Auto On The Rebound For Fox Stations

Along with reporting across the board growth in Fox Corporation’s fiscal fourth quarter (ended June 30), Executive Chairman-CEO Lachlan Murdoch had a specific piece of good news to offer analysts from the Fox Stations group.

“Locally, base market adverting sales have been stable. In fact, we’re currently seeing a return to growth in the auto category for the first time in a couple of years. This stability of the base market provides a strong foundation for the upcoming political cycle, where the outlook is remarkably strong,” Murdoch said in his Wednesday conference call.

For the fiscal fourth quarter, the Television segment reported total revenues up 5% to $1.53 billion. Advertising rose 4% to $698 million, credited to higher political revenues at the O&Os, growth at Tubi and the addition of the USFL on Fox Sports. Affiliate fee revenues grew 7% to $683 million.

Murdoch reminded the analysts that he had promised to achieve $1 billion of incremental television affiliate revenues in calendar 2022. “I am more than pleased to confirm that we have achieved that billion dollars target in this past quarter, a full six months ahead of schedule,” he reported. The company cited higher retrans for the O&Os and higher fees from affiliate stations as accounting for 10% growth in affiliate fees for the full year.

Like other broadcasters, Fox Corp. is booking heavy political ad spending in this mid-term election year. “We continue to expect this election to deliver another record mid-term cycle. In fact, excluding the impact of the Georgia runoffs in the last cycle, this mid-term cycle looks certain to surpass the 2020 presidential cycle at our local stations,” Murdoch said.

As Fox Corp. reported full fiscal year net income of $1.23 billion, down from $2.2 billion the previous year, the company announced that its board of directors had approved a one cent increase in the semi-annual dividend. The new dividend of 25 cents per share will be paid in September.

In the Q&A period, Murdoch was asked about macro-economic and ad trends.

“One of the most pleasing things that we’re seeing, actually in the local stations, our base markets — ex-political — the base market is very stable. As I mentioned in my remarks, particularly the return to growth for the auto category is obviously something that was a concern to us over the last couple of years with COVID and the softness in the auto category. The return to growth in the auto category is a very strong indicator of things to come,” the CEO said.

“We are seeing locally two verticals, or categories, that are soft. One is the local wagering, betting category, that is soft,” Murdoch told analysts. But he said that was predictable, with advertising moving to national as more and more states legalize sports betting.

“And then we’re seeing some softness in government spending — and that was really COVID spending over the past couple of years, which obviously is not there anymore,” he explained.

Murdoch said the scatter market is quiet at this time of year, ahead of the fall sports cycle. Even so, pricing is up in the low double-digits.