Fox Corp. reported a $50 million loss in the first quarter primarily due to charges associated with the legal settlement costs at Fox News Media for more than $787 million.
Elevated legal costs connected with the case are likely to appear in the broadcaster’s next quarterly report.
It was Fox’s first earnings report since Fox News fired Tucker Carlson, host of its 8 p.m. slot.
Fox’s ratings have plummeted in the two weeks since Carlson left, and the stock (FOX) is down 4.08% from $30.82 on April 21, ahead of Carlson’s April 24 departure, and closing price of $29.56 on May 8.
Fox Corp.’s market capitalization has declined by $1.36 billion in that time, from a market cap of $17.97 billion on April 21, 2023 to $16.61 billion on May 9, 2023.
“During the quarter we booked an $850 million charge in 'other,' net in relation to the Fox News Media defamation cases, reflecting all incurred and estimable costs at this time,” a Fox spokesperson told The Hollywood Reporter.
“We made the business decision to resolve this dispute and avoid the acrimony of a divisive trial and a multiyear appeals process, a decision clearly in the best interest of the company and its shareholders,” Fox CEO Lachlan Murdoch said during an earnings call with investors.
Murdoch brushed aside concerns related to Carlson’s leaving, only saying, “With regards to our programming strategy in primetime, there’s no change to our programming strategy at Fox News. It’s obviously a successful strategy.”
Total revenue rose 18% to $4.08 billion, just slightly above analysts’ estimates of $4.03 billion, according to Refinitiv data. Fox's ad revenue was up 43% to $1.88 billion.
However, Fox said its cable network ad revenues declined by 7.28% to $316 million from $339 million in the previous quarter “as the continued impact of elevated supply in the direct response marketplace at Fox News Media was partially offset by the broadcast of the World Baseball Classic at Fox Sports.”
Murdoch said the results were supported by higher viewership for Fox Sports' broadcast of Super Bowl LVII and growth at its streaming service Tubi, which delivered 31% revenue growth in the quarter.
Murdoch suggested Fox may lay off staff and look for other cost-cutting measures in the coming months in a softer advertising environment.
“We are not completely immune to the headwinds facing the broader industry and the general economy,” Murdoch said. “You can expect us to be even more focused on our cost base as we look to reinforce our strategy for future growth.”
As for the second, $2.7 billion lawsuit from Smartmatic, Murdoch said the company will be “ready to defend” itself when it goes to trial, most likely in 2025.
The judge overseeing the Dominion case had ruled in March that Fox could not use its “newsworthy” argument as a defense, finding its coverage was false, defamatory, and not protected by the First Amendment.
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