‘The Greatest Showman’ Home Entertainment Sales Spur Fox Studios Q2 Profit

Twentieth Century Fox Studios Feb. 6 reported second quarter (ended Dec. 31, 2018) operating income of $193 million, a 47% increase over the $131 million reported in the previous-year quarter.

Quarterly segment revenue decreased 4% to $2.16 billion from $2.24 billion, primarily reflecting lower home entertainment revenue at the film studio and lower syndication revenue at the television production studio.

Through half the fiscal year, revenue is down less than 6% at $3.97 billion compared to $4.2 billion in the previous-year period.

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Fox, which is in the process of closing its acquisition by The Walt Disney Co., said studio Q2 operating income reflected higher contributions from the worldwide theatrical performance of Bohemian Rhapsody (winner of two Golden Globes and nominated for five Academy Awards), lower theatrical releasing costs from a comparatively lower number of films released in the current quarter, and the worldwide home entertainment and pay-television performance of The Greatest Showman, partially offset by higher new series deficits and lower domestic syndication contributions at the television production studio.

The Greatest Showman, starring Hugh Jackman, was the No. 2 selling DVD/Blu-ray Disc title in 2018 after Disney’s Black Panther, according to The-Numbers.com. The title generated $66.4 million in revenue from sales of more than 4.3 million combined discs.

Separately, Fox upped its quarterly Hulu equity loss to $115 million, compared to an equity loss of $108 million last year. Through six months of the fiscal year, Fox’s equity loss with Hulu tops $229 million compared to $170 million during the previous-year period.

Home Entertainment Sales of ‘Greatest Showman,’ Box Office Success of ‘Deadpool 2’ lifts Fox Film Unit Out of the Red

On the eve of its partial acquisition by the Walt Disney Co., 21st Century Fox Aug. 8 credited the theatrical success of Deadpool 2 and the home video performance of The Greatest Showman, among other factors, with lifting its Filmed Entertainment segment out of the red, with an operating profit of $289 million in the fourth quarter of fiscal 2018 ended June 30.

In the fiscal fourth quarter of 2017, the film unit reported a loss of $22 million.

The turnaround, the studio reported in an earnings release, was due to “higher television production contributions from animated and library series and higher film studio contributions, led by the successful worldwide theatrical release of Deadpool 2 and the successful worldwide home entertainment release of The Greatest Showman, combined with lower theatrical releasing costs, partially offset by costs incurred supporting the Marvel Strike Force mobile game release.”

Quarterly revenue in the film unit shot up 27% to $2.3 billion, “reflecting higher SVOD revenue at the television studio and higher home entertainment, television and theatrical revenues at the film studio,” according to the Fox release.

For the full year, the Filmed Entertainment segment reported an operating profit of $962 million, down 8% from the $1.05 billion reported in the prior year, “primarily due to costs incurred supporting FoxNext Games’ successful inaugural mobile game release, Marvel Strike Force,” according to the earnings release.

Full-year film unit revenue was 6% higher than the prior year due to higher SVOD revenue from the licensing of animated television product and higher theatrical revenue at the film studio due largely, again, to Deadpool 2.

In a $71.3 billion deal, Disney is buying the 20th Century Fox film and television studio, U.S. cable channels, and U.K.-based Sky News. Other assets, including the Fox News Channel, Fox Business Network, and the Fox Television Stations Group, are not part of the purchase agreement and will be spun off as “New Fox.”