By Maria Armental
21st Century Fox Inc.'s quarterly profit nearly doubled as its cable-television and film units posted significant gains, overcoming a subdued performance in the broadcast-TV unit.
The results come as Fox looks to close a $71 billion sale of entertainment assets to Walt Disney Co. Disney has agreed to purchase assets including Fox's film and television studios as well as media company Star India and European pay-TV giant Sky PLC. Disney, which initially agreed to buy the Fox assets in December, raised its offer following a bidding war with Comcast Corp.
The cable networks unit, home to Fox News and the Fox Sports 1 network, drove the quarter's results with an 11% increase in domestic affiliate fee revenue, which is the money collected from pay-TV distributors to carry Fox's channels. Operating income before depreciation and amortization rose 12%.
The filmed entertainment division, which includes the Twentieth Century Fox studio, swung to a $289 million operating profit, helped by the theatrical release of "Deadpool 2" from a year-earlier loss of $22 million.
The broadcast-TV unit, which includes the Fox broadcast network, continued to struggle with a 23% drop in operating profit, though revenue rose 14%, boosted by the broadcast of the FIFA World Cup.
For the fourth quarter ended June 30, Fox reported profit of $920 million, or 49 cents a share, compared with $476 million, or 26 cents a share, a year earlier. Excluding certain items, the company's profit from continuing operations was 57 cents a share, up from 36 cents a share a year earlier.
Fox's revenue rose 18% to $7.94 billion from a year earlier. Analysts surveyed by Thomson Reuters had projected 54 cents a share in adjusted profit and $7.56 billion in revenue.
Disney would become a majority owner of streaming-video service Hulu if the Fox deal closes. On Wednesday, Fox reported its equity investment in Hulu, whose owners also include Comcast's NBCUniversal, resulted in a loss of $127 million in the June quarter, compared with a year-earlier loss of $54 million.
Control of Sky remains an open question. Fox is seeking to purchase the 61% it doesn't already own, but Comcast has submitted a higher offer valuing Sky at GBP25.9 billion ($33.5 billion), or GBP14.75 a share. The jockeying and bidding could continue in coming weeks.
Executive Chairmen Rupert Murdoch and Lachlan Murdoch highlighted Fox's financial performance in the year ended June 30 as the company moves closer to completing the Disney deal and establishing the new Fox.
"We delivered financial and operational momentum, including four consecutive quarters of double-digit domestic affiliate gains, one of the strongest six-month periods ever for our film studio, and continued dominance in live sports and news," they said in a statement.
Lachlan Murdoch, Rupert Murdoch's oldest son, is slated to become chief executive of the "new" Fox if the Disney deal goes through. He would also serve as chairman with his father. The new Fox would include assets such as the Fox broadcast network, Fox News and the FS1 network.
Meanwhile, James Murdoch, Lachlan's younger brother and CEO of 21st Century Fox, isn't expected to move to Disney if the deal closes, The Wall Street Journal has reported. He is expected to strike out on his own, likely by starting a venture-capital fund.
21st Century Fox and News Corp, parent company of The Wall Street Journal, share common ownership.
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