Fox Corporation, the parent company of Fox News, has reported financial results for the three months ended March 31, 2023.
Chief executive Lachlan Murdoch led an analysts call after the quarter results were released. He referred in general to the recent settled litigation settled with Dominion but didn’t refer directly to the departure of Fox News host Tucker Carlson.
Fox Corp reported total quarterly revenues of US$4.08 billion (all figures US$), an 18% increase from the $3.46 billion reported in the prior-year quarter.
Advertising revenues increased 43%, primarily reflecting the impact of Super Bowl LVII, a higher volume of NFL games and continued growth at Tubi.
Affiliate fee revenues increased 3% with 9% growth at the television segment. Other revenues were essentially unchanged from the prior-year quarter.
The company reported a quarterly net loss of $50 million as compared to net income of $290 million reported in the prior-year quarter. The variance was primarily due to charges associated with legal settlement costs at Fox News Media.
Commenting on the results, executive chair and chief executive officer Lachlan Murdoch said:
“Our fiscal third quarter once again demonstrated the effectiveness of Fox’s strategy to leverage the power of compelling live events to deliver for our viewers, advertisers, and distributors at scale.
“During the quarter, the largest audience in US television history [115m] gathered to watch Fox Sports’ broadcast of Super Bowl LVII, underpinning our delivery of double-digit revenue growth, and providing a promotional gateway to Fox’s entertainment and news brands.
“Additionally, the momentum at Tubi continued in the quarter where its stellar growth has led to its emergence as the most watched Free-Advertising-Supported-Television [FAST] service in the United States. Against a backdrop of macroeconomic uncertainty, our portfolio of leadership brands combined with our balance sheet strength position us well to allow us to focus on creating shareholder value for the long term.”
When referring to the Fox network, Murdoch said: “Leveraging the reach of a Super Bowl lead-in, we launched the second season of Next Level Chef, which promises to be the next big lifestyle franchise from our Studio Ramsey partnership.
“Our entertainment business also found success with the number one new series and new drama of the year in Accused and the number one new unscripted series in Special Forces, World’s Toughest Test.
“Fox has now debuted the top new unscripted series for five consecutive seasons.
“In fact, the combined power of our sports and entertainment programming places Fox at number one amongst broadcast network seasons of date in the key 18-49 demo.
“Our strong sports calendar also had a halo effect at the Fox television stations, which saw many local advertising 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 bedding, retail, and telecom.
“Tubi’s performance in the third quarter was nothing short of stellar, with revenue growth of 31% supported by sustained gains in engagement, where total view time increased 38% year on year.
Lachlan Murdoch on Fox News Channel
“At Fox News Media, we retained our leadership position amongst our peers.
“The Fox News channel ended the third quarter as the most watched cable network in total day and prime time, while maintaining its lead as the most watched cable news network, beating CNN and MSNBC combined.”
It was commentary about the recent legal action that listeners wanted to hear. Murdoch eventually got to it.
“Let me briefly address the settlement of our dispute with Dominion Voting Systems.
“We made the business decision to resolve this dispute and avoid the acrimony of a divisive trial and a multi-year appeal process, a decision clearly in the best interests 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.
“We’re proud of our Fox News team, the exceptional quality of their journalism and their stewardship of the Fox News brand.
“Whether it be our coverage of politics and elections, world events such as the war in Ukraine, or domestic issues such as the crisis at the border, our journalists bring compelling news home to our viewers every day.
“The standards behind this reporting are not only what makes us the number one cable news network, but the number one network in all of cable.
“In a recent poll, 41 percent of respondents chose Fox News as their most trusted network news provider.”
Turning to the outlooks for the general business, Murdoch commented:
“We are confident in the strength of the Fox brands and the strength of our balance sheet.
“While we are not completely immune to the headwinds facing the broader industry and the general economy, we are well positioned given our areas of differentiation.
“Nonetheless, you can expect us to be even more focused on our cost space as we look to reinforce our strategy for future growth.
“We are being committed to driving long-term shareholder value creation through the thoughtful management of our existing business, the pursuit of new and exciting adjacencies, and returning capital to our shareholders.”
Lachlan on the Dominion settlement
“I won’t comment on any ongoing litigation, but I can make the following comments in regards to Dominion.
“As we’ve stated many times, we always acted as a news organisation reporting on the newsworthy events of the day, which certainly included allegations being 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 in the merits of our position that the First Amendment protects the news organisations reporting on allegations being made by a sitting President of the United States.
“However, the Delaware court severely limited our defences of trial through pretrial rulings. One example of not being able to point to the newsworthy nature of the allegations.
“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 even three years of appeals.
“We have been, we have a pending case with Smartmatic, which is a fundamentally different case than Dominion in that all of our full complement of First Amendment defences remain and will be ready to defend this case surrounding extremely newsworthy events when it goes to trial – likely not until the calendar year 2025.
As regards to our programming strategy in prime time, there’s no change to our programming strategy at Fox News. It’s obviously a successful strategy.
And as always, we are adjusting our programming and our line-up, and that’s what we continue to do.”