Fox forges ahead despite ad-revenue shortfall in Q4

Fox Sports
Fox reported revenues of $2.42 billion, only 4% below the year-ago quarter’s $2.51 billion. (Fox Sports)

The novel-coronavirus pandemic punched a hole in Fox’s advertising revenue, but that wasn’t enough to leave a major dent in Fox’s fourth-quarter earnings results.

The company reported revenues of $2.42 billion, only 4% below the year-ago quarter’s $2.51 billion. Its quarterly net income fell to $145 million, for earnings of 20 cents a share, from $465 million for last year’s Q4—but most of which Fox chalked up to impairment and restructuring costs from unwinding its rights deal with the U.S. Golf Association.

Ad revenue dropped 22%, a consequence of fewer local ads sold at Fox TV stations, fewer live sports events and pandemic-forced production shutdowns leading to less scripted programming.

Opponents of Fox News’ lineup of right-wing commentators have pressured numerous advertisers, with apparent success, to remove their spots from the shows of such outspoken Trump advocates as Sean Hannity, Laura Ingraham and Tucker Carlson, but those boycotts didn’t get a mention in the earnings call.

Fox is banking on politics and sports to keep it afloat through its next quarter, and one of those bets seems unimpeachable.

“As we close in on November, we expect to continue to achieve a record amount of political revenue across both our national channels and local stations,” said CEO Lachlan Murdoch on the call. “In the political cycle today, inclusive of the impact of COVID-19, our political advertising revenue is pacing more than 50% ahead of the equivalent period four years ago.”

Sports and Covid

After noting Fox’s use of such technological advances as done footage to cover NASCAR racing with a third of the usual trackside personnel, Murdoch stated his optimism about the return of live sports this fall.

“This all, of course, assumes that the COVID-driven disruptions to major sports are behind us and that we enjoy a full season of NFL, a conference-only 10-game college football season and the MLB season completes,” Murdoch said. “These assumptions remain valid today, and we have no intention of using this call to run through the list of what ifs.”

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Major League Baseball’s attempt to stage a truncated 60-game season is already in trouble, with a schedule now pockmarked with scratched games because the Miami Marlins and St. Louis Cardinals have been sidelined by more than a dozen positive coronavirus tests among members of each organization.

JPMorgan’s Alexia Quadrani pressed the sports issue anyway, asking what alternatives Fox would have if college football or NFL seasons get interrupted or canceled.

“We fully expect both college football and the NFL to come back in the fall,” Murdoch said. Citing college football conferences’ decision to limit teams to playing within their own conferences and the NFL’s own precautions, he pronounced Fox “full speed ahead.”

Analyst Rich Greenfield of LightShed Partners tweeted his doubts afterwards about any sports league’s ability to stay in business without quarantining all games and personnel inside a bubble like the NBA’s confined campus outside Orlando: “We remain skeptical that #bubbleless sports can work until pandemic under control, but we’ll see.”