Fox Corp. posted a loss in the most recent quarter after it paid a $787.5 million settlement to Dominion Voting Systems.
The company had posted a profit in the same quarter a year ago.
The company took a $719 million charge including the cost of the Dominion settlements 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. But the hit left Fox with a $50 million net loss, compared to $290 million in profit a year earlier.
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 Tuesday Fox CEO Lachlan 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.”
Excluding those special items it had 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.
Since its settlement with Dominion, Fox has fired its most popular anchor, Tucker Carlson. Ratings on Fox News have fallen, while other right wing networks have gained audience since Carlson’s firing.
Murdoch denied that Fox News is changing its way of reporting news in the face of the Dominion suit or Carlson’s ouster.
“There is no change to our programming strategy at Fox News,” Murdoch said in response to an investor who asked about Carlson’s ouster.
Murdoch described Fox News as “obviously a successful” 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.
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.
The Dominion settlement was reached on April 18, but it was still reported in Fox’s fiscal third quarter, which concluded March 31. Dominion accused Fox of reporting false statements about Dominon’s voting machines in the 2020 presidential election.
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.
Company executives 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 little change in trading at the market open following the report.