(Reuters) - Twenty-First Century Fox Inc cut its profit forecast for the next financial year after the dollar strengthened and as more viewers and advertisers swap its broadcast networks for on-demand TV.
Shares of the company, helmed by media mogul Rupert Murdoch, fell 6 percent to $32.57 in extended trading on Wednesday.
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.
“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.
Viewers have made drastic changes to the way they watch television, opting for on-demand content offered by Netflix Inc or Amazon.com Inc, which can be viewed on a array of devices from TVs to smartphones to tablets.
According to Trefis, a research company, ratings have been softer this season for scripted shows on Fox’s broadcast network, such as supernatural drama “Sleepy Hollow” and “New Girl”, a sitcom starring Zooey Deschanel.
Softer ratings will hit advertising revenues, a trend that is likely to be exacerbated by rising programming costs, Trefis said in a report published on Feb. 3. (bit.ly/1xkI2Fy)
Fox also joins a growing list of U.S. corporations to be hit by the strengthening of the dollar, which gained nearly 13 percent against a basket of currencies in 2014.
Carey said 2016 profit would take a $200 million hit from currency moves in addition to a $250 million hit that the company had already been anticipating.
Despite the gloomy outlook, quarterly profit came in ahead of analysts’ estimates, helped by higher affiliate and advertising revenue in the company’s cable business and the box-office success of “The Maze Runner” and “Gone Girl”.
Fox grossed a larger chunk of theater ticket sales from “The Maze Runner”, which was released in September, in the October-December quarter. “Gone Girl”, a thriller based on the novel by Gillian Flynn, has grossed about $368 million worldwide, according to Box Office Mojo.
Excluding items, the company earned 53 cents per share for the second quarter ended Dec. 31. Revenue fell to $8.06 billion.
Analysts, on average, had expected a profit of 42 cents on revenue of $7.36 billion, according to Thomson Reuters I/B/E/S.
Additional reporting by Jennifer Saba in New York; Editing by Saumyadeb Chakrabarty and Robin Paxton