Reduced Home Video Slate Undermines Fox Q2 Financials

8 Feb, 2016 By: Erik Gruenwedel

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Success can be a double-edged sword. Twentieth Century Fox found that out in the second quarter (ended Dec. 31, 2015) when it reported pre-tax income of $302 million, down $34 million from pre-tax income of $336 million in the previous record fiscal period. Indeed, Fox ended 2014 with the top domestic box office at nearly $1.8 billion.

The studio, which includes 20th Century Fox Home Entertainment, saw Q2 revenue drop $392 million to $2.36 billion, primarily due in part to lower worldwide home entertainment revenue. Specifically, the quarter’s comedy home video release Spy “failed” to measure up to retail sales of X-Men: Days of Future Past and Dawn of the Planet of the Apes in the previous-year quarter.

Spy, starring Melissa McCarthy, Jude Law and Jason Statham, sold $235.6 million worth of tickets at the global box office. It generated $18.2 million (1.2 million units) in combined DVD/Blu-ray Disc revenue (excluding digital) since its Sept. 29, 2015, retail release, according to The-Numbers.com.

By comparison, X-Men: Days of Future Past recorded nearly $58.6 million in revenue from more than 2.6 million discs sold. Apes generated $33.2 million in revenue from 2.1 million discs. The movies, which both ranked among the top 20 titles of 2014, were released into retail channels Oct. 14 and Dec. 2, 2014, respectively.

Fox added that lower TV productions in Q2, including the absence of contributions from successful series that concluded in the prior year, such as “Sons of Anarchy,” contributed to the decline in pre-tax earnings — as did a 14% negative impact from foreign exchange rate fluctuations. 

“While our film business is running behind our financial expectations, we feel good about our releases moving forward [i.e. Deadpool, Eddie the Eagle, X-Men: Apocalypse],” co-chairman Lachlan Murdoch said on the company's fiscal call.

The studio’s fiscal miss undermined somewhat the impact of Oscar-nominated The Martian, starring Matt Damon, which topped $605 million at the global box office. The film, which was Fox’s top theatrical title in 2015, was released into retail channels Jan. 16.

Murdoch said Oscar-nominated The Revenant, starring Leonardo DiCaprio, and Kung Fu Panda 3 (which Fox distributes for DreamWorks Animation) are doing well at the box office.

The CEO said Fox Television is producing 36 episodic shows on the current broadcast season. The recent revival of “The X-Files” generated 21 million viewers during its premiere on Jan. 24. That surpassed the original series’ most-watched season, according to Murdoch.

“Globally, ‘The X-Files’ reached an impressive audience of more than 50 million viewers across our international network of Fox-owned channels,” he said.

The executive reiterated that propriety programming helps Fox drive revenue via traditional and new distribution — the latter including pay-TV channels FX, FXX and Hulu Plus, which Fox co-owns with The Walt Disney Co. and Comcast.

“Developing and producing our own shows … is a priority for us,” he said.

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