Fox Corp. Quarterly Earnings, Revenue Fall Amid Pandemic

Lachlan Murdoch - chief executive officer of Fox Corporation and co-chairman of News Corp- Getty - H 2019
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Fox, led by CEO and executive chairman Lachlan Murdoch, posted quarterly revenue of $2.42 billion, against a year-earlier $2.51 billion, amid lower advertising demand and spending.

Fox Corp. on Wednesday reported a fall in quarterly earnings and overall revenues, as the owner of Fox News Channel and Fox Entertainment recorded lower advertising revenue amid the coronavirus pandemic.

Fox — which, after Rupert Murdoch sold most of 21st Century Fox to Walt Disney for $71 billion last year, became a stand-alone company mostly focused on news and sports — reported net income of $145 million for the latest quarter, compared with $465 million in the year-ago period. 

The company posted $442 million in one-time impairment and restructuring charges, in part to exit a rights deal with the U.S. Golf Association. That impact was offset by lower operating expenses.

On a per-share basis, earnings were 20 cents for the latest quarter, against a year-earlier 73 cents per share, and the adjusted per-share earnings were unchanged at 62 cents. Quarterly revenue fell 4 percent to $2.42 billion, compared to a year-earlier $2.51 billion.

Wall Street analysts forecast per-share earnings of 61 cents, with overall revenues to hit $2.41 billion, according to a Zacks consensus estimate.

Fox also reported advertising revenue of $712 million during the fourth quarter, down 22 percent from a year-earlier $918 million. The media conglomerate was hit by a TV advertising downturn as sports leagues went dark, with the delayed Major League Baseball and NASCAR live events only recently returning.

The media group reported lower local ad revenues at Fox Television Stations, fewer live events at Fox Sports and fewer hours of scripted content at Fox Entertainment, due mostly to the impact of the coronavirus outbreak. Overall affiliate fee revenues rose 8 percent to $1.51 billion.

During the latest quarter, cable network programming saw segment revenues fall 2 percent to $1.27 billion, compared to a year-earlier $1.3 billion, as lower ad revenue was offset by higher affiliate revenues.

Advertising revenue during the fourth quarter was underpinned by political revenues at Fox TV stations. Fox earlier forecast local TV station advertising during the latest quarter would be down sharply, compared to year-earlier levels, as marketing budgets for major brands had collapsed.

During an analyst call, Fox Corp. CEO Lachlan Murdoch talked up the return of live sports to the Fox Sports division, including Major League Baseball and NASCAR events. He said Fox Sports was using fewer production crew members at arenas and NASCAR tracks, and increased safety protocols, to produce the live events.

Murdoch talked about the return of the NFL and college football this fall. He said Fox Sports expected to hear shortly from the college conferences about dates for their fall 2020 season launches, and the NFL had already signaled a return in September.

"We fully expect both college football and the NFL to come back in the fall... We are full speed ahead working with the college conferences and with the NFL to ensure a safe and consistent and full season for the NFL and a reduction in the season for college football" as a safety precaution during the COVID-19 crisis, Murdoch reported.

On the entertainment front, Murdoch touted two new TV series produced before the pandemic and set to launch on Fox this fall -- the sci-fi drama Next and the southern gothic family soap Filthy Rich. "We remain hopeful that The Masked Singer's fourth season will also be on air for the fall," he added.

The Masked Singer wrapped its third season on May 20. The fourth season of the popular music competition series is understood to have restarted production amid the pandemic.

Murdoch later in the analyst call said he preferred The Masked Singer to return in the fall, rather than mid-season, to help drive ratings and ad revenues for Fox. The Fox Corp. boss also addressed how U.S. politics was boosting overall revenues at the Fox News Network and across the media group.

He argued political advertising revenues were "pacing more than 50 percent ahead of the equivalent period four years ago. We are encouraged by our recent trends in our local markets and expect healthy political demand up and down the ballot in our coming quarters."

Murdoch added Fox TV stations were helped by being situated in key battleground states in both the U.S. presidential and Senate re-election races. "Record political revenue has already offset some of the impacts of COVID-19 on local markets," he told analysts.

August 4, 3:30 p.m. Updated with comments by Fox Corp. CEO Lachland Murdoch made during an analyst call.