Fox Corporation managed to mitigate some of the effects of the coronavirus pandemic as strength at its Fox News Media operations and a gain recorded on a payment from Walt Disney Co. helped the company navigate its way to a profit in its first fiscal quarter.
The owner of Fox News Channel and the Fox broadcast network said revenue during the period increased 2% to $2.72 billion from $2.67 billion in the earlier period, largely due to increases in fees paid by distributors of Fox News. Those payments helped offset downturns in advertising as well as challenges rising from delays in sports and scripted programming due to pandemic conditions.
“Our growth was led by Fox News Media where the Fox News Channel has been the highest rated television network in America for the last four months and has consistently achieved record digital engagement across its platforms,” said Lachlan Murdoch, the company’s executive chairman and CEO, in a statement. Fox said net income attributable to investors rose to $1.11 billion, or $1.83 a share, compared with $499 million, or 80 cents a share in the year-earlier period.
The results were buoyed by a large one-time gain due to a $462 million cash payment from Walt Disney related to some of the terms of Fox’s sales of its cable-and-studio assets to that company in 2019. Fox had made a pre-payment to Disney of its share of tax liabilities that resulted from Disney’s sale of the former Fox-owned regional-sports cable networks, and Disney’s payment to Fox during the period is based on the sales price of those assets.
Executives said during a Tuesday-morning call with investors that the results provided early indication of business improving after the onset of coronavirus. So-called “scatter” ad buying is improving, and Fox intends to use its NFL football broadcasts to promote the debut of new scripted series in January, Murdoch said, He also indicated that the company is selling inventory on its Tubi streaming-video outlet as part of all its ad-sales negotiations.
Fox’s cable programming operations led the way, with revenue rising $40 million, or 3%, due to higher fees from advertising and distribution. Fox said advertising rose $45 million, or 18%, thanks to higher pricing and increased ratings at Fox News. Affiliate fees rose $34 million, or 4$, thanks to price increases. Despite the results, Fox said a downturn in live sports events and subscriber declines challenged the company during the period.
Fox said its broadcast-TV assets saw a revenue decrease of $6 million, to $1.35 billion, as lower advertising revenue offset gains from distribution. Fox said affiliate revenue rose $105 million, or 23%, thanks to increases from fees to carry programming from its TV stations. But ad revenue fell $117 million, or 15%, thanks to a smaller number of NFL broadcasts in the quarter and the postponement of college football games that would have been broadcast by Fox Sports. Fox said political advertising at its TV stations helped to offset some of those dynamics.