Twenty-First Century Fox (NASDAQ:FOXA) is a diversified media and entertainment company. Shares of Fox declined in the wake of the company’s fiscal fourth quarter earnings report. The good news was continued strength in distribution revenues earned by its suite of Pay-TV networks around the world as well as a resilient ad market in the U.S. Unfortunately, Fox’s international ad revenues slowed considerably due to weakness in Northern Europe and India, rising only 1% in local currency after seven straight quarters of very strong, double-digit growth. Additionally, Fox’s three major summer film releases, X-Men: Apocalypse, Ice Age: Collision Course, andIndependence Day: Resurgence, all underperformed expectations. Moreover, management de-emphasized share repurchase within their capital allocation plans, preferring to preserve flexibility to either invest in the business organically (e.g., increasing investment in original content at the National Geographic channel) or to make acquisitions. Despite a more challenging international ad market and disappointing box office results, we continue to believe the underlying business is sound.
From Wallace Weitz (Trades, Portfolio)'s Partners Value Fund third-quarter commentary.
