21st Century Fox (NASDAQ:FOX) (NASDAQ:FOXA) reported third-quarter earnings on May 6, delivering earnings per share that were above expectations and revenue that missed the average target.

The average analyst estimate as polled by Yahoo! Finance called for sales of $6.89 and EPS of $0.39, with actual sales coming in at $6.84 billion and EPS of $0.47 on net income of $975 billion.

The results
Fox's total third-quarter revenue was down $1.38 billion, or roughly 16.8% from the period in the year prior, but the comparison isn't particularly useful, as the company sold businesses across the comparison period. Adjusting for the third-quarter 2014 revenues generated from the businesses sold to Sky plc later in 2014, Fox reported an $84 million increase in year-over-year revenues, with the gain primarily attributed to growth in the Cable Network Programming segment. Cash flow came in at $1.23 billion, up 4.9% year over year.

Fox's Cable Networks segment represented 52.4% of total revenue for the quarter at $3.59, increasing roughly 13.9% year over year. The company attributed much of the gains to higher affiliate rates; however, growth was limited by a 19% increase in expenses stemming from investment in FXX and STAR Sports. OIBDA for the Cable Networks segment was down roughly 5%, with the company attributing most of the decline to currency fluctuations in Latin America and Europe. Strong performance from Fox News and Fox Sports 1 offset declining revenues from FX and the company's National Geographic channels.

Revenues from the Television segment saw a significant decline because the company broadcast the Super Bowl in 2014 but not the current year. The massive sporting event added approximately $350 million in revenue to the company's Q3 2014 books, and revenues were consistent between periods if the Super Bowl is discounted. Rupert Murdoch made mention of this in the quarterly conference call and also cited foreign exchange headwinds as a reason for the lack of EPS growth. OIBDA for the Television segment also took a big hit, falling from $288 million to $141 million. The company absorbed higher costs associated with shows such as Glee and Empire.

The company's Filmed Entertainment segment saw revenue increase from $2.28 billion to $2.39 billion, representing roughly 5.3% growth. OIBDA increased from $354 million to $382 million, or roughly 8%, and the company touted the performance of Taken 3, Penguins of Madagascar, and Kingsman: The Secret Service as reasons for the gains. Kingsman in particular looks like it has significantly exceeded expectations, as the movie launched with a mediocre U.S. open but has gone on to do over $400 million worldwide.

What's next for Fox?
In the company's Cable Network, Television, and Filmed Entertainment segments, delivering hit new content while managing cost continues be key to growth. Ratings for original programming on Fox networks have been turbulent in recent years, and the promise offered in well-performing shows such as Empire will have to be replicated to deliver growing revenues and secure investor confidence.

The company must also contend with the rise of MVPD content packages that encroach on its sports broadcasting territory. National and regional sports programming is a big asset for Fox, and low-price alternatives such as DISH Network's Sling and the push for a la carte programming represent a potential challenge for Fox. The company is in an interesting situation in this regard, as it also sees the potential to expand the reach of its studio content and channels around the globe as one of its big growth drivers. The company has SVOD deals with Amazon.com and Sony, and anticipates that it can deliver big wins by leveraging digital distribution of content in growth territories like India and Asia. These entertainment markets are unfolding at rapid clips, so Fox appears to have growth potential if it can maintain strength in sports and better tap international markets.