Fox Corp exceeded expectations in its fiscal Q4 earnings report, surpassing Wall Street forecasts for earnings per share. While the company’s revenue was in line with expectations, it experienced a 4% decline in advertising revenue compared to the previous year, amounting to $1 billion. This decline impacted both its broadcast and cable networks.
The decrease in broadcast advertising revenue was primarily due to lower political advertising revenues. However, this was partially offset by higher revenues at Tubi, the company’s free streaming service. On the other hand, the decline in cable advertising revenue was mainly attributed to the continued impact of elevated supply in the direct response marketplace at Fox News. Notably, Fox News had replaced its 8 PM host Tucker Carlson during the quarter, resulting in a decline in ratings during that hour. The exact impact of Carlson’s departure is unclear.
Despite the decline in advertising revenue, Fox Corp’s total revenue for the quarter remained relatively stable at $3 billion, only slightly lower than the previous year. This was partly due to higher affiliate fees at the Fox broadcast network, which helped offset the advertising declines. However, the company also experienced a decrease in affiliate fees in its cable segment, as contractual price increases were outweighed by the impact of net subscriber declines.
In an effort to manage costs, Fox Corp announced plans to reduce expenses at Fox News by lowering digital investment and newsgathering costs. This strategic move reflects the company’s focus on optimizing its operations and maintaining a strong balance sheet.
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Looking ahead, Fox CEO Lachlan Murdoch expressed his optimism for the future. He highlighted the exceptional performance of the company in fiscal year 2023, which saw record annual revenue and EBITDA. Murdoch attributed this success to various factors, such as major sporting events like Super Bowl LVII and the FIFA Men’s World Cup, the record-breaking political midterm cycle, and the impressive growth of Tubi. As Fox enters fiscal year 2024, the company remains committed to its focused strategy and aims to generate shareholder value while leveraging its powerful portfolio.
Overall, while Fox Corp faced challenges in advertising revenue, particularly in its broadcast and cable networks, the company’s ability to manage costs and benefit from other revenue streams helped mitigate the impact. With a strong financial position and a strategic focus, Fox Corp is well-positioned to navigate the evolving media landscape and continue delivering value to its shareholders.
