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Chase Carey: 'No Silver Lining' to Fox’s Reduced Q2 Profit

6 Feb, 2014 By: Erik Gruenwedel

21st Century Fox COO Chase Carey

A subdued Chase Carey, COO of 21st Century Fox Inc., Feb. 6 said theatrical results from 20th Century Fox Studios through the first six months of the fiscal year (ended Dec. 31, 2013), in addition to lower political advertising on TV stations, and viewer ratings, led by declines at “X Factor,” would negatively impact corporate results going forward.

Twentieth Century Fox Studios reported second-quarter operating income of $337 million, which was down about 20% from operating income of $424 million during the previous-year period. Revenue increased 6% to more than $2.4 billion.

“Our film company had a difficult first half of the year,” Carey said in the fiscal call. “I don’t want to try and put a silver lining on the results. We’re disappointed. But this business will always have its ups and downs.”

Carey said he looked forward to Fox’s upcoming theatrical slate, which includes Rio 2, X-Men: Days of Future Past and Dawn of the Planet of the Apes, among others.

The studio, which includes 20th Century Fox Home Entertainment, said the decline in operating income was due to lower theatrical revenue comparisons with the worldwide theatrical performance of Taken 2 and the home entertainment performance of Ice Age: Continental Drift in the prior-year period.

In addition, the studio incurred higher theatrical release costs related to the worldwide theatrical releases of The Secret Life of Walter Mitty and Walking With Dinosaurs in December.

Quarterly revenue increased $153 million, primarily reflecting growth at the television production businesses, led by the syndication of “Modern Family,” higher revenue from “Homeland” and higher SVOD revenue led by “The Killing.”

Indeed, Netflix inked a deal with Fox to produce a fourth and final season of “The Killing” after previous broadcaster, AMC Networks, declined to continue the dark thriller.

The quarterly results also reflect the worldwide theatrical release of The Counselor and the home entertainment performance of The Heat.

Finally, James Murdoch, deputy chief operating officer at 21st Century Fox, was asked if Netflix’s speculated move into Germany (and France) would disrupt Sky Deutschland’s Snap subscription VOD service and other on-demand platforms. Fox owns satellite TV operator Sky Deutschland.

Murdoch said Germany remained a competitive market for video distribution, with several free satellite and IPTV services in operation (including Amazon’s LoveFilm Instant).

“Germany’s a very big market, and we’ve shown over the last few years that you can increase your revenue per customer there, and attract new customers,” Murdoch said. “Sky Deutschland has a momentum to it that is very encouraging.”

About the Author: Erik Gruenwedel

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