Advertising is moving to digital platforms, away from cable TV, and it's having a direct impact on companies such as 21st Century Fox (FOXA) .
Revenue from cable TV programming, Fox's largest business, rose 2.1% to $4.02 billion, trailing estimates that called for $4.13 billion. Fox said ad sales from cable TV programming were flat compared with the same period a year ago.
Overall, Fox's results for its fiscal third quarter were significantly bolstered by its broadcast of Super Bowl LI and an additional NFL playoff game. Nonetheless, revenue still fell short of analyst projections of $7.64 billion. Fox posted revenue of $7.56 billion for the quarter.
Fox posted earnings per share of 44 cents for the quarter, less than the average Wall Street analyst forecast of 48 cents per share. Fox shares, which dipped 1.2% on Wednesday, were down an additional 1.8% after hours to $27.40.
The slowdown in advertising comes as consumer viewing habits are fragmenting and advertisers are moving more of their marketing dollars to digital platforms led by Facebook (FB) , Alphabet's (GOOGL) YouTube and Snap (SNAP) .
There's also a lot happening at Fox that has little to do with ongoing operations.
Fox News remains a focus of federal investors trying to determine whether the company hid payments to women who alleged sexual harassment by either its former chairman, Roger Ailes, or former star anchor Bill O'Reilly. The dismissal of O'Reilly and Fox News co-president Bill Shine rocked the network internally yet hasn't had a noticeable impact on the ratings of the right-leaning network.
The Murdochs are also anxious to convince U.K. regulators that they will be good stewards of Sky Broadcasting. Fox needs regulatory approval before it can acquire the remaining 60.9% of Sky that it doesn't already own. A decision on the Sky deal is not expected until after U.K. elections later this summer. Fox CEO James Murdoch said on Wednesday's earnings call he's confident the company will win approval and that the deal will close by year's end.
Murdoch also acknowledged that Fox didn't bid on Tribune Media (TRCO) , the TV station group that agreed earlier this week to be acquired by Sinclair Broadcasting (SBGI) . In the past, Murdoch had said that growing its local TV station group wasn't a high priority. For that reason, some investors questioned the rationale for Fox having made preparations to bid on Tribune in a partnership with Blackstone Group (BX) .
Ultimately, Murdoch said, Fox decided taking on further debt to finance a Tribune Media acquisition wasn't a move worth making.
"We're happy with our local TV station group, but it's not a place where we're looking to target capital," he said.
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