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The launch of FXX is also seeing mass penetration into its target market of young men as programs such as 'Arrested Development', 'Freaks & Geeks' and Sports Night see FOX gaining market share and highly prized adverting dollars
Medium term earnings growth
Earnings over the next three years FOX should see mid to low double digit growth as FIC, FXX and FS1 launch cost subside and these channels organically gain market share. Existing channels are also seeing market penetration as sports, cable and cinema revenue sees increased monetisation
Balance sheet capacity
Leverage is currently under management expectations at 2.5 times and has between US$2.7 to US$3.7 billion in excess cash, compared to management’s expectations of hold US$2.3 billion. With that in mind, shareholders are positioned to see further share buy backs; having seen management US$913 million in the first half of FY14 and is in line with guidance of $4 billion by year end.
I would look to buy FOX on the ASX as it has the added benefit of USD tail winds, and with the likely buy back happening in the next few months it could be an interesting trade on a medium term. Look for a pick up on a drop back to $37.50 before rallying on its results in a few weeks time.