Fox: Positive Signs From Advertisers

The current quarter is pacing down more than 50% for the Fox O&O stations, but Fox Corp. Executive Chairman-CEO Lachlan Murdoch told Wall Street analysts Wednesday there are signs of improvement.

“The categories that you would expect being affected significantly worse by COVID-19 are pacing more than 50% below — so travel, entertainment, restaurants are all pacing worse than 50%. But that’s ameliorated by many categories that are down significantly less than that — professional services, insurance and some categories that frankly are up, like pharmaceuticals. So it’s a real mix,” Murdoch said in the company’s quarterly conference call following release of earnings results.

He noted that the local markets won’t recover at the same rate — it will be state-by-state based on how businesses reopen. “But we are beginning to see positive signs in the pacings going forward,” he said.

Murdoch also noted a slowdown in political spending, with the thinning of the Democratic Party presidential field and some states delaying their primaries. “However, traditionally the political campaigns significantly ramp-up spending in our first fiscal quarter [calendar fourth quarter], and we expect with election day still six months away that this category will intensify again as we approach November.”

After getting a big boost from the Super Bowl in the fiscal third quarter ended March 31, Fox has so far felt relatively little impact from sports cancellations. “Our sports revenue is concentrated in the fall, when baseball post-season and the college and NFL football seasons are most active,” Murdoch said. He noted that the company is in close contact with its sports partners about their scheduling decisions. Advertiser response has been strong for live NASCAR racing, which resumes May 17 (albeit with no fans in the stands).

While station advertising has taken a hit from COVID-19, Murdoch noted that Fox News Channel has been adding new advertisers. That’s because stay-at-home orders have increased viewing of the cable news channel by younger demos.

While next week’s upfront presentation was canceled, Fox representatives have conducted hundreds of video conferences with advertisers and agencies. Murdoch says Fox is in good shape for the fall season because it has so many shows already in the can. That includes the Sunday animation lineup: The Simpsons, Bless the Harts, Bob’s Burgers and Family Guy.

In addition, production is already complete on series including Hell’s Kitchen, MasterChef Junior, the psychological thriller Next and the Southern gothic soap opera Filthy Rich. Whether season four of The Masked Singer airs in the fall or later will depend on whether production can take place in August as planned.

The COVID-19 advertising downturn followed a strong showing by the Fox television segment in the fiscal third quarter. CFO Steve Tomsic reported that revenue grew 41%, led by a 56% increase in television ad revenue. Excluding the impact of the Super Bowl and one less NFL divisional playoff game, advertising revenue would have been up 1%. Television affiliate revenue increased 22%, reflecting double-digit increases for both fees from affiliates and retrans for the O&Os.