Fox’s ad revenue fell 20%, the company said during its second-quarter earnings call. CEO Lachlan Murdoch says the company aims to drive up ‘cord never audiences through streaming sports and its free ad-supported platform, Tubi.
The company reported an overall revenue of $4.2 billion during last year’s second quarter, down from $4.6 billion in 2022. Net income also fell considerably to $115 million, dropping from $321 million, although affiliate revenues increased by 4% to $1.8 billion. This boost was partially driven by the Fox broadcast network. Fox’s cable TV revenues increased 2% to $2 billion.
Fox blamed a strong 2022 for the unfavorable comparison. It cited the 2022 FIFA Men’s World Cup in Qatar and ad revenue from midterm election coverage pulling in large audience numbers during the same year-ago quarter which weren’t part of 2023’s earnings report. More than 16.78 million viewers watched the FIFA Men’s World Cup on Fox Sports. At peak viewership, Fox netted 25.62 million, marking the most-watched English-language men’s telecast ever.
Fox said “lower ratings and higher preemptions associated with breaking news coverage,” along with “higher supply” in the advertising market, led to declining ad revenue. The network also saw expenses decrease due to lower production costs during the dual WGA and SAG-AFTRA strikes last summer.
“Expenses decreased in the quarter, primarily due to lower entertainment and sports programming rights amortization and production costs, led by fewer hours of original scripted programming and the absence of the Men’s World Cup, partially offset by the renewed NFL contract,” Fox said in the earnings report.
The company is focusing on capturing the attention of the estimated 60 million “cord nevers” in the U.S. who have never signed up for cable TV and instead opt for streaming through Tubi. For seven consecutive months, the service outperformed Peacock, Max, Paramount+, and Pluto TV, said Lachlan Murdoch, chief executive officer of Fox. However, in the most recent January data from Nielsen, Tubi doesn’t appear on the top list of streamers.
Tubi also saw a decrease in ad revenue, which dropped to $2.5 billion compared to $2.9 billion the previous year. Even so, Fox considers the platform a “growth driver” and a key component to snagging cord never households. The service ended the year with 78 million monthly active users, with total watch time growing 62% to 2.5 billion streaming hours.
Sports is another area where Fox is focusing its efforts. The network on Tuesday revealed plans to launch a new sports streaming service as part of a partnership with Disney and Warner Bros. Discovery. This is another attempt to draw in cord never households with sports content from ESPN, FS1, ABC, Fox TNT, and TBS.
Murdoch said Fox is “very confident” this deal won’t undermine the company’s traditional cable bundle. However, this makes Fox News the only Fox channel available exclusively through the pay-TV bundles. But Murdoch said the risks are “very low” as the focus to draw in cord nevers is through streaming sports, and the cable news channel continues to “drive tremendous viewership.”
Fox won’t see a boost in ratings or revenue from the Super Bowl this year, which CBS will host. According to Murdoch, last year’s game included around $50 million in revenue for the station group. He cites the “competitive primary competition” ahead of this year’s election as a strong driving force behind Fox News’ viewership and ad revenue. Fox saw a decrease in ad revenue in 2023 compared to 2022, when the midterm elections were held.