Fox Corp reported a 20% decline in advertising revenue on Wednesday, due to lower political ad spending, while concerns over uncertainty in ad spending and the future of sports programming sent the broadcaster’s shares down about 6% .
The company, which broadcast last year’s Super Bowl, is looking to capitalize on the move by teaming up with Walt Disney’s ESPN and Warner Bros Discovery to launch a sports streaming service later this fall.
Fox said lower political ad spending negatively affected its TV stations’ revenues due to the absence of the 2022 midterm elections.
“A 20% decline in advertising and the looming shadow of Super Bowl comparisons, which will air this year on CBS and stream on Paramount+, suggest advertising woes could continue,” said Michael Ashley Schulman, chief investment officer at Running Point Capital.
The company’s advertising revenue fell to $2 billion in the second quarter ended Dec. 31, but came in slightly above analyst estimates of $1.96 billion.
The lack of details about the joint venture to create a sports streaming platform has hurt Fox’s stock, analysts said.
“All three companies in the sports streaming announcement are stuck due to a lack of details. Shoot first, ask questions later,” said Thomas Hayes, chairman of hedge fund Great Hill Capital.
Fox’s broadcast network has been hit hard by high cable cuts as consumers cancel network TV packages and turn to video streaming for content.
Marketers are also spending more and more money on streaming and digital advertising platforms to keep up with the transition.
However, political ad spending in the United States is expected to increase by around 30% this year ahead of the November presidential election compared to the last election in 2020, with TV media expected to be the largest advertising platform, according to a report from research firm Insider Intelligence.
Fox reported quarterly revenue of $4.23 billion, compared with estimates of $4.20 billion, according to LSEG data.
On an adjusted basis, the company earned 34 cents per share, compared with estimates of 13 cents.
First print: February 8, 2024 | 12:43 pm IST