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Fox Corp. CEO Lachlan Murdoch will forgo his salary amid the novel coronavirus pandemic and 700 employees at the company will see pay reductions, the executive said in an internal memo Wednesday.
Fox’s executive officers, which include mogul Rupert Murdoch as well as chief operating officer John Nallen, chief legal officer Viet Dinh and chief financial officer Steve Tomsic will go without pay until Sept. 30 of this year, the memo said.
Lachlan Murduch wrote that the moves were needed so that “to the greatest extent possible, we are able to protect our full-time colleagues with salary and benefit continuation during the period we are most affected by the crisis.”
Rupert Murdoch’s total compensation in fiscal 2019 was $42.1 million while Lachlan took home $42.1 million in total pay, per a company filing with the Securities and Exchange Commission last September.
Salary cuts will hit other Fox executives in tiers, Murdoch added: “The rest of my direct-report executive team will reduce their salaries by 50 percent through the same period. And from May 1 through July 31, 2020, our executives at the VP level and above will reduce their salaries by 15 percent.”
The Fox CEO noted, “Collectively, these salary reductions will impact about 700 of our colleagues. And we are suspending compensation increases throughout the company, including for the Board of Directors.”
The company will also extend its work-from-home policy to May 15, Murdoch stated, and Fox will “modify our approach to returning to normal operations based on recommendations from health experts and elected officials.”
The media conglomerate, comprising Fox News, Fox Sports and Fox Entertainment, as well as local TV stations, has been hit by a television advertising downturn as sports leagues go dark. On March 31, Fox described the virus impact to the firm as “material” and noted “broadcast rights have been canceled or postponed and the production of certain entertainment content the Company acquires has been suspended.”
Earlier this month, S&P Global Ratings noted in its forecast for Fox that the company is “heavily exposed to both national and local television advertising, given that it generates nearly 50 percent of its consolidated revenue from advertising.”
S&P, the financial services firm, noted, “Nonetheless, our ratings on the company are unaffected and we believe that it may be the best positioned of its pure media peers to weather the pandemic due to its conservative financial policy.”
On April 20, UBS analyst John Hodulik lowered his price target for Fox from $40 to $28, noting, “We now expect steeper U.S. advertising declines in 2020 with a more gradual recovery in 2021.” The same day, Fox Corp. closed its $440 million cash deal for the ad-support streaming service Tubi. (Earlier this year, Fox sold its 5 percent stake in streaming player Roku to finance the acquisition.)
In his April 22 memo to staff, Murdoch highlighted the work that Fox employees have been doing to support virus relief efforts. The exec noted, “we have retained and redeployed our Studio Lot food services staff, and these colleagues are now preparing 2,000 meals per day for those in need in the L.A. community. And some costume department staff have used their time and skills to make masks for fellow colleagues to help them work more safely.”
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