Fox Corp, the media company owned by the Murdoch family has reported a loss of over $50 million in its fiscal third quarter, largely due to the costs associated with a defamation lawsuit brought against it by Dominion Voting Systems. Despite an increase in advertising revenue of 43% due to its broadcast of Super Bowl LVII, Fox ultimately agreed to pay $787.5 million to settle the claims brought by Dominion. This cost wiped out the company’s profits and resulted in a loss for the quarter.
In a statement, Fox Corp. explained that the costs associated with the lawsuit were substantial enough to offset the gains made in advertising revenue. The company said, “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”. The actual cash for the settlement was taken out in April, as disclosed in Fox SEC filings.
The loss reported by Fox Corp. was $54 million, or 10 cents per share, compared to a profit of $283 million, or 50 cents per share, in the same period the previous year. The company attributed the loss to the “charges associated with legal settlement costs at Fox News Media”.
Fox CEO Lachlan Murdoch said settling the lawsuit was “a decision clearly in the best interest of the company and its shareholders”, but he doubled down on Fox News decisions that led to the massive payout, saying that the company’s decision to settle “in no way alters Fox’s commitment to the highest journalistic standards across our networks, or our passion for unabashedly reporting the news of the day”.
Fox Corp’s profits wiped out in Q3 due to $787.5 million settlement of Dominion Voting Systems defamation lawsuit.
The lawsuit costs weighed on the operations of Fox’s cable-programming unit, where revenue fell to $1.57 billion from $1.58 billion in the same period the previous year. Affiliate fees were flat with last year due to subscriber declines, while ad revenue was down by about $23 million due to “the continued impact of elevated supply in the direct response marketplace at Fox News Media.”
Revenue from Fox’s broadcast TV operations rose 36%, or $655 million or 36%, as ad revenue rose 61% due to Super Bowl LVII and more NFL games than in the same period the previous year. Affiliate fees rose 9%, or $64 million.
During a call with investors, analysts raised questions about the company’s ability to handle legal costs, given that Fox is also facing a second defamation lawsuit with Smartmatic, another voting technology firm. However, executives said that they were optimistic about the company’s standing in court.
Murdoch indicated that Fox News Channel was unlikely to shake up its primetime lineup in the wake of the ouster of former primetime host Tucker Carlson, stating that “there’s no change to our programming strategy at Fox News. It’s obviously a successful strategy.”
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While the costs associated with the Dominion lawsuit have had a significant impact on Fox Corp’s financials, the company remains optimistic about its future and committed to its programming strategy. However, the outcome of the Smartmatic lawsuit and the potential for further legal costs may still pose a challenge for the media giant.