Fox Eyes Election Ad Revenue Boost After Primary Letdown

Key Takeaway

• Fox Corporation anticipates a boost in political advertising revenue from the upcoming US election, despite a disappointing primary season.
• Despite a 15% quarterly revenue decline, Fox's net income recovered to $704 million from a previous year's net loss of $50 million.
• Global markets, including the Chinese offshore yuan and Mexican peso, react to US election prospects with increased volatility and concerns over potential trade impacts.

Election Season Impact on Fox

Fox Corporation, led by Chief Executive Lachlan Murdoch, expressed disappointment over the lackluster interest and advertising revenue generated during the recent presidential primary season. Despite this, Murdoch remains optimistic about the financial prospects tied to the upcoming US election, particularly in terms of political advertising expected to benefit Fox's local broadcast stations. He pinpointed tight US Senate races in states like Michigan, Wisconsin, and Pennsylvania as key opportunities for increased ad spending. This outlook comes in the context of traditionally heightened audience engagement and advertising revenue for US news media during election cycles, a trend bolstered in previous years by the so-called "Trump bump."

Financial Performance Amidst Challenges

Fox reported a significant quarterly revenue decline of over 15% from the previous year, a period that included the Super Bowl's lucrative advertising impact. Advertising revenues saw a downturn to $1.2 billion from $1.9 billion year-over-year for the quarter ending in March. However, the company's net income showed a remarkable recovery to $704 million, contrasting sharply with a net loss of $50 million in the same quarter last year, which included a nearly $800 million settlement related to a lawsuit from Dominion Voting Systems. Despite these financial fluctuations, Fox shares have seen a modest increase of approximately 9% this year, slightly lagging behind the S&P 500 index's performance.

Global Markets React to US Election

The impending US election is already influencing global financial markets, particularly in the foreign exchange sector. Elevated volatility is being priced into currency markets, especially concerning the Chinese offshore yuan, where the spread between six- and three-month implied volatility has significantly widened. This market movement reflects concerns over potential outcomes of the election, notably the impact of a Donald Trump victory, which traders fear could lead to heightened volatility and a selloff in the offshore yuan. Similar concerns are echoed in the Mexican peso and the euro, with markets wary of Trump's tariff threats and the broader implications for international trade and currency stability.

Management Quotes

• Lachlan Murdoch, CEO of Fox:

  "We obviously were disappointed for multiple reasons that there wasn’t a more competitive primary season." "But we certainly know this is an election which . . . all sides of politics are very focused on [and] have raised a tremendous amount of money. And that money will flow ultimately to local television. And we are extremely confident of that."