Political Powers Quarter For Fox

With Election Day a week away, Fox Corp. Executive Chairman-CEO Lachlan Murdoch reported Tuesday morning that the company’s TV Stations group has already topped its record political advertising haul from two years, excluding the subsequent Senate runoffs in Georgia.

As you would expect, analysts on the earnings call wanted to know about the possible reunification of Fox Corp. and News Corp., but Murdoch said he would not discuss the potential combination, which is now being explored by independent committees at each company. The analysts tried to sneak into the topic with questions nipping at the edge of the merger issue, but Murdoch stood his ground.

For the fiscal first quarter ended Sept. 30, CFO Steve Tomsic reported that Television segment (Fox Network, O&O stations and Tubi streaming) revenues rose 8% to $1.7 billion, led by advertising growth of 11% to $905 million.

“Our television stations had a record September quarter for political advertising revenues, while the Fox Network benefitted from continued strength in pricing, an additional MLB broadcast at Fox Sports, partially offset by softer rates,” Tomsic told the analysts.

Looking forward, Murdoch remained optimistic about advertising.

“We have observed some softness in the linear scatter marketplace. Remember that Fox does not over-index for network entertainment, so any impact there is nominal to us. That’s being more than offset he digital entertainment strength delivered by Tubi. Additionally, despite the economic headwinds, we are seeing continued strength across our linear news and sports portfolios, led by the pharmaceutical, restaurant and streaming categories,” he noted.

“These dynamics underscore a flight to quality and the importance of our focus on live content, with over two-thirds of our advertising revenue generated by live sports and news,” according to Murdoch.

“At our local stations we generated record political revenues for the September quarter. Second-quarter to date political revenues are also being very strong, given the combination of races and ballot issues across our markets. And I can confirm, with a week still to go before Election Day, we have already beat our fiscal year 2021 record at the local stations, excluding the Georgia run-offs,” the CEO said.

“Meanwhile, base market sales at the local stations were stable in the first quarter. It’s still too early to gauge how much impact macro-uncertainty will have on base local market advertising in the December quarter, but we are encouraged by the continued positive growth we are seeing in the automotive category,” Murdoch told the analysts.

Near the end of the Q&A session, the CEO returned to a discussion of advertising trends.

“In some cases, local might have some softness or more fluidity in the market, but we’re seeing it being picked up national advertising in the same categories. Some were strong in local, but they’re now strong in national. There’s some sort of swings and roundabouts there. But overall, the trend is always a flight to quality, particularly around our news and sports brands and platforms,” Murdoch said.

“Nationally, I think I called out our pharmaceuticals are very strong, restaurants, particularly quick service restaurants — and even more particularly the pizza category. It’s doing very well, and I know at my household the advertising is working,” he chuckled.

Murdoch also pointed to media as a strong ad category, particularly streaming as SVOD services are more and more competitive.

“We’re seeing softness in wagering — there’s more local softness in wagering, but we’re picking up a lot of that in national,” he said. And Murdoch noted that a lot of COVID-related government health spending from a year ago has gone away.

“Locally, automotive remains very strong. It’s the first time in a couple of years that we’ve seen local automotive advertising as strong as it is now. The other category locally that is very strong is general services, which is great to see. And any softness elsewhere has been more than made up by this record political year,” Murdoch noted.