21st Century Fox hit by lack of blockbusters

Rupert Murdoch, executive chairman of 21st Century Fox, founded Sky Television nearly 30 years ago

Profits at 21st Century Fox dipped in the first three months of the year, weighed down by flat cable advertising and less successful movie releases.

The Rupert Murdoch-controlled firm said profits fell 5% to $799m (£617.7m) compared with the same period in 2016.

But executives were upbeat, pointing to rising revenues and its bid to take full control of Sky, the European satellite broadcaster.

The deal should close this year, they said.

21st Century Fox already owns about 39% of Sky and its £11.6bn bid to take over the firm entirely is under review by UK regulators. European regulators have already signed off on the deal.

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"We remain confident the proposed transaction will be approved by the end of the calendar year following a thorough review process," said executive chairmen Lachlan and Rupert Murdoch.

Total revenue at 21st Century Fox increased almost 5% in the quarter to $7.56bn (£6.18bn), helped by demand for advertising during the Superbowl championship.

But profits felt the pinch from the absence of cricket broadcasts in India and the lack of a big box office hit, such as Deadpool, for its film studio. The surprise success of the film, starring Ryan Reynolds, powered film profits in the first quarter last year.

Advertising at its US cable networks was also flat.

Dozens of advertisers abandoned the conservative Fox News channel this year amid allegations of sexual harassment and mismanagement, an issue that led to the departure of former chairman Roger Ailes and its highest-rated presenter, Bill O'Reilly.

Concerns about conduct at Fox News were also recently raised as part of the UK review of the Sky bid.

Asked about the changes at Fox News, company executives said they believed the channel was in good shape, pointing to high ratings, among other factors.

Three of Fox News' senior male staff have recently left the company after allegations of sexual harassment and mismanagement.

They attributed the fall in growth for advertising revenue at its cable operations to a poor performance for its National Geographic brand.

Fox had warned that growth in the first three months of the year would slow, but shares still fell modestly in after-hours trading in New York.

Analysts appeared to accept the firm's explanations for its figures.

Tuna Amobi at CFRA Research wrote in a note that the results "were mainly constrained by tough film comparisons".

21st Century Fox has spent about $45m related to the sexual harassment litigation in the nine months to March, it said in a filing with the US Securities and Exchange Commission. Settlements or future claims related to the suits are not expected to have a "material impact" on its finances, the company added.

The Murdoch family controls a large media empire. Its News Corp, which was spun out of 21st Century Fox in 2013, owns major newspapers in the UK, Australia and the US, including the Sun, The Times and the Wall Street Journal.