Fox Corp. said profit fell noticeably in its second fiscal quarter due in part to a 20% dip in advertising revenue that reflected the absence of a outsize sporting event like the FIFA Men’s World Cup in the period as well as lower political advertising at its stations and a continued glut of cheaper direct-response advertising that has filled commercial breaks at many cable-news outlets.
The company, which owns Fox News, the Fox broadcast network and Fox Sports, said fiscal 2024 second-quarter profit came to $109 million, or 23 cents per share, compared with $312 million, or 58 cents per share.
Revenue for the period fell 8.2% to $4.23 billion, compared with $4.61 billion last year.
Declines in traditional advertising revenue have been persistent for the last few quarters for most media companies, and there is hope the pattern will break in 2024 as a stock-market upturn and lowered interest rates buoy consumer spending. But there is also growing concern that Madison Avenue has already shifted many of the dollars it once earmarked for linear TV to new streaming venues where prices are lower and audiences are more difficult to aggregate.
Lachlan Murdoch, Fox’s CEO, said in a statement that the company continued to back a strategy of investing heavily in live programming like sports and news, which continues to bring bigger audiences. He also praised a new streaming sports joint venture the company unveiled with Warner Bros. Discovery and Disney, saying that it would help Fox reach broader audiences, while allowing the company to pursue its own strategies.
Speaking to investors during a Wednesday earnings call, Murdoch said the new sports joint venture would reach an audience of “cord-nevers” who were not part of the industry’s traditional cable business. Such a customer base, he suggested, could total as much as 60 million consumers, and the new streaming outlet would provide new affiliate revenue to Fox and its partners, though it would generate costs such as marketing. He remained sanguine that it would not undermine Fox’s current distribution relationships or cause current cable customers to abandon their current arrangements, a dynamic that could undermine the business of Fox News.
“We would not be launching this product if we thought it was going to significantly affect” our pay-TV business, Murdoch said.
Revenue rose 2% at the company’s cable operations, largely on a $5 million increase in affiliate fees. Ad revenue fell to $348 million from $451 million, largely due, Fox said, “to the impact of elevated supply in the direct response marketplace, lower ratings and higher preemptions associated with breaking news coverage at Fox News Media, and the absence of the Men’s World Cup at the national sports networks.”
Television reported quarterly segment revenues saw revenue fall to $2.54 billion, compared with $2.93 billion. Ad revenue fell to $1.65 billion, compared with $2.05 billion in the year-earlier period, due to the absence of the World Cup event and lower political advertising revenues at the company’s local TV stations.
One analyst suggested the ad trends bore observation. In a Wednesday research note, Wells Fargo analyst Steven Cahall noted that cable ad revenue missed his estimate by 6% to 7% and worried “the presidential election could be setting up for a weaker news cycle.”
