By Maria Armental
This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (August 10, 2017).
Higher fees for the Fox News, FX and sports cable networks lifted revenues for 21st Century Fox Inc. and helped offset weak performances from the Fox Broadcasting and film units in the most recent quarter.
The cable networks unit reported a 10% gain in the fees pay-TV distributors pay to carry the channels compared with the same period a year ago. Domestic advertising revenue was up 6%, driven by higher ratings at Fox News and price increases at National Geographic, even as Fox Sports 1 and the regional sports networks carried fewer marquee events.
The importance of news and sports to 21st Century Fox was emphasized by Co-Executive Chairman Lachlan Murdoch, who told analysts that news and sports account for more than half the company's advertising revenue. Advertising brought in $8 billion in the fiscal year ended in June.
The picture was bleaker at 21st Century Fox's broadcast network and film studio.
At the studio, filmed entertainment swung to an operating loss of $22 million, which was attributed to a decline in home entertainment revenues and higher marketing costs for summer movies including "War for the Planet of the Apes."
Fox Broadcasting, which has been mired in a ratings slump for a few years, experienced a drop in ad revenue that was partially offset by an increase in the fees distributors pay to carry the Fox-owned television stations.
Overall, the company modestly beat analysts' earnings estimates and fell just shy of revenue projections.
Net income for 21st Century Fox fell to $476 million, or 26 cents a share, in the quarter. Excluding restructuring charges and other items, profit fell to 36 cents a share from 45 cents a share a year earlier, when results included a tax benefit of 7 cents a share.
Revenue rose to $6.75 billion, from $6.65 billion a year earlier.
Analysts surveyed by Thomson Reuters had projected adjusted profit of 35 cents a share on $6.77 billion in revenue.
The Wall Street Journal parent News Corp and 21st Century Fox share common ownership.
The results come as 21st Century Fox seeks to buy the shares of British TV giant Sky PLC it doesn't already own. The deal remains under review in the U.K. On a conference call with analysts, 21st Century Fox Chief Executive James Murdoch said he expected approval to come in the first six months of next year.
Fox News turned in a strong financial performance, despite the turmoil inside the network over the past year.
The network continues to deal with lawsuits and accusations of sexual harassment and racial discrimination that have led to several high-level departures, both in front of the camera, such as host Bill O'Reilly, and in the executive suites, including that of its former chief executive, Roger Ailes. Mr. Ailes and other individuals accused have denied the allegations; Mr. Ailes died in May. Fox hired a law firm to investigate the claims and has said it is cooperating with a federal probe related to the allegations.
In a memo to employees released with its earnings announcement, James and Lachlan Murdoch said the company is "committed to being an organization where anyone, from anywhere, feels welcome and can thrive."
For the nine months through March 31, the company disclosed $45 million in costs related to settlements and legal expenses following Mr. Ailes's July 2016 departure.
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