Fox News fell 19% from January to June compared to the same period two years ago.
QUICK FACTS:
- Wells Fargo analyst Steven Cahall downgraded Fox Corporation’s stock from “Equal Weight” to “Underweight.”
- Underweight means you should have less of a particular stock in your portfolio compared to a standard measure, while equal weight means you should have an equal amount of each stock in your portfolio regardless of their size.
- “Fox’s earnings are mostly Fox News earnings, and Fox News is facing viewership and share pressures,” Cahall wrote in a note. “With ecosystem risks also elevated we find our estimate outlook more negative and below the Street.”
- By downgrading Fox Corp. stock, analysts do not believe the company can provide market-beating investment returns.
- Cahall suggested that turning to streaming content may save costs, but still leaves growth lackluster.
- “Fox could look to cost cuts, but that could threaten revenue. Licensing sports content to streamers could be incremental revenue/EBITDA, but investors will weigh this against the added downside to linear cash flows,” the analyst described.
RATINGS PLUMMET SINCE TUCKER CARLSON EXIT:
- Much of the decline in viewership is apparently due to Tucker Carlson’s exit from the company.
- “Fox News was 52% of cable news primetime viewership for 2020-22, 51% in Jan’23, and that has slid to a low of 38% in June’23 post-TC,” Cahall explained. “FN’s share of conservative news viewers has fallen from 94% to 84%. While the new PT lineup could drive a rebound, we think Fox News is a Show Me viewership story.”
- The 8 p.m. time slot viewership originally hosted by Carlson’s show fell 56% after his exit.
- The time slot averaged 3.03 million viewers per night in 2022.
BACKGROUND:
- Following Tucker Carlson’s departure from the network, fellow Fox News host Sean Hannity lost about half of his audience.
- In a span of three weeks, Hannity’s 2.7 million viewers dropped to 1.3 million viewers.
- Meanwhile, show personalities from Newsmax saw a drastic increase in viewership, prompting Newsmax Chief Executive Christopher Ruddy to suggest that audiences have left Fox News due to its increasingly establishment stance, compared to Newsmax which embraces “all sides of the Republican Party.”
