Twenty-First Century Fox Inc (Nasdaq: FOXA) reported a mixed fiscal third quarter, beating consensus revenue estimates but falling short on earnings per share. The stock traded slightly higher on Thursday morning following the report as investors turned their attention to a potential bidding war for Fox’s movie and TV assets.
Fox on Wednesday reported third-quarter adjusted EPS of 49 cents, below consensus analyst estimates of 53 cents. Fox reported revenue of $7.42 billion, slightly above consensus expectations of $7.40 billion. Revenue was down 1.9 percent from a year ago.
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Despite the lackluster earnings number, Fox said its cable business reported record earnings. Third-quarter cable revenue was $4.42 billion, above consensus estimates of $4.39 billion.
Television revenue declined from $1.69 billion to $1.14 billion and missed consensus estimates of $1.25 billion. Filmed Entertainment revenue also declined to $2.24 billion from $2.25 billion but beat analyst expectations of $2.19 billion.
“We continue to make operational and financial progress against near-term objectives as we also work to close our strategic transactions,” executive chairmen Rupert and Lachlan Murdoch said in a joint statement. “Our cable segment delivered its highest earnings ever in our fiscal third quarter, propelled by sustained double-digit gains in domestic affiliate revenues.”
In December, Walt Disney Co. ( DIS) made a $52 billion stock bid to acquire most of Fox’s TV and movie studio assets. This week, Comcast Corp. ( CMCSA) reportedly said it is planning to make a competing all-cash bid for Fox’s assets if regulators approve the pending AT&T ( T) buyout of Time Warner ( TWX).
For now, the outlook for Fox, Disney and Comcast is up in the air, but B. Riley FBR analyst Barton Crockett says there is a potential win-win-win scenario.
“To us, the most logical outcome is detente, with Disney perhaps buying Comcast off by offering it Sky,” Crockett says.
In the meantime, Crockett says Disney investors should consider hedging their bets by buying FOXA stock.
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“There is clearly risk here of a bidding war, which is one reason why we recommend Fox as a way to obtain Disney exposure, to hedge the bidding war risk,” Crockett says.
B. Riley has a “buy” rating and $46 price target for FOXA stock.
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Good and Bad Results for Twenty-First Century Fox Inc (FOXA) Stock originally appeared on usnews.com
