Sports broadcasts and political advertising helped buoy Fox Corp. in its fiscal second quarter at a time when many of its rivals are scrambling to find new profits as they invest heavily in courting consumers who want to stream their TV favorites.
The owner of the Fox News Channel and the Fox broadcasting network said it swung from a loss to a profit in the second quarter, largely due to advertising associated with its sports broadcasts and a flow of political advertising revenue at its local TV stations. The results seemed to lend ballast to Fox’s longtime operating stance of not investing as heavily in subscription-based streaming as its competitors and its focus on assembling large, concurrent audiences to its traditional TV assets.
Fox said profit in the period attributable to shareholders came to $313 million, or 58 cents a share, compared with a loss of $85 million, or 15 cents a share, in the year-earlier period. Revenue rose 4% TO $4.61 billion, compared with $4.44 billion in the year-earlier quarter. Fox said revenue from affiliate fees rose 1%, while ad revenue rose 4%.
Even so, the company saw headwinds at its cable operations, where it experienced declines in affiliate fees, revenue and cash flow. Affiliate fees were off by $13 million due to subscriber declines, while ad revenue fell slightly, owing to a rising supply of direct-response advertising. Direct-response advertisers typically pay lower prices than more traditional, big-brand marketers, in exchange for a network having more say on when their commercials can run. A person familiar with the matter says direct response ads often fetch similar prices to national ads in certain dayparts.
Fox also cited higher sports rights fees for Fox Sports and “higher legal costs and increased digital investment at Fox News Media.” Fox has been investing more heavily in programming for Fox Nation and Fox Weather and grappling with lawsuits from two voting-technology firms over how their roles in the 2020 presidential election were represented in reports by Fox News Channel and some of its personalities.
During a call with investors Wednesday Fox CEO Lachlan Murdoch indicated the company believed it was in a good position to consider strategic investments and acquisitions. Fox and its sister corporation, News Corp., recently decided to stop its exploration of a possible recombination of the two companies, both of which are controlled by the Murdoch family.