Fox Corp. Revenues Up In Quarter Hit By Legal Settlement

While Fox Corp. reported a $50 million loss for its fiscal third quarter ended March 31, due to a major legal settlement, revenues shot up 18% to $4.08 billion. That was largely due to airing the Super Bowl.

Executive Chairman-CEO Lachlan Murdoch said: “Our strong sports calendar also had a halo effect at the Fox Television Stations, which saw many local advertiser verticals higher in the quarter. In what continues to be mixed local advertising market conditions, we are encouraged by growth in categories including auto, restaurants and entertainment, but are watchful across other categories including betting, retail and telecom.”

“Our advertising revenues increased 43%, led by the Super Bowl,” noted CFO Steve Tomsic. “Television advertising revenue led this growth with a 61% increase, fueled by Super Bowl 57, which, as Lachlan mentioned, generated over $650 million in gross revenue. We also benefitted from two additional NFL Playoff games — one divisional and one wildcard — partially offset by the timing of one less regular season game,” he said.

“These strong advertising tailwinds from the Television segment were partially offset by lower primetime ratings at the Fox Network and mixed base market conditions at our local stations, when excluding the Super Bowl,” the CFO told analysts.

“We’re seeing political revenue earlier than we’ve ever seen before. It’s still small, but it’s sort of unheard of to have it this early in the political cycles. We think that bodes well for the fall as we enter the more significant part of the political cycle,” said Murdoch of how the year is shaping up.

“Then when you get down to local base markets that’s where we’re seeing mixed results in the different verticals of our revenue. We’re very pleased to see auto continuing its rebound with strong growth in the auto category. The entertainment category, we’re also seeing growth there. And the restaurant category that we’re seeing growth in. But this is offset by weakness across other categories, such as retail, health and, obviously, sports wagering and betting.

“So, the local ad market does feel soft overall. But for our businesses, particularly in sports and news, we look forward to a decent summer and a strong fall season,” the CEO said on the conference call.

Of course, analysts and investors were keenly interested in Fox Corp.’s agreement to pay Dominion Voting Services $787.5 million to settle a federal court lawsuit in Delaware which had alleged that Fox News Channel defamed the company following the 2020 presidential election. The legal settlement pushed Fox Corp. to a $50 million loss for the quarter.

“We made the business decision to resolve this dispute and avoid the acrimony of a divisive trial and a multi-year appeal process. Our decision was clearly in the best interest of the company and its shareholders. The settlement in no way alters Fox’s commitment to the highest journalistic standards across our company or our passion for unabashedly reporting the news of the day,” Murdoch declared in his opening comments.

And it came up again in Q&A.

“We’ve stated many times that we’ve always acted as a news organization reporting on the newsworthy events of the day, which certainly included allegations made by the sitting President of the United States and his lawyers in the aftermath of a hotly contested presidential election. We have been and remain confident of the merits of our position that the First Amendment protects a news organization from reporting on allegations being made by a sitting President of the United States. However, the Delaware court severely limited our defense at a trial through pre-trial rulings—one, for example, not being able to point to the newsworthy nature of the allegations. So, we determined that the best course of action for the company and its shareholders was to settle instead of proceeding with a six-week trial and potentially two or three years of appeals,” Murdoch told the analysts.

According to the CEO, potential defenses remain in place for pending lawsuit by another voting machine maker, Smartmatic, which isn’t expected to go to trial in a New York state court until 2025.

Murdoch remains upbeat on the upfront, despite the just-launched strike by writers.

“For us, I think our focus on live news, live sports and, frankly on the network, a healthy balance of scripted and unscripted content on the network, puts us in a tremendous position. The timing of the strike, with the upfront is next week, creates some hesitancy if you’re unable to present an exact schedule if you’re only in entertainment. It’s not if you’re in news and sports, so I think it positions us very well in the upfront,” he concluded.