Fox Will Report First Earnings Since Dominion Settlement And Carlson Exit—Revealing Whether It’s In ‘Rebuilding Mode’ - Forbes

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Topline

Fox Corp. will share its first quarterly earnings report of the year Tuesday after a noisy start to 2023, which included a nearly $800 million settlement for its news wing’s touting of misinformation about the 2020 election and the surprise ouster of its popular but controversial television personality Tucker Carlson.

Key Facts

The Carlson and Dominion Voting Systems ado “creates headline risk but is unlikely to impact business fundamentals and is already reflected in the equity price,” Evercore ISI analysts led by Vijay Jayant wrote in a note to clients last week.

Class A shares of Fox are down 6% over the last month, shedding some $520 million and $90 million in the first trading sessions following the Carlson and Dominion announcements, respectively.

Helping to mitigate the potential bottom-line effects of the recent controversy is Fox’s hefty cash pile and Fox News’ success at replicating the ratings of Carlson’s prime-time predecessor Bill O’Reilly, after his own sudden and controversial ouster due to sexual misconduct allegations, Evercore noted.

Fox is likely to offer further guidance on the tax impacts and insurance coverage of its settlement with Dominion during its Tuesday morning earnings call, Jayant wrote.

In an April note to clients, CFRA analyst Kenneth Leon knocked down his 2023 and 2024 earnings estimates for Fox by about 5%, pointing to the negative publicity’s likely drag on advertising revenue.

Surprising Fact

Compared to other legacy media stocks, Fox will be “relatively less impacted” by the ongoing Writers Guild of America strike affecting most scripted programming in the U.S. should the stoppage extend to impact the crucial fall television season, according to Evercore, citing Fox’s stronger reliance on unscripted content such as sports for prime-time programming. CBS parent Paramount would be the most-impacted media stock if the strike lasts a prolonged period due to its heavy exposure to scripted programming, according to Evercore; shares of Paramount are down more than 25% over the last week after an earnings miss.

Crucial Quote

Fox News “is now in rebuilding mode, and it will likely take time for the stock to recover,” KeyBanc analyst Brandon Nispel wrote in a note to clients following Carlson’s departure.

Big Number

$28 billion. That’s how much market value the five largest American media companies—NBC parent Comcast, CNN parent Warner Bro. Discovery, Fox, Paramount and Fox’s sister company News Corp—have added year-to-date.