Nobody cared about 21st Century Fox’s September quarter financial results at 8:30 am Sydney time today — all the analysts wanted to talk about was merger, deal, sale and will it happen? In what turned out to be a miserly 30 minute telephone briefing, they got zilch as the Murdoch sons pulled up the drawbridge of communication.
Fox reported solid third-quarter results, with revenue climbing 8% to US$7 billion, ahead of Wall Street estimates, and adjusted net was 49 cents a share, down from 51 cents in the year-ago period with net profit for the quarter of US$920 million, up from US$888 million.
But that’s history and only money. If deals happen, we are talking about billions of dollars and big fat fees — so no wonder the analysts wanted to talk about deals etc. Lachlan and James Murdoch were on the analysts call, along with chief beancounter, John Nallen. Co-executive chair and dad Rupert was again a notable absentee — perhaps he was on the phone to bestie President Donald Trump in China and trying to talk him down from climbing the wall after he was rejected by those ungrateful voters in state and local elections in Virginia, New Jersey, parts of New Hampshire, Montana, Washington Sate and New York City.
So it fell to co-executive chair, Lachlan Murdoch, fresh from his failure to nab control of the collapsed Ten network in Australia (with Bruce Gordon), to run things and first off he nixed any chance of a discussion of this week’s shock story of sale talks with Disney by saying from the top of the phone talk that he and brother James would be following the company’s long held policy not talking about or commenting on speculation about corporate transactions.
You could have heard the collective sighs of frustration from the dozens of analysts, media and others on the line waiting to hear what the Murdoch sons would say about the Disney talks. But an American twanging Lachlan killed it dead. It was the same in the earnings statement with executive chairs Rupert and Lachlan Murdoch who said not a word about the Disney talks:
“The company’s double-digit gains in affiliate revenues demonstrate our strength in the dynamic global market for distinctive video brands and content, across both established distributors and new entrants. We delivered top-line growth at all of our businesses, backed by stand-out storytelling, sports and news, as well as a product focus that will drive greater consumption and compelling opportunities for financial returns on our content investment. Our solid first quarter performance puts us on track to achieve our overall financial and operational objectives for this fiscal year.”
But the lack of any willingness to talk about Disney only confirmed that the talks had happened and that dismembering 21st Century Fox had at least been looked at by the highest levels of the Murdoch family company.
In his opening address though, Lachie did give it away by a couple of comments — he strongly defended Fox, saying “Fox has the required scale” to compete in media these days (answering comments that one reason for the sale talks that Fox no longer had the scale or the financial strength to compete with the likes of Amazon, Netflix, Apple and Google). He made another defence towards the end of his address saying “our businesses and brands are stronger than ever”. Brother James repeated his Lachlan’s admonition that there would be no commenting on the sale reports, but was willing to talk about being “excited about the coming years”.
But in the Q and A Mike Nathanson of leading US analysts, MoffattNathanson tried the sneaky non-deal question by asking the Murdochs if they were happy with the company’s current scale and mix and image as a “collector” of assets and would they be interested in changing strategy. James saw that one coming, protesting that Fox wasn’t a collector, but was “an operator and builder of businesses” to deliver value over the coming years. Fox he said had a “great set of brands, great set of assets that we really like” Lachlan agreed, saying “we have always been asset builders”. The Meccano Murdochs?
By the way — not a question or comment on the fate of Rupert’s friend, Saudi Prince Al-Waleed bin Talal, who was arrested in Saudi Arabia last weekend over claimed corruption charges, or the Prince’s departure from the fix share register after holding a stake of 4.92% a year ago. The Murdochs will face pressure next week to answer questions at the company’s annual meeting in Los Angeles, or you would hope someone might ask a question.