<

Assessing Dinakar Singh and TPG-Axon’s 4Q13 positions

Part 6
Assessing Dinakar Singh and TPG-Axon’s 4Q13 positions (Part 6 of 7)

Singh’s TPG-Axon sells its shares in Twenty-First Century Fox

TPG-Axon Capital Management and Twenty-First Century Fox

TPG-Axon Capital Management’s notable positions traded last quarter include new stakes in Equinix Inc. (EQIX), Huntsman Corp. (HUN), Hertz Global Holdings Inc. (HTZ), and Spirit Aerosystems (SPR) as well as sold positions in in Twenty-First Century Fox-A (FOXA) and CONSOL Energy Inc. (CNX).

TPG-Axon exited a position in Twenty-First Century Fox-A (FOXA) that accounted for 5.23% of the fund’s 3Q portfolio. Twenty-First Century Fox is a diversified media and entertainment company.

FOXAEnlarge Graph

In its latest 2Q 2014 results, Twenty-First Century Fox saw revenue up 15%, to $8.16 billion, beating expectations as the company saw strong advertising growth at its sports channels. But profit declined 49%, to $1.21 billion, or $0.53 a share. The growth in revenue also reflected a $605 million increase at the Direct Broadcast Satellite Television segment, primarily related to the inclusion of Sky Deutschland AG revenue, and a $366 million or 14% increase at the Cable Network Programming segment, led by continued affiliate revenue growth. OIBDA fell 4% to $1.54 billion.

The decline in profit was attributed to the launch of new channels, such as Fox Sports and FXX, lackluster results at the filmed entertainment division, and falling ratings for The X-Factor and American Idol. The company also saw higher programming expenses at its regional sports networks. Lower advertising sales at its broadcasting unit and weakness at its film studio division continued to be a drag on the company’s results. Twenty-First Century Fox was spun off from News Corp. (NWSA) in June of last year, so the results were a bit skewed.

The film studio division’s operating income fell 20%, to $337 million, on the back of lower theatrical revenues and higher releasing costs for The Secret Life of Walter MittyWalking With Dinosaurs, and The Counselor. However, Fox expects very favorable film comparisons led by this year’s comparatively stronger releases, including Rio 2Dawn of the Planet of the Apes, and X-Men: Days of Future Past.

The company declared a semi-annual dividend of $0.125 per share, which represents a yield of 0.78%. The company said it has repurchased nearly $8.9 billion shares at an average price of $21.71 per share since August 2011 through February 5, 2014. Fox also last month entered into an agreement to acquire an additional 31% interest in the YES Network for approximately $680 million.

Singh's TPG-Axon sells its shares in Twenty-First Century FoxEnlarge Graph

Chief executive officer Rupert Murdoch said, “Our quarterly OIBDA results also reflect the planned investments we are making in our core businesses to support long-term growth.” The company is confident that these investments will drive growth in the future.

The Realist Discussions