The high-profile lawsuit between Fox Corp. and Dominion Voting Systems had a significant impact on Fox’s bottom line last quarter, with the company reporting a $50 million loss “primarily due to charges associated with legal settlement costs at Fox News Media.”
The earnings report is the first since Fox Corp. settled its defamation lawsuit with Dominion. That settlement was for more than $787 million. That being said, the loss was due to elevated legal costs associated with the case, with the actual settlement likely to appear in its next quarterly report.
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“During the quarter we booked an $850 million charge in Other, net in relation to the Fox News Media defamation cases, reflecting all incurred and estimable costs at this time,” a Fox spokesperson said.
Despite the legal issues, Fox’s broadcast of the Super Bowl in the quarter saw the company’s advertising revenue rise by 43 percent to $1.86 billion, with total revenues in the quarter of $4.08 billion.
Had it not been for the settlement, an increase in both distribution and advertising revenue would have given Fox a healthy profit in the quarter.
“We made the business decision to resolve this dispute and avoid the acrimony of a divisive trial and a multiyear appeals process,” Fox CEO Lachlan Murdoch said on the company’s earnings call. “Our decision is 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.”
In answer to a follow-up question, Murdoch said the decision to settle with Dominion was due in part to the fact that the court limited Fox’s ability to use the First Amendment in its defense, but that option remains available in the defamation suit filed against Fox by fellow electronic voting machine manufacturer Smartmatic.
And Murdoch suggested that the company may follow the other media giants in looking to lower its costs.
“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,” Murdoch said. “Nonetheless, you can expect us to be even more focused on our cost base as we look to reinforce our strategy for future growth.”
The company noted that Fox News seems to be facing a softer ad environment.
“Advertising revenues were $316 million as compared to $339 million in the prior year quarter as the continued impact of elevated supply in the direct response marketplace at Fox News Media was partially offset by the broadcast of the World Baseball Classic at Fox Sports,” the company reported in a footnote to its cable network earnings figures.
It was the broadcast network (and specifically the Super Bowl and NFL playoffs) and Tubi that were responsible for a great deal of the company’s growth.
With regard to the writers strike, Murdoch said, “We expect not to be affected by the writers strike, really at all,” noting that the company programs very little scripted entertainment. While it will have some impact on what Fox commits to at its upfront, Murdoch predicted that in the event of a prolonged strike, “the audience will pivot when they are watching TV to [news and sports],” which Fox is heavy in.
This was Fox Corp.’s first earnings report since Fox News parted ways with its star 8 p.m. host, Tucker Carlson. FNC’s ratings in the hour have plummeted since Carlson’s departure, though the channel continues to regularly beat its cable news rivals.
Murdoch brushed aside concerns related to his departure on the earnings call.
“With regards to our programming strategy in primetime, there’s no change to our programming strategy at Fox News,” Murdoch said. “It’s obviously a successful strategy. And as always, you know, we are adjusting our programming and our lineup and that’s what we continue to do.”
