LOS ANGELES (Reuters) - Rupert Murdoch’s Twenty-First Century Fox Inc, the film and TV company recently separated from News Corp, expects to increase profit over the next few years while it invests in new sports and entertainment networks, Chief Operating Officer Chase Carey said on Thursday.
Fox has set a target of “$9 billion-plus” in earnings before interest, taxes, depreciation and amortization (EBITDA) for fiscal 2016, Carey told investors at a meeting on the Fox movie studio lot in Los Angeles. Wall Street has forecast $8.8 billion for the fiscal year that ends in June 2016, according to analysts surveyed by Thomson Reuters I/B/E/S.
Shares of Fox rose 4.3 percent to $33.17 on Thursday afternoon on the Nasdaq.
The company will invest $400 million to $500 million over the next two years to build the new Fox Sports 1 and FXX cable networks, Carey said. Fox Sports 1 will launch August 17, followed by FXX, an entertainment channel aimed at younger adults, on September 2.
The company’s TV channels, which include cable networks Fox News and FX, will drive profit gains, Carey said. Fees paid by pay TV operators to carry the networks will rise annually by “low teen” percentages during the next three years, he said. Fox’s international networks will pass $1 billion in profits in fiscal 2015, he said.
“Content is a growth business,” Carey said. “Premium content is just going to get more valuable. Our first priority has to be keeping the content and brands strong.”
Carey also said Fox’s board authorized a $4-billion-share buyback over the next 12 months and an increase in the annual dividend to 25 cents a share from 17 cents.
He said the threat of “cord cutting” by consumers who drop their cable TV service had been overstated. The number of cable subscribers has remained “essentially flat” during the last 12 months, he said.
“The reality is this content is such a fundamental part of daily life, people will give up food and a roof over their head before they give up TV,” Carey said.
One “legitimate issue” worth watching is “cord nevers,” or younger people who never sign up for cable, he said. “This is an issue that will play out over the next 10-plus years, not the next three,” he said.
Reporting by Lisa Richwine; editing by Lisa Von Ahn, Matthew Lewis and Bob Burgdorfer