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Joshua Cho
Rupert Murdoch's Fox Entertainment Group and parent company News Corp. last week announced results for the year ending June 30, 1999.
The recently public Fox Entertainment Group, which consists of News Corp.'s film and television production and distribution business, 22 owned and operated television stations and cable networks, last week reported full year operating income before depreciation and amortization (EBITDA) of $1.03 billion. This represents a 14% increase over the previous year's $906 million, on revenue of $8.1 billion. EBITDA for the fourth quarter was $246 million, up 30% from $189 million on a year-over-year basis.
Net income for the year came in at $205 million, or 33 cents per share, compared to $176 million, or 32 cents per share, in the previous year. Net income in the fourth quarter was $35 million, or 5 cents per share, compared with $3 million, or 1 cent per share, on a year-over-year basis. According to an average of analyst estimates compiled by First Call Corp., the company missed both those targets by one penny.
"In fiscal 1999 almost all of our businesses reported record results. Just as importantly, most of our divisions achieved significant operating milestones that further strengthened their leading market positions," said Rupert Murdoch, chairman/CEO, in a company issued statement.
The company attributed much of its gains to record sales of the home video Titanic, which sold 57 million units during the year.
Fox's parent company, News Corp., reported flat pro forma operating income of $392 million and $1.61 billion for the fourth quarter and fiscal year, respectively.
The company said it reported an abnormal loss of $224 million in the fourth quarter due primarily to BSkyB's transition to digital set-top boxes.
In other earnings news, a number of cable operators both big and small reported the results of their respective quarters.
Last week, Middletown, N.Y.-based Mediacom LLC said it had double-digit increases in second quarter revenues and EBITDA. Revenues for the quarter increased by 11.2% to $38.2 million from $34.1 million on a year-over-year basis. EBITDA came in at $16.6 million for the quarter, representing a 13.2% increase over the $14.7 million reported in the second quarter of last year.
For the first half of this year, Mediacom said it spent approximately $35.9 million to upgrade its plant to 750MHz two-way architecture required for advanced services. The company plans to spend $66.0 million this year for those upgrades. And like the rest of the industry, Mediacom said it was aggressively launching digital services over that portion of its network that was already upgraded.
"To date, we have launched digital television in three markets and are pleased with the early results," said Mediacom chairman/CEO Rocco Commisso in a statement. "By March 2000, we expect to have digital television in front of 250,000 homes passed."
Mediacom is in the process of acquiring systems owned by Triax Midwest Associates L.P. and Zylstra Communications Corp. for an aggregate purchase price of $761.5 million. Giving effect to those deals, the company said it would serve more than 725,000 cable and Internet customers in 21 states.
Also last week, Avalon Cable Television, which is in the process of being acquired by Paul Allen's Charter Communications Inc. for $845 million, said that it had second quarter revenues of $27.2 million and EBITDA of $11.7 million. The company also stated that it had a total of 248,945 customers at the end of the quarter.
"The quarter ... finished in line with our projections. We anticipate continued subscriber growth in the remaining half of 1999," said Avalon president/CEO Joel C. Cohen.
Avalon's two main systems are located in Michigan, with around 234,000 customers, and the New England region, with some 25,000 customers.
Cablevision System Corp. also recently announced earnings for the second quarter ended June 30, 1999 that were in line with analyst expectations. The MSO reported pro forma net revenues of $941.3 million, an increase of 15% over the same period of 1998. Pro forma adjusted operating cash flow was $254.0 million, up 12% on a year-over-year basis.
The company attributed its double-digit gains to strengths in cable system operations, commercial telephone business, cable networks and Madison Square Garden. The Wiz retail electronics stores continued to put a drag on the company's cash flow, posting an adjusted operating cash flow deficit of $5.5 million for the second quarter and a deficit of $16.8 million for the first half of this year.
In cable alone, Cablevision posted second quarter adjusted operating cash flow of $215.0 million, an increase of 9.2% on a year-over-year basis. Basic customers grew by 2.7% when comparing periods.
SG Cowen analyst Gary Farber believes that the company will continue to see double-digit growth long term, particularly from its New York systems, by offering bundled services, which will be hedged by content ownership through its Rainbow programming arm.
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