on the top and bottom line compared with what Wall Street expected:

  • Adjusted earnings: 49 cents per share vs. 53 cents per share forecast by Thomson Reuters
  • Revenue: $7.42 billion vs. $7.40 billion forecast by Thomson Reuters

In the year-ago quarter, Fox reported adjusted earnings of 54 cents on $7.56 billion in revenue.

Shares of Fox made slight gains in extended trading.

— CNBC's David Faber and Alex Sherman contributed reporting

Disclosure: Comcast is the owner of NBCUniversal, parent company of CNBC and Comcast is also a co-owner of Hulu.


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