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Fox Corp., led by CEO Lachlan Murdoch, reported higher advertising and affiliate fee revenues for its fiscal fourth quarter, while overall earnings and revenue missed analyst expectations.
The media company posted total revenue of $3.03 billion for the three months to June 30, up 5 percent from a year-earlier $2.89 billion. Zack Consensus Estimate forecast $3.06 billion in overall revenue.
The media giant also posted net income attributable to shareholders at $306 million, compared to a year-earlier net income attributable to shareholders at $253 million. The adjusted net income attributable to shareholders was 74 cents, which missed on an analyst’s forecast of 78 cents in per-share earnings.
Murdoch, on a morning premarket analyst call, said Fox continues to strengthen core brands while investing in “high-growth digital initiatives,” including Tubi, Fox Nation and Fox Weather. He also discussed the domestic advertising market.
“We are aware of the chatter around advertising headwinds. And of course we will be prepared if the market turns downward. But let me be clear: We are currently not seeing any adverse advertising impact on our business,” he reported.
Murdoch pointed to advertising sales strength in local TV markets. “Our base market, ex-political, is very stable, particularly the return to growth for the auto category. That’s a strong indicator of things to come.”
And he pointed to a strong outlook for political advertising sales in the run-up to the midterm election season. “With a combination of political races and ballot issues across our markets, we continue to expect this election to deliver another record midterm cycle,” Murdoch forecast.
He also anticipated the midterm ad buys would exceed the 2020 presidential election cycle at local TV stations, when excluding the Georgia runoff election in the last political cycle. Murdoch said 13 of Fox’s TV markets would have U.S. Senate races, including in Arizona, Florida and Georgia, and 17 of the media company’s 18 markets will host key gubernatorial races, including in Arizona, Florida, Georgia, Michigan, Texas and Wisconsin.
“We are seeing an unprecedented wave of political spending, which accelerates as we head toward November,” he reiterated. Murdoch also discussed the upcoming renewal of Big Ten Network sports. “It’s a key strategic partner of ours. … We look forward to renewing those rights, potentially with some new broadcast partners in the mix,” Murdoch told analysts.
Media reports point to Fox, which holds the Big Ten digital rights and expects to retain those, joining with Paramount Global’s CBS and Comcast’s NBC to broadcast Big Ten games next year.
During the latest quarter, affiliate fee revenue at Fox Corp. rose 4 percent to $1.72 billion due to stronger pricing. And advertising revenue, driven by stronger pricing and higher ratings at Fox News media, rose 7 percent to $1.05 billion, against a year-earlier $982 million.
Fox also pointed to higher political advertising revenues at the Fox Television stations and continued growth at Tubi. In segmented revenues, television increased 7 percent to $1.52 billion and the Cable Network Programming segment rose 2 percent to $1.46 billion.
Ahead of the morning analyst call, Fox shares rose 2 percent in premarket trading.
“These results validate the strategy we embarked on three years ago – to focus on live news and sports while investing in high-growth digital initiatives to create a platform for ongoing growth. We begin fiscal 2023 with strong momentum, supported by an enviable schedule of live sporting events and the midterm election cycle, and bolstered by a best-in-class balance sheet,” CEO Murdoch said in a statement.
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