The costs of investing in sports chipped away at Fox’s profit in the company’s second quarter, as the owner of Fox News Channel and Fox Sports said cash flow was eroded by higher rights fees for the live matches that have helped it endure a difficult climate for media companies more readily than some of its competitors.
Fox Corp. said revenue in its second quarter rose 2%, or $104 million, to $5.18 billion, due in part to upticks in revenue for distribution and advertising.
But net income attributable to shareholders dipped to $229 million, or 52 cents per share, compared with $373 million, or 81 cents a share in the year-earlier period. Fox indicated that revenue in the quarter was “more than offset by higher expenses” which were due primarily “to higher sports programming rights amortization and production costs, and higher digital marketing costs.”
Fox Corp. in recent years has served as a model for the rest of the media sector, divesting itself of cable networks and studio assets and focusing primarily on live programming tied to news, sports and special events. Others have followed, with Comcast recently spinning off a passel of cable networks from NBCUniversal into a new stand-alone entity called Versant, and Warner Bros. Discovery planning to separate its streaming and studio assets from its traditional TV properties.
But the focus on live events and sports comes with challenges. Such things come at a cost, and a growing one. Demand by TV networks for live sports rights have spurred many leagues to push their fees higher, most notably the NFL and the NBA.
Revenue dipped slightly in Fox’s largest business segment, traditional TV, falling to $2.94 billion fro=m $2.96 billion in the year-earlier period. Advertising, Fox said, was essentially flat, with extra post-season Major League Baseball games and digital growth from its Tubi streaming service “offset by lower political advertising revenues and lower ratings.” Distribution revenue rose !%, or $7 million. Cash flow in the segment fell largely due to “higher sports programming rights amortization and production costs and higher digital content costs,” the company said.
The company’s cable operations saw a revenue increase of 5%, or $110 million, to $2.28 billion. Distribution revenue rose 5%, or $54 million. Advertising revenue rose 7%, or $31 million. Cash flow improved, but was offset by higher expenses tied to sports programming, Fox said.
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