Sputtering ‘X-Factor’ and weak films crimp Fox’s profit

Media company 21st Century Fox’s fiscal second-quarter profit was sliced in half, largely because big-ticket feature films landed with a thud at the box office and the broadcast network continues its uphill slog.

Fox’s television show “X-Factor” with Simon Cowell was a factor all right — a factor contributing to the dramatically lower earnings for the company controlled by Rupert Murdoch. The singing competition stumbled in the ratings, and Fox Chief Operating Officer Chase Carey warned analysts that Fox’s other competition tentpole, “American Idol,” was losing steam faster than the company had hoped.

“It’s a great show,” Carey said of “Idol.” “But it’s not a show that drives the whole network the way it did in the past. We know it’s coming to the end; it’s winding down.”

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The Los Angeles film studio had a lackluster quarter. It suffered due to higher costs to promote two December releases, “The Secret Life of Walter Mitty” with Ben Stiller, and “Walking With Dinosaurs.” Both failed to produce blockbuster ticket sales.

“The Counselor,” directed by Ridley Scott and featuring an A-list cast including Michael Fassbender, Penélope Cruz, Cameron Diaz, Javier Bardem and Brad Pitt, was a stinker too. The film only grossed about $60 million worldwide.

“Our film company has had a difficult first half of the [fiscal] year. We’re disappointed,” Carey said.

For the quarter ended Dec. 31, Fox produced a profit of $1.21 billion, or 53 cents a share, down from $2.38 billion, or $1.01 a share in the year-earlier period.

On the bright side: Revenue was up 15% to $8.16 billion.

A big chunk of the growth came from a $605-million increase in the company’s satellite television unit because of the inclusion of revenue from the German pay-TV system Sky Deutschland.

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The company’s cable television unit also generated 14% higher revenue — to $2.96 billion — because pay TV operators are paying more to carry Fox’s channels, including FX, Fox News Channel and the Fox regional sports networks. Affiliate fee revenue grew 15%.

But the revenue growth in cable was largely offset by a 22% increase in programming costs, which concerned some analysts. Fox News Channel also brought in lower revenue because of difficult comparisons with the year earlier period when the channel was awash in political spending surrounding the 2012 general election.

The broadcast television unit produced $1.63 billion in revenue, a nearly 6% increase over the year-earlier period. But operating income slipped 11% to $218 million.

The filmed entertainment division, which includes the 20th Century Fox movie and television studios, generated revenue of $2.48 billion, an increase of 6.5%. But operating income fell 20% to $337 million.

“I’m not going to gloss over the challenges that we’ve got,” Carey said, but he sounded an upbeat note. “Overall, we feel good about where we are at.”

Fox also disclosed that it agreed to pay $680 million to increase its stake in the New York Yankees’ YES television network. Fox agreed to shell out an additional $160 million for programming and marketing costs for YES.

The YES deal was announced last month. When the transaction closes, Fox will own 80% of the YES network.

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Twitter: @MegJamesLAT