Fox Corporation reported a net loss of $50 million on Tuesday, or a loss of 10 cents per share, for its fiscal third quarter of 2023, compared to net income of $290 million it reported in the same quarter a year ago. Adjusted for one-time items, the company earned 94 cents per share.
“The variance was primarily due to charges associated with legal settlement costs at Fox News Media,” partially offset by investment gains, the company noted in its quarterly earnings release. A Fox spokesperson told TheWrap that the company booked an $850 million charge in its Other segment “net in relation to the Fox News Media defamation cases, reflecting all incurred and estimable costs at this time.”
Total revenue came in at $4.08 billion, an 18% increase from the $3.46 billion reported in the prior-year quarter. Advertising revenue increased 43%, primarily reflecting the impact of Super Bowl LVII, a higher volume of NFL games and continued growth at Tubi. Affiliate fee revenue increased 3% with 9% growth at the Television segment. Revenue in the Other segment was essentially unchanged from the prior year quarter.
Analysts surveyed by Zacks Investment Research were expecting earnings of 88 cents per share on revenue of $4.04 billion.
“Our fiscal third quarter once again demonstrated the effectiveness of Fox’s strategy to leverage the power of compelling live events to deliver for our viewers, advertisers, and distributors at scale,” chief executive officer Lachlan Murdoch said in a statement in the release. “Against a backdrop of macroeconomic uncertainty, our portfolio of leadership brands combined with our balance sheet strength position us well to allow us to focus on creating shareholder value for the long term.”
The quarterly report came not long after Fox reached a $787.5 million settlement with Dominion Voting Systems in April, which fell in the company’s fiscal fourth quarter. The Denver-based voting technology firm had accused top Fox News hosts and some network guests of defaming the company after they suggested its machines had been hacked or compromised during the 2020 presidential election.
Fox, which had stridently denied any wrongdoing, informed investors of the settlement but offered few details on its broader financial implications for the company at the time. The company may be able to write off a significant portion of the expense from its taxes.
“We made the business decision to resolve this dispute and avoid the acrimony of a divisive trial and a multi-year appeal process, a decision clearly in the best interest of the company and its shareholders,” Murdoch told analysts and investors on Tuesday. “The settlement in no way alters Fox’s commitment to the highest journalistic standards or our passion for unabashedly reporting the news of the day.”
Murdoch said that the network “always acted as a news organization reporting on the newsworthy events of the day, which certainly included allegations being made by the sitting president of the United States and his lawyers in the aftermath of a hotly contested presidential election.”
“We have been and remain confident in the merits of our position that the First Amendment protects a news organization’s reporting and allegations being made by a sitting president of the United States,” he added. “However, the Delaware court severely limited our defenses and trial through pre-trial rulings. So we determined that the best course of action for the company and its shareholders was to settle instead of proceeding with a six week trial and potentially two or even three years of appeals.”
In addition to Dominion, voting technology company Smartmatic has filed a separate defamation suit, which Murdoch said is a “fundamentally different case than Dominion in that all of our full complement of First Amendment defenses remain.”
“We’ll be ready to defend this case surrounding extremely newsworthy events when it goes to trial likely not until the calendar year in 2025,” he said.
In the Cable Network programming segment, revenue came in at $1.57 billion, compared to $1.58 billion during the same period a year ago. Affiliate fee revenue was broadly consistent with the prior-year quarter as contractual price increases offset a drop in subscribers. Advertising revenue was $316 million, compared to $339 million in the prior year quarter. Other revenue increased $14 million or 10%, primarily due to higher Fox Nation subscription revenue. The segment posted EBITDA of $792 million, compared to $864 million in the prior year quarter.
Meanwhile, the television segment reported revenue of $2.48 billion, an increase of $655 million or 36% from the prior-year quarter. Advertising revenue increased $590 million or 61%, primarily due to the broadcast of Super Bowl LVII and a higher volume of NFL games at Fox Sports, as well as continued growth at Tubi. Affiliate fee revenue increased $64 million or 9% led by higher rates at both owned and operated stations and third-party Fox affiliates. The segment posted EBITDA of $117 million, an increase of $82 million from the prior-year quarter.
Fox’s Class A shares popped over 2% at the opening of Tuesday’s trading session. The company, which has authorized a $7 billion stock repurchase program, has repurchased approximately $3.4 billion of its Class A common stock and approximately $1 billion of its Class B common stock to date.