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Cable, television driving modest gains at Fox

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Cable, television driving modest gains at Fox

21st Century FoxInc. saw a 6% year-over-year increase in revenue for the quarter, drivenby gains in the Cable Network Programming and Television segments, meeting expectationsfrom the Street and setting up the network for the rest of the 2016 fiscal year.

Revenue came in at $7.23 billion for the fiscal third quarterended March 31, marking a 6% year-over-year increase from $6.84 billion in the year-agoquarter. Revenues from advertising and affiliate in the Cable Network Programmingand Television segments drove the growth. Foreign exchange headwinds impacted revenuegrowth by $204 million.

One highlight for the quarter came from the company's film studio,which saw the second strongest quarterly earnings in the company's history thanksto the comic antihero movie "Deadpool."

Quarterly OIBDA clocked in at $1.88 billion for the quarter,up 12% from $1.68 billion in the prior-year period, driven by the Filmed Entertainmentand Cable Network Programming segments.

Executives also confirmed the network is working with on a "reimagined videoexperience" for consumers. The company, like many others, is moving to adaptin the age of cord cutting and OTT. Asked what the expected ad load would be foronline streaming, CEO James Murdoch declined to provide specifics but painted abullish portrait of the model.

Murdoch added that he could not predict ad load going into thefuture but mentioned that consumers are gravitating toward an ad-free option bypaying a premium.

"In a streaming environment, the real opportunity here isto have better pricing and more targeting, which allows us to continue to lowerthe ad load," he said.

Another highlight for the quarter came from the Cable NetworkProgramming segment, which saw FOXNews Channel (US) come in first among basic cable networks for the firsttime. Prime-time ratings were up 35% year over year for the quarter, executivestold analysts.

The segment led the way in revenue with $3.94 billion for thefiscal third quarter, up from $3.59 billion in the 2015 fiscal third quarter. ByOIBDA standards, the segment saw a 12% year-over-year increase to $1.38 billionthat was driven by increases in affiliate revenues and advertising revenue. Therewas a 9% increase in expenses for the segment linked to the cost of political coverageas well as marketing and programming costs at FX Network (US).

The Television segment reported $1.30 billion in revenue, upfrom $1.24 billion in the year-earlier quarter. Executives attributed the increaseto strong growth in retransmission consent revenue and political spending that ledto higher spending at TV stations. In terms of OIBDA, the segment clocked in at$125 million, down from $141 million in the year-ago period and attributed to highercontractual sports programming costs.

Despite the boost from "Deadpool," the Filmed Entertainmentsegment saw a year-over-year decline, with revenue clocking in at $2.32 billionfor the March quarter, down from $2.39 billion a year ago. Executives attributedthe decline to lower revenues in worldwide home entertainment and television productionas well as a 3% foreign exchange rate fluctuation. The segment's OIBDA saw a year-over-yearincrease of 23%, jumping to $470 million from $382 million a year ago. They alsonoted foreign exchange had a 13% adverse affect on the segment.

Looking at the 2016 fiscal year, Senior Executive Vice Presidentand CFO John Nallen projected the company to see flat- to low-single-digit year-over-yearOIBDA growth compared to the 2015 fiscal year.

Net income attributable to 21 Century Fox stockholders came inat $841 million, or 44 cents per share, compared to year-ago attributable incomeof $975 million, or 46 cents per share. Quarterly income from continuing operationsattributable to stockholders came in at $844 million, or 44 cents per share, downfrom $990 million, or 47 cents per share, in the prior year. Excluding the net incomeeffects of other considerations, net gains and other adjustments related to and Endemol Shine, adjustedquarterly earnings per share from continuing operations attributable to stockholderswas 47 cents, compared to 42 cents in the year-ago third quarter.

The S&P Capital IQ consensus normalized EPS and GAAP EPSestimate for the just-ended quarter were both 47 cents.