By Mark Hanrahan -
Shares in media conglomerate Twenty-First Century Fox dropped in after-hours trading Wednesday, as the company announced a cut in its profit forecast. It said a strong dollar and declining advertising revenue, linked to viewers shying away from its broadcast networks, would likely impact revenues.
Fox expects a profit in "the mid $7 billion range" for the financial year ending June 2016, Chief Operating Officer Chase Carey said after the company reported quarterly results. Fox had previously forecast 2016 profit of about $8 billion, Reuters reported.
"We anticipate the industry trends impacting advertising will be slightly larger than previously expected, as both advertising and viewership continues to migrate to digital platforms," Carey said on a conference call with analysts.
The profit warning put a damper on second-quarter results that had outperformed the expectations of analysts. Sales for the quarter ended Dec. 31 totaled $7.42 billion, buoyed by growth in pay-TV fees and its film studio, which led the U.S. in box office sales last year, taking $1.94 billion, according to Bloomberg.
The Fox broadcast network and stations suffered from weak ratings and a soft ad market. The company's television revenue was roughly flat at $1.62 billion, though operating income rose to $290 million from $218 million, helped by lower programming costs, the Wall Street Journal reported.
Internet-based video-on-demand services, such as Netflix and Amazon, have hurt the company's broadcast TV businesses, as viewers opt to watch content across an array of devices and in different timescales to those traditionally followed by television networks.
In addition some of Fox's scripted shows have seen weaker ratings in than in previous years, hurting ad revenue. Co-COO James Murdoch noted that the growth of streaming means Fox’s networks are competing “not only with what’s on at the same hour, but with everything that’s come before,” according to Deadline.com.