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21st Century Fox Has Lower Earnings

21st Century Fox reported lower profits in its first quarter despite a strong performance from its cable network group. Its movie business was down and broadcast continued to struggle.

Net income fell to $675 million, or 34 cents a share, in the quarter ended Sept. 30, from $1.037 billion, or 47 cents a share.

The year ago income included asset sales by BSkyB.

Revenues were down 6% to $6.08 billion because of lower film revenues, foreign exchange rates and the absence of revenues from Shine, which was spun off.

“Our cable networks business generated strong growth in the first fiscal quarter, delivering double-digit earnings gains both domestically and internationally on sustained increases in overall affiliate fees, higher advertising revenues and lower expenses,” said executive chairman Rupert Murdoch.

“Our quarterly results also reflect the expected impact of challenging comparisons for our film studio due to the timing of key releases, as well as the poor performance of The Fantastic Four,” he said.

Murdoch said “good progress is being made at the Fox Network both from our returning series, including the continued success of Empire, as well as some of our new series. We are focused on creating compelling storytelling and enhancing the customer experience of our digital video brands as we respond to changing consumer preferences.”

Operating income for 21st Century Fox’s Cable Network Programming segment was up 26% to $1.31 billion. Revenues were up 7% on affiliate growth and higher ad revenues as expenses declined.

Domestic operating income rose 19%, driven by FS1, FX Networks and Fox News. Domestic affiliate revenue rose 11% because of growth at FS1. Domestic advertising revenue grew 4%, thanks to the sports channels and Fox News.

Operating income for the Television Segment, which includes Fox Broadcasting, was up 13% to $196 million. Programming costs were lower at the Fox Broadcast Network and TV stations.

Revenues were flat as gains in retransmission revenues were offset by a 5% decline in advertising. Ad revenues were impacted by one fewer week of NFL broadcasts, lower political revenue at the stations and lower ratings at Fox Broadcasting.