Even though 21st Century Fox (FOXA) underperformed in the latest quarter while also lowering its outlook for its fiscal year, the market largely ignored the short-term results because it likes the overall long-term strategy of the company.

For the quarter, 21st Century Fox missed big on net income, which came in at $1.2 billion, or $0.53 per share. This was a big drop from the $2.38 billion or $1.01 per share in net income that the company generated in the same quarter of last year. This primarily stemmed from a decline in the company's network ratings, as well as a weak performance at the box office from its studio unit.

The company lowered its full fiscal-year estimate of earnings before interest, taxes, depreciation, and amortization from the former high single-digit to low double-digit percentage growth outlook to a mid-to-high single-digit growth projection.

Revenue for the quarter rose to $8.16 billion, a gain of 15% over the same period last year. Much of that was because of the 14%
boost in affiliate fees in the quarter. These fees are expected to be the chief growth engine of TV revenue for the next several years for all broadcasters.

On the broadcast side, the company's powerhouse American Idol continues to falter, as does The X Factor. The company hasn't been able to come up with alternatives to these reality shows, although it is rebooting its popular "24" series, which will be called 24: Live Another Day. It's scheduled to premiere May 5 on Fox.

Investors and analysts continue to like 21st Century Fox primarily for its focus on expanding its presence in sports, and also because the company invests in its various cable networks. These two segments are considered strong future growth areas, and Fox is positioning itself to take advantage of these market trends.

Fox is targeting its FX networks on the cable side and investing heavily in its regional sports networks and new national sports network Fox Sports 1, which aims to take market share from Disney's (DIS 0.16%) ESPN.

Disney reported a big quarter with all segments up double-digits, according to Chairman and CEO Bob Iger.  Disney's media networks unit enjoyed growth of 20%, led largely by the fees and revenues associated with ESPN. This is why investors like Fox's plan to compete in this very lucrative market.

No matter what pressures come from market fragmentation in the future, live sports will remain big business for many years and that bodes well for Fox and Disney.

Expenses caused Fox to miss on the earnings side as it continued to boost its investments in sports with spending of $1.6 billion overall in the latest quarter, which was 22% more than the year-over-year figure. Its Fox Sports 1 channel was launched in August.

Other major expenses included in the $1.6 billion figure were the costs of marketing and releasing The Secret Life of Walter Mitty and Walking with Dinosaurs.

Film revenue was down 21% from last year in the same period, and coupled with higher expenses this resulted in a weak quarter for Fox's film division.

With double-digit growth in Fox's retransmission and affiliate fee revenue, it is easy to see that investing in the future of the company was the main source of pressure on its short-term performance, outside of the weak film slate.

While 21st Century Fox had a somewhat weak quarter it still outperformed competitors like Time Warner (TWX) and Viacom (VIAB), especially in domestic advertising revenue, which was up 7%.

Over the last three months the overall major media companies have been fairly weak. Disney led the way with a share price gain of only 4%. Viacom came in with a loss of 4.58%. Fox was next with a loss of 6.5%, followed by Time Warner with a loss of 6.8%.

I like what Fox is doing, as it has focused on long-term goals which should produce nice revenue and earnings streams for a long time. With broadcasters expected to remain under pressure this shows that the company understands what it needs to do in this environment, as it does not mind foregoing some short-term earnings in order to build a successful future.

The successful implementation of this strategy should keep Fox growing at the fastest pace of all major media companies. Over the last five years it is up over 450% as I write. I'll take that any day.

Add to that the upcoming release of its powerful "Avatar" franchise, which will include one film per year for three straight years, and you can see why 21st Century Fox is such a compelling company.