Fox's Q2 Results Somewhat Of A Mixed Bag, SKY Deal Still Fuzzy

Loop Capital’s David Miller maintains his Hold rating on Twenty-First Century Fox Inc FOXA shares after the media company reported mixed results for its second quarter.

Though EPS of $0.53 beat $0.49 consensus estimate, the $7.68 billion revenue missed Street view of $7.72 billion. The lower-than-expected revenue came primarily from the weakness in Film business, driven by underperformance of movies such as "Why Him?" "Assassin's Creed" and "Rules Don't Apply."

Due to EU restrictions, the management said nothing about the recent SKY PLC (ADR) SKYAY on the call. Fox offered to take full control of the British-based SKY with a $14.6 billion bid.

Miller expressed his skepticism over the level of accretion seen in this deal.

“[O]ur opinion is that the extent of the accretion seen in this deal is fuzzy at this juncture because FOXA still has not yet finalized financing, but instead, has a bridge loan in place as per EU rules,” Miller wrote in a note.

The final financing phase will come once Fox gets EU approval, and the process could take four to seven months. Even if the regulators approve the deal, the analyst views shareholder vote for the deal “represents yet another level of consternation.”

At last check, shares of Fox were down 0.52 percent to $30.90, while Miller has a price target of $29.