Fox Corporation Ad Revenue Slips to $1.2 Billion, but Q3 Earnings Still Beat Wall Street Expectations

Fox Corporation beat Wall Street estimates in its third quarter of 2024, largely due to the absence of legal charges associated with Dominion Voting Systems’ lawsuit, despite seeing ad revenue declines throughout the quarter.

Here are the top-line results:

Net income: $704 million, compared to a net loss of $50 million in 2023

Revenue: $3.45 billion vs. $3.44 billion estimated by Zacks Analysts

Adjusted Earnings Per Share: $1.09 vs. 98 cents estimated by Zacks Analysts

While affiliate fee revenues increased by 4% driven by growth in the company’s television segment and cable network programming segment, advertising revenues fell to $1.24 billion compared to $1.88 billion in the prior year quarter. This was primarily attributed to the absence of the prior year broadcast of Super Bowl LVII and fewer NFL games at Fox Sports.

While the lack of primary elections this year hurt Fox’s political advertising, CEO Lachlan Murdoch said during the earnings call, “We do expect strong political advertising for national and local races,” in the fall of 2024, “which would largely benefit our station group.”

The CEO pointed out that Fox News again ended the third quarter as the most watched cable network in total day and primetime, commanding 50% of total day viewing.

“We expect this momentum to continue as we ramp our election coverage,” Murdoch noted.

“Fox’s fiscal third quarter results once again demonstrate how our unique strategy continues to distinguish Fox from our peers,” Murdoch said in a statement. “The strength and leadership of our core brands, coupled with our focus on live content and must have event programming, is clearly valued by our audiences, advertisers and distribution partners.”

“The consistent financial delivery from this strategy supports our investments in innovation which are driving momentum in our digital portfolio, led by Tubi. Our balanced capital allocation approach, fortified by our strong balance sheet, underpins our ability to drive long-term value creation for our shareholders,” Murdoch continued.

Cable network programming reported quarterly segment revenues of $1.47 billion. Affiliate fee revenues increased $11 million or 1% as contractual price increases were partially offset by the impact of net subscriber declines. Television reported quarterly segment revenues of $1.94 billion.

Cable network programming revenue in the third quarter of 2023 was $1.47 billion, compared to $1.58 billion the year prior.

The results come as Fox moves forward with Warner Bros. Discovery and Disney on a new sports streaming joint venture that will put ESPN, TNT and Fox Sports on a standalone app.

The service will be launched in the fall, with each media giant owning one-third of the company, having equal board representation and licensing their sports content to the joint venture on a non-exclusive basis. The venture will have its own independent management team.

On Wednesday’s earnings call, Murdoch praised the venture’s newly minted CEO Pete Distad, who was appointed to the role in March, noting that “demand for sports remains robust.”

“In just several weeks, the JV now has over 150 engineers and executives dedicated to building a unique innovative product, which focuses on sports fans outside of the traditional TV bundle,” Murdoch added. “We’ve already launched an internal beta service, which I have been trialing this past week and I have to say it’s an incredibly exciting product.”

In response to the move, sports streamer Fubo filed an antitrust lawsuit in February, alleging that the trio of studios have engaged in a years-long campaign of anticompetitive practices to block its business. A preliminary injunction hearing for Fubo’s legal battle has been set for Aug. 7.

While Fox, Disney, and Warner Bros. Discovery have filed motions to dismiss the lawsuit, DirecTV and Dish Network executives have issued declarations of support for Fubo, backing the sports streamer’s lawsuit.

Congress has also taken an interest in the joint streaming venture, requesting that Murdoch, Bob Iger, and David Zaslav all respond to questions about how the offering would impact access and competition in the sports streaming market.

In response to a question about the pushback from competitors and distributors, Lachlan said on Wednesday he and Fox are still “wholly and fundamentally supportive” of the traditional television bundle.

“It’s important for us to put our brains where where viewers are, and in the universe of sports fans that don’t currently take a cable bundle, the sports joint venture will be entirely focused on that,” he said on the call. “It’s frankly important to us that, because we are so invested in the cable bundle, that the sports joint venture will be very targeted and very focused on the non-traditional pay TV viewer universe, and we think we can very cleverly and in a very targeted way market to those subscribers so that we minimize any cannibalization of traditional subscribers.”

Murdoch has previously said he’s “not overly concerned” about potential regulatory scrutiny.

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