Despite a turbulent and expensive few weeks, Fox News isn’t changing course.
Fox Corp. CEO Lachlan Murdoch said there will be no change in strategy at the company’s top rated right-wing network, despite the firing of its top rated anchor Tucker Carlson and a massive $787.5 million settlement to Dominion Voting Systems that resulted in the company swinging to a loss in the just completed period.
“There is no change to our programming strategy at Fox News,” Murdoch said in response to an analyst who asked about Carlson’s ouster during the investor call Tuesday to discuss its financial results.
Murdoch described Fox News as “obviously a successful strategy” and suggested Carlson’s firing was a tweaking of its strategy, not a departure from it.
“As always, we are adjusting our programming and lineup and that is what we continue to do,” Murdoch said.
His comments came after the company reported a $50 million net loss for the just completed quarter, compared to $290 million in profit a year earlier.
The reason was a $719 million charge including the cost of the Dominion settlement, other legal settlements related to its news division and other legal costs, including attorney fees, which was partly offset by equity earnings of it affiliates and a change in the market value of some of its investments.
The earnings statement didn’t mention Dominion Voting Systems, although it does refer to charges related to legal settlement costs at Fox News Media. On the company’s call with investors Murdoch referred to the settlement with Dominion as in the best interest of the company and its shareholders, given rulings by the Delaware court that he said limited its defense. He said going to trial could have led to two to three years of appeals.
“We’re proud of our Fox News team, the exceptional quality of their journalism and their stewardship of the Fox News brand,” he said. “So as we look ahead, we are confident in the strength of the Fox brands and the strength of our balance sheet.”
And he again defended the company’s post-election coverage of the false conspiracy theories made against Dominion, even though internal communications among Fox anchors made public during the discovery process showed many of them didn’t believe the claims being made.
“We always acted as a news organization reporting on the newsworthy events of the day,” Murdoch told investors Tuesday. “Now we have been and remain confident in the merits of our position that the first amendment protects a news organization’s reporting and allegations being made by a sitting president of the United States. However, the Delaware court severely limited our defenses and trial through pre-trial rulings.”
Fox did not have to apologize or admit wrongdoing as part of the settlement in Dominion’s defamation suit against it, although its statement did say it acknowledged “the Court’s rulings finding certain claims about Dominion to be false.”
Fox still faces a lawsuit from another voting machine manufacturer, Smartmatic, which is seeking $2.7 billion in damages. Murdoch told investors that case is “fundamentally different” from the Dominion case and that Fox will have greater defenses available to it than in the Delaware court hearing the Dominion case. He predicted that case won’t go to trial until 2025.
The Dominion settlement was reached on April 18, but it was still reported in Fox’s fiscal third quarter, which concluded March 31. Excluding the legal costs and other special items reported Tuesday, it was a pretty good financial quarter for Fox.
It reported adjusted earnings of $494 million, or 94 cents a share, up from $459 million a year earlier. That was better than the 87 cents a share forecast by analysts surveyed by Refinitiv. The company was helped by the profits and revenue gain it received from airing this year’s Super Bowl.
Revenue at the company rose 18% to $4.1 billion, slightly higher than analysts’ forecasts. Most of that gain was due to a 43% surge in advertising revenue, helped greatly by $650 million in Super Bowl ads. Fox did not broadcast the Super Bowl in 2022.
Fox had plenty of money available to pay the settlement. It said it had $4.1 billion in cash and cash equivalent on hand as of March 30, about three weeks before the settlement was reached. It also announced it repurchased $1.8 billion of its shares in the nine months ending March 31, as part of a $7 billion share repurchase plan. So far, Fox has repurchased $4.4 billion worth of shares as part of its plan.
Murdoch said Fox is better positioned than many other media companies to ride out the delays and lost revenue that could take place from a prolonged strike by the Writers Guild of America. Some programming, such as late night shows, have already gone dark due to the strike that started last week, and production on other shows has been halted.
But Murdoch said the fact that Fox has more of its revenue and profit coming from sports and news, which are not affected by the strike, puts it in a better position.
“Our healthy balance of scripted and unscripted content on the network puts us in a tremendous position,” he said.
The hit from the settlement was well known by investors ahead of the report. But even with the better than expected results, Fox (FOX) shares were up only about 1% in trading at the market open following the report.