NEW YORK (TheStreet) -- Chase Carey, who runs the day-to-day operations at Rupert Murdoch's 21st Century Fox (FOXA), surprised investors Wednesday when he informed Wall Street analysts that he wouldn't be giving a revenue forecast for the company's new fiscal year, which begins in July.
While investors would prefer a positive outlook, writes Bernstein media analyst Todd Juenger, they could have handled downward guidance. Investors are fully aware that television advertising revenue is in the midst of a general decline and that the Fox network has been mired in fourth place among major U.S. broadcasters.
"Inexplicably, we got neither outcome -- management refused to comment, citing the fact they are just entering their fiscal-year 2016 budget process and it would be premature," Juenger wrote.
Shares of New York-based 21st Century Fox were falling 2.8% to $32.74, extending the stock's 2015 decline to more than 14%.
The no-comment of sorts only exacerbated concerns that Fox is still having difficulties turning around its television business, which reported a gigantic 51% drop in operating income for the three months ended March 31 compared to the same period a year ago. Of course, Fox had the Super Bowl for that period a year ago, so results aren't likely as bad as they appear.
But still, earnings shouldn't be that bad. But they apparently are. Advertising revenue at its broadcast network group fell 7% during the quarter as rating woes at FX and National Geographic contributed to the problems.
Although Fox has historically not given guidance, this year is different. The ongoing problems at Fox network have required stepped-up investment in original content. Those investments continue to weigh on profits. For the quarter ended March 31, Fox said net income was $975 million or 46 cents a share, a decline from $1.05 billion or 47 cents a share for the same period a year ago.
Further perplexing investors, Fox has yet to make clear what it plans to do in the increasingly competitive and crowded space of Internet-based video offerings. Most of these services have focused on a single product, such as Time Warner's (TWX) HBO Now and CBS's (CBS) All Access.
Carey's comment on the subject appeared to mirror those of Disney CEO Robert Iger: that they'd like to offer their most popular channels as part of "skinny bundles." But these packages have to avoid cutting into the company's cash cow: carriage fees from pay-TV companies.
"The predominant majority will want a bundle," Carey said. "There are consumers that probably are interested in alternatives. It's important everything we do is adding to the pie, not cannibalizing the pie. [Fox needs to] create offers that speak to customers that want something different."
For the moment, weakness at the Fox network remains a major focus for the company as it attempts to add programming around its two most highly rated shows, Empire and Gotham, Carey added.
"The Fox network is not where we think it should be and not where we planned for it to be," Carey said. "We still look at Fox network as a business that should be the shining light that is the top of the pyramid that drives our business forward. Clearly, it's not performed as such."
Apart from low ratings at Fox's broadcast network, Carey has also had to grapple with surging costs related to sports programming as well as a strong dollar. Those have curbed returns on the company's extensive international holdings in Europe, India and Australia.
Fox's strength remains its ability to consistently get higher-than-expected fees from pay-TV providers that carry their channels, especially its regional sports networks and Fox News. Additionally, Fox's movie business continues to perform well.
Fox's movie business remains on solid footing. The film studio 20th Century Fox makes "tentpole" films that travel internationally. And Fox Searchlight has emerged as the dominant player in independently produced films. Kingsman: The Secret Service and Taken 3 were credited with driving an 8% increase in profits at Fox's film group.
But for greater insight into how Carey sees his many businesses performing into 2016, or what he plans to do with its $9.3 billion in cash apart form buying back more shares, investors will have to wait until the company's next investor conference call in August.