Twenty-First Century Fox Class A Earnings Call Insights: Fiscal 2014 Budget Outlook and Hulu Details

Twenty-First Century Fox Inc Class A (NASDAQ:FOXA) recently reported its fourth quarter earnings and discussed the following topics in its earnings conference call.

Fiscal 2014 Budget Outlook

Douglas Mitchelson – Deutsche Bank: Chase, can you give us a sense in your budget of fiscal ’14? What percentage of Fox Sports 1 subscriber base at launch will be on the new rate card versus your old speed rate card? It seems at least Comcast and Time Warner Cable are there and is there any to put forward other distribution contracts where you assumed in the guidance for this year.

Chase Carey – President and COO: I’m not going to get too defensive sort of individual discussions. I mean, look – I guess there, generally, (indiscernible) we are confident about the targets we’ve got for the channel and we are comfortable with where we are in the process. We are engaged with a number of parties. This process usually have a lot of conversations that sort of occur, so the details we got it last minute but we actually feel good about where we are and I think those conversations of any individual players were probably best and in private.

Hulu Details

Benjamin Swinburne – Morgan Stanley: I was wondering if could comment on the decisions around Hulu, the fact that their business now seems to be more of a strategic asset for you guys and you are in investment mode. And I was just curious John if you could give us any sense for working capital for ’14. It was actually a pretty big drag in fiscal ’13 of about a $1 billion. I wondered if you had any comments and sort of why that was and what we should think about for fiscal ’14.

Chase Carey – President and COO: Yes, I think on Hulu, yeah I think it’s really a case where we know – I think we have always known the importance of these individual platforms and the opportunity specifically in Hulu. I think the real question was partnerships are complicated and can we get along aligned about the strategy we both believe we can execute to be successful and I think as we went through this process we really found all the constituencies really sort of (collapse) around the vision of how to really build this in a way that it could be something exciting content owners, something that could be an exciting addition to the additional marketplace, and something that in many ways could the enhance existing ecosystem. And so I think, we know the important digital, so to making the capital in anyway with these partners we have planned that we all are aligned around and believe we can execute on them.

John Nallen – SEVP and CFO: And Ben to respond to the working capital, you see the biggest change there comes from our buildup of inventory, which is – at the end of the year we had five enormous films in production as compared to where we were a year ago, led by Wolverine and a few other big ones coming out this year. And likewise on the TV side, we’ve got the most new series in the history of the Company under development right now. So, a lot of that is just the production spend towards those series. Looking at ’14, our expectations are, we’re going to see our revenue growth much more significantly in the fourth quarter than this year. So, when you look at an overall year, we’d probably be a touch below where that working capital is, but it’s all because of the growth in the business.

Chase Carey – President and COO: Yeah. I guess the only other dynamic I’d add to that is, as we’re growing these new channels, clearly, there is a ramp-up to invest. We want to invest in content. We want these channels to be – channels that we can be excited about so both on the sports and entertainment side we’ve been investing to ramp up and the content to fuel as one in FXX, as well as the international calendar shifts.