Fox Entertainment Group Posts Lower Profits

Nov 3, 2004  •  Post A Comment

Fox Entertainment Group on Wednesday reported a 20 percent decline in fiscal first-quarter profit, hurt be equity losses from its interest in satellite operator DirecTV Group.

The results came as the Australian Federal Court approved FEG parent and controlling shareholder News Corp.’s plan to reincorporate to the United States. Shares in News Corp., which owns 81 percent of FEG, began trading Wednesday on the New York Stock Exchange, and the reincorporation transaction is expected to be completed by Nov. 12.

For its part, FEG booked a profit of $320 million for the three months ended Sept. 30, compared with a profit of $401 million a year ago.

The company blamed the decline on FEG’s share of losses taken in connection with DirecTV, which booked charges related to a reduction in value of a pair of satellites as well as a cut in the sale price for DirecTV’s PanAmSat unit following the failure of a PanAmSat satellite.

Revenue rose 5 percent in the quarter to $2.9 billion, driven largely by growth at the company’s cable networks and the Fox Broadcast Network.

Fox Broadcasting reported a narrowed operating loss in the quarter of $4 million, versus red ink of $37 million a year ago. The improvement came as Fox recorded higher advertising pricing and lower programming costs.

Fox Television Stations saw its operating income before depreciation and amortization remain flat year to year at $236 million, reflecting higher costs associated with the expansion of local news in several markets that offset lower entertainment programming costs.

At the cable unit, operating income before depreciation and amortization surged 44 percent to $206 million, driven by the absence of losses associated with the now-sold Los Angeles Dodgers baseball team as well as general growth at the cable channels.

That growth was led by Fox News Channel, which boasted a 58 percent increase in operating income amid higher advertising revenue and a 37 percent increase in prime-time ratings. Other cable nets, including FX, Speed Channel and the Regional Sports Networks, also posted strong operating income growth, at 45 percent.

News Corp. earned a fiscal first-quarter profit of $536 million, a 27 percent increase over last year’s figure of $422 million. Revenue advanced 12 percent to $5.2 billion.