Twenty-First Century Fox (NASDAQ:FOXA) is expected to report second-quarter fiscal 2019 results soon.
Investors should note that the majority of Twenty-First Century Fox’s film and television assets will be acquired by Disney (NYSE:DIS) in a cash-and-stock deal worth $71.3 billion. The acquisition is expected to close in the first half of calendar year 2019. Following the acquisition, a new entity called Fox Corporation will be formed, which will host an array of sports, news and entertainment content from the likes of FOX Sports, FOX News, FOX Network and FOX Television Stations.
Estimate Revision Trends
The company’s earnings beat the Zack Consensus Estimate in two of the trailing four quarters, delivering average positive surprise of 3.6%.
In fiscal first-quarter 2019, adjusted earnings increased 6.1% from the year-ago quarter to 52 cents per share. Revenues increased 2.5% from the year-ago quarter to $7.18 billion.
Notably, the Zacks Consensus Estimate for second-quarter fiscal 2019 earnings has remained stable at 31 cents per share over the past seven days, indicating a decline of 26.2% year over year.
Nevertheless, the consensus mark for revenues, which is pegged at $8.6 billion, indicates 6.8% year-over-year increase.
Twenty-First Century Fox, Inc. Price and EPS Surprise
Twenty-First Century Fox, Inc. Price and EPS Surprise | Twenty-First Century Fox, Inc. Quote
Let’s see how things are shaping up for this announcement.
Key Factors to Consider
Fox is increasingly focusing on enhancing its live programming portfolio, which is a positive. The company being the exclusive national broadcast partner for Major League Baseball (MLB) since 2001 is expected to gain from the popularity of the sport.
Notably, baseball continues to have strong primetime ratings in the television space per Nielsen. This is expected to command more ad dollars for commercial slots, eventually boosting advertising revenues. Moreover, in second-quarter fiscal 2019, Fox inked a seven-year deal with MLB extending the current deal, which ends in 2021. Additionally, the deal will extend Fox Sports’ digital, streaming, social media and highlight rights as well.
Fox is also expected to benefit from its content strength. This is evident as Facebook (NASDAQ:FB) acquired streaming rights to all episodes of Buffy The Vampire Slayer, Angel, and Firefly in the soon-to-be reported quarter. Additionally, Facebook signed a deal with Fox to launch news shows on its platform, which is a positive.
Further, Fox News was the most watched cable network for the third consecutive year by both primetime and total day viewers in 2018, per Nielsen Media Research. Additionally, Fox Business Network had the most Business Day viewers in 2018, its second consecutive win over CNBC. We believe that Fox’s growing focus on sports along with the popularity of its networks may aid second-quarter fiscal 2019 top-line growth.
However, intensifying competition from Amazon (NASDAQ:AMZN) , Facebook and Twitter in the sports event broadcasting space is a concern for Fox. While Facebook and Twitter have deals with MLB among others, Amazon has an array of sports content including National Football League (NFL) and National Basketball Association (NBA) games. Moreover, higher spending from media and streaming companies may increase Fox’s programming related costs.
Fox currently carries a Zacks Rank #3 (Hold).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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