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21st Century Fox beats estimates with Q4 earnings; expects Sky takeover to get UK approval

Fox boss James said his firm was still working with regulators to resolve their concerns and that the company still expects the takeover to be approved by the end of June
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A one-off tax gain helped to boost fourth-quarter profits

21st Century Fox Inc (NASDAQ:FOX) said it still expects the UK competition authorities to approve its £11.7bn takeover of UK broadcaster Sky PLC (LON:SKY), despite a provisional finding that the deal would not be in the public interest.

In an earnings calls with analysts, Fox boss James Murdoch said his firm was still working with regulators to resolve their concerns and that the company still expects the takeover to be approved by the end of June.

READ: Murdoch's Sky bid 'against public interest'

The UK competition watchdog’s provisional finding was that the deal should not get the green light because it would give Rupert Murdoch and his family – who have significant stakes in several UK media businesses – too much control over the UK media landscape.

The deal between Fox and Sky was originally reached over a year ago but it has been with the regulators ever since.

Adding to the complication is Fox’s deal to sell some of its assets, including its stake in Sky, to The Walt Disney Company (NYSE:DIS). That deal is also with competition authorities in the US.

Cable networks boost Q4 revenues

Murdoch’s comments came as Fox reported a 5% rise in revenues to US$8.04bn in the three months ended December 31, driven by a better than expected performance from its cable networks, including its flagship Fox News channel, which offset declines in broadcast television and film.

Profits more than doubled to US$1.83bn, or 99 US cents a share, thanks to a one-time gain from the tax reforms recently brought in by President Trump.

Excluding that US$1.34bn tax benefit and some other items, earnings fell to 42 US cents a share but came in ahead of analysts’ estimates of 38 US cents a share.

‘Solid growth’

“We delivered another quarter of solid top-line revenue growth including the further acceleration of gains in global affiliate revenues and despite challenging revenue comparisons for our TV segment,” said executive chairmen Rupert and Lachlan Murdoch.

“Looking ahead, we are focused on continuing to deliver value to our shareholders through achieving our near-term growth plans, completing our proposed acquisition of the balance of Sky, obtaining the required approvals for the successful completion of our transaction with Disney and planning for the exciting launch of the new ‘Fox’.

Fox shares inched 0.2% higher to US$36.12 in premarket trading.

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