On the strength of political advertising and summer soccer tournaments including the UEFA European Championship and CONMEBOL Copa América, Fox Corp. posted better than expected earnings for its first fiscal first quarter, not an entirely surprising development due to the avalanche of political spending.
What caught my eye – or ear as the case may be – on Fox’s happy earnings call this morning was CEO Lachlan Murdoch’s answer to an analyst question about his views whether, or when, the steady loss of cable subscribers would hit a nadir (assuming there is a floor).
One would have had to have been living under a rock for the last decade plus to not know pay TV programmers like Fox are threatened by the steep decline of cable subscribers. The number has been halved over the last 12 years to between 50 million and 60 million based on which data service is counting, as consumers flock to digital options. And some observers predict there is no end and soon cable TV profitability shrinks to an uneconomic level.
But the pace of sub loss slowed in the recent quarter, Fox reported, as did Comcast last week. Is the bottom in sight?
“The rate has declined somewhat in this quarter, pleasing to see,” Murdoch said. “We do believe that there is a sub floor we just don’t know where it is, but we do believe there is, there is a sub floor, and there will always be consumers and subscribers who will want a core package, and a core package that includes all of our brands.”
Fox alone among the major TV programmers has not jumped into the deep end of the streaming ecosystem, tethering its fortunes to the decaying pay TV market. NBCUniversal has Peacock, CBS boasts Paramount+ and ESPN/ABC have ESPN+ and soon a direct to consumer ESPN. That leaves Fox uniquely beholden to the cable bundle, so it is not a shock Murdoch expressed confidence in the future of linear.
Fox does have the digital news service, Fox Nation, and a free ad supported streaming TV platform, Tubi (Fox executives gushed about political ad spending surging on Tubi). But it does not have a streaming home for its sports, unlike its competitors, or for Fox itself.
It is a partner in Venu Sports, the currently frozen endeavor stuck in court that seeks to stream 14 sports dominant channels from Fox, Warner Bros. Discovery and Walt Disney.
“On Venu, obviously we are awaiting our appeal of the injunction, and we’ll see where we go from there,” Murdoch said. “We continue to believe Venu is a tremendous pro consumer, pro competition platform. We’re very excited to launch it when we have the ability to do so.”
An analyst asked Murdoch about Comcast’s disclosure last week that it is considering selling its linear cable channels, underscoring the declining profitability of that business. But Murdoch demurred, arguing he knows little about it and it doesn’t affect Fox. Fox is of course heavily invested in the cable channel universe, with channels like FS1, Fox Business and Fox News.
“I don’t see how we could ever do that,” he said. “I think breaking apart part of the business would be very difficult, both from a cost point of view, from revenue, and promotional.”
On a more light-hearted note, Murdoch playfully apologized for all the political advertising on sports programming, a much written about subject over the last few months.
“I apologize to anyone who’s enjoying their football over the weekend being bombarded by political ads but sports has really been the beneficiary of national political advertising,” he said. I’d say, and beneficiary is a debatable term as a viewer.
Murdoch also said advertising inventory for Super Bowl 59 is sold out at record pricing. This is not very newsworthy, had it not been sold out or set record prices, that would have been the big story of this column.
