Everything seems like it’s going great at Fox Corporation, except for the fact that everything seems like it isn’t.
While speaking at an investor conference Thursday, Fox Corp. CEO Lachlan Murdoch praised his family’s decision to sell off a large swath of cable and studio assets to Walt Disney Co. in 2019, a move that left Fox significantly smaller and focused largely on live TV, mainly news and sports. He even brought up a reference to the 1979 comedy “Monty Python’s Life of Brian,” in which a small combatant unencumbered with armor or muscle is able to survive a colosseum fight after his larger opponent suffers a heart attack.
“We are the little guy,” said Murdoch. “We are going to be the one that survives.”
Many interested observers may not be so sure.
Fox Corp. expects to go to court in April to defend itself in a $1.6 billion defamation lawsuit filed by voting-technology company Dominion Voting Systems. The case alleges that Fox News Channel anchors and interviewees made false claims about Dominion’s actions and influence on the 2020 election. It is the second legal proceeding made against Fox News for its coverage of the aftermath of the 2020 race for the White House. Smartmatic, a voting technology company, has filed a massive $2.7 billion suit against Fox News. At issue in the suits are allegations that Fox News falsely claimed the companies had rigged the election, repeated items about the matter and then refused to engage in efforts to set the record straight. The 2020 election was not fixed and its results were certified by multiple legal processes.
Fox executives have for months told investors their focus on news and sports allow the company to be nimble and to stay out of the profit-draining streaming wars that have enveloped so many of their rivals. Where Warner Bros. Discovery, Disney, Paramount and NBCUniversal have sunk millions into creating content behind a broadband paywall, Fox is going after advertisers who will support either linear TV assets or the free-to-view Tubi streaming hub. From a financial viewpoint, Wall Street has seemed less concerned about Fox and more worried about its competitors.
The two defamation cases threaten to upset all that. Fox had approximately $4.06 billion in cash on hand at the end of its fiscal fourth quarter, according to the filing. And texts, emails and depositions revealed in recent days show Fox in a horrible light, with executives and prominent anchors stating they did not believe in many of the debunked and far-fetched schemes espoused by several affiliates of former President Donald Trump. The documents have not shone a positive light to Fox News luminaries including Maria Bartiromo or Tucker Carlson.
To be sure, Fox News continues to dominate in the ratings, handily topping rivals CNN and MSNBC in viewership. As part of its ability to win bigger audiences, said Murdoch, the network also attracts bigger groups of Democrats and viewers of either Latino or Asian heritage than its two competitors. Murdoch complimented Fox News Media CEO Suzanne Scott, noting that he team has “done a tremendous job at running the business and building this business.”
And yet, there have been some signals in recent days that Fox News’ allure to newsmakers who might be among its most faithful has dimmed. A group of Republican senators, including Majority Leader Mitch McConnell, have rebuked Carlson, Fox News’ controversial 8 p.m. host, for trying to portray the insurrection at the U.S. Capitol on January 6, 2021, as “mostly peaceful,” using footage of the event given to him by U.S. Speaker of the House Kevin McCarthy. On Thursday night, Virginia Governor Glenn Youngkin, an up-and-comer in the Republican party, is taking part in a primetime town hall centered on education on CNN (He has in the past appeared on Carlson’s show). Earlier this week, Scott Adams, the “Dilbert” cartoonist whose popular comic strip was pulled from the nation’s newspapers after he made racist remarks, granted a sit-down interview to Chris Cuomo, the anchor of a primetime program on NewsNation, the Nexstar Media Group cable-news outlet that doesn’t attract the industry’s biggest audiences. The interview was one of NewsNation’s most-watched primetime hours, according to Nielsen. Combatants in the so-called “culture wars” often post great “gets” — and ratings — for Fox News programs.
There have been other Fox missteps in recent weeks, including a shambolic corporate effort to try to snare President Joe Biden for an interview in pre-game coverage of the Super Bowl and a scuttled attempt to get investors to approve a merger of Fox and its corporate sibling, News Corp., another media company controlled by the Murdoch family.
Lachlan Murdoch dismissed the Dominion case as posturing. “A lot of the noise you hear about this case is not about the law and it’s not about journalism, and it’s really about politics,” he said during his remarks on Thursday. “That’s fundamentally more reflective of this polarized society we live in.”
Yet the court case will start in Delaware just a few weeks before the beginning of the TV industry’s annual “upfront,” when Fox and other media companies try to sell the bulk of their advertising in advance of the debut of their next cycle of programming. And Fox is about to work its way through negotiations for carriage of Fox News, Fox Business Network, Fox Sports and affiliates of Fox broadcasting with about a third of its distribution partners, Murdoch acknowledged Thursday. Fox News alone was projected last year to take in approximately nearly $1.17 billion in ad revenue for 2022 and nearly $1.82 billion in distribution fees, according to Kagan, a market-research firm that is part of S&P Global Intelligence.
“Fox News is Fox Corporation’s largest moneymaker, yes,” Lachlan Murdoch said in a recent deposition.
The Murdochs would like investors to see Fox’s portfolio of sports rights, its ad-supported Tubi streaming service and the sizable TV crowds that flock to Fox News. But the court case is likely to obscure that view in weeks to come. That character in “Life of Brian” won a battle at the colosseum. The Murdochs’ fight is just beginning.