Advertising Revenues Could Rule Fox Q4 Earnings

21^st Century Fox (NYSE:FOX) will report its Q4 results on August 03, 2016. We expect Fox to post better results compared to the same quarter last year. We estimate that the company’s cable networks account for more than 50% of its valuation, and therefore maintaining and growing ratings is critical. All of its networks have seen improvement in ratings this quarter. Fox News became the top most watched channel in the primetime spot  reflecting political ad spending amid presidential election campaign in the U.S. (Fox News Having Highest-Rated Year Ever; Tops Cable Primetime So Far, Deadline, June 28, 2016) The network performed better than its competitors MSNBC and CNN in terms of ratings. In addition, Fox Business Network nearly saw 100% growth in total day ranks and became the fastest growing cable news outlet this quarter. A similar trend was observed in Fox Sports ratings, which set a new record for its viewership of USA vs Ecuador Copa America quarterfinal match (FS1 sets record for viewership for USA vs. Ecuador Copa America quarterfinal match, Lagaxy, June 17, 2016).

The upfront sales season has been very good for Fox. The company sold most of its inventory with an increase of around 10% as compared to the past year (Fox Finishes Upfront Sales Strong Thanks to Interest in New Shows Like Lethal Weapon, Adweek, July 13, 2016). This could mean strong advertising revenues for latter part of the year.

The movie business could do well particularly, in terms of box office revenues with the release of X Men and Independence Day, which generated combined box office sales of around $900 million implying nearly 100% growth in total box office collection over Q4, 2015 (Box Office Mojo). These movies could boost the licensing business of the firm as they are strong franchisees.

Considering the strong quarterly trends and Presidential Elections in the U.S., we continue to remain positive on 21^st Century Fox. The table below shows our expectations for the company for 2016. We believe Q4, 2016 will results will reflect these expectations to a meaningful extent.

Have more questions about 21st Century Fox? See the links below.

• What’s 21st Century Fox’s Fundamental Value Based On Expected 2015 Results?
• By What Percentage Can 21st Century Fox’s Revenue & EBITDA Grow In The Next 3 Years?
• What’s 21st Century Fox’s Revenue & EBITDA Breakdown?
• How Important Are Cable Networks For 21st Century Fox?
• What’s The Revenue & EBITDA Breakdown For 21st Century Fox’s Studio Business?

Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com

2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for 21st Century Fox 

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