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Fox Q2 Income Falls 42%

2 Feb, 2011 By: Erik Gruenwedel

20th Century Fox Studios Feb. 2 reported second-quarter (ended Dec. 31) operating income of $189 million, down 42% from operating income of $324 million during the previous-year period.

The studio, whose assets include 20th Century Fox Home Entertainment, said the decline was largely due to unfavorable comparisons with home entertainment revenue from Ice Age: Dawn of the Dinosaurs during the previous-year quarter compared to Predators and pay-TV revenue from Avatar in the quarter.

Revenue during the quarter topped $1.8 billion, down 4.7% from revenue of $1.898 billion last year, undermined in part to underperformance of select titles at the box office, company management said during a call with analysts.

Studio parent, News Corp., said filmed entertainment results wouldn’t fare any better during the current third quarter (which ends March 31) due to prior-year comparisons with Avatar, which generated 75% of worldwide box office revenue during the period. The James Cameron-directed epic went on to become the top grossing theatrical release in history.

“The film business was not a year to remember, but that is the nature of the business,” News Corp. president and COO Chase Carey said in the call.

Carey said Avatar 2 and Avatar 3 would be Cameron’s next two films.

The executive said ongoing efforts to launch “TV Everywhere” platforms by cable operators and satellite operators is a good thing, despite challenges he believes some cable operators are imposing.

“Authentication is a good thing if it gets some traction,” Carey said, adding that after two years there has been more talk than action. “We would like to see it succeed.”

Carey said premium VOD is “very important” to Fox, provided it doesn’t encroach upon the theatrical experience. He said Fox would likely enter the space during the first half of the year.

When asked about the burgeoning influence of Netflix as both a competitor to pay-TV channels and buyer of content, Carey said Fox has purposely restricted license deals to older catalog product instead of selling newer content to the lowest common denominator.

“I think the Starz deal with Netflix is an example of product being sold beyond cheap,” Carey said. “We’ve been pretty judicious with Netflix because we value our product very highly.”

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