On his first earnings call as CEO of 21st Century Fox, a company built by his father Rupert Murdoch, James Murdoch laid out his priorities.
“As we begin a new fiscal year, we're very pleased with where the business is, but of course, there's a lot of work to be done,” James Murdoch said.
He summed up what he wants 21 Century Fox’s approach to be. “We're very focused on applying all of our enterprise to creating with our partners a great experience where our programming is available, discoverable and accessible in the way that today's and tomorrow's customer expects and deserves,” he said.
He described three key aspects of the company.
“First and foremost, as a creative company, we're focused on great storytelling across the business,” he said.
“Secondly, and at the crux of the changes in our industry, we have to make sure those stories get to our customers in the most effective and compelling way possible,” he added.
“Thirdly, we recognize and we relish our position as a global company with diverse and deep assets across the globe. We'll continue to focus on selective, deep growth in markets that really matter,” he concluded.
There are some things that will be worked on right away. “Looking forward over those next 12 months, our main focus will be on execution, particularly in the areas of creative excellence, digital, video and advertising capabilities, and channel distribution,” he said.
But those 12 months won't be easy.
The company also announced it was lowering its guidance for 2016 earnings to mid-single digit growth.
"Fiscal 2016 is projected to be a year of continuing strong growth at our cable segment challenging comparisons at our film segment due to the timing of major releases and a continuation of the programming and marketing initiatives in support of ratings recovery at the television segment,” said CFO John Nallen.
Nallen said 21st Century Fox’s cable segment will lead the fiscal 2016 growth, driven by low double-digit affiliate fee increases led by the U.S. “As we've commented on previously, our rate of expense growth will moderate in fiscal 2016 to about half the high teens rate experienced in the previous two fiscal years,” he said.
“Turning to the television segment, we're expecting a double-digit increase in retransmission consent revenues, while ad revenues are expected to be in line with fiscal 2015. Expenses are anticipated to increase in the mid-single digit range, led by planned increases in our national sports contracts and by slightly higher marketing investments at the Fox Network to support new series. As a result, we expect overall television EBITDA to be essentially flat with fiscal 2014," he said.
“So as we roll it all up and based on all the assumptions inherent in our projections, we are anticipating total company segment EBITDA percentage growth rate for fiscal 2016 to be in the mid-single digit range above the $6.49 billion base level for fiscal 2015," he said.
Nallen noted that six months ago, the company said it expected earnings to be higher, in the mid-$7 billion range. “The primary factors causing this change have been noted publicly, including headwinds from foreign exchange and film releasing timing, further sports and digital investments in India to support long-term growth and an updated view of the ad markets,” he said.
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