Fox Tops Q1 Earnings Mark Despite Advertising Declines – Limits Murdoch Voting Power to 44%

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September’s Emmy Awards prove to be no revenue replacement for 2018 FIFA World Cup

Rupert and Lachlan Murdoch

Fox topped Wall Street’s earnings and revenue forecasts for the first quarter of fiscal 2020, and the evolving company is celebrating with a $2 billion stock repurchase program. That big buyback is not the only interesting news to emerge with Wednesday’s earnings for the media company pared down since Disney acquired the bulk of its film and TV operations. In addition to the share-repurchase plan, Fox’s board of directors has limited the Murdoch family and their trust to owning no more than 44% of Fox’s outstanding voting shares (Class B). Below is the language Fox sent to media about the Class B ownership limits now imposed on the Murdoch family.
The stockholders agreement provides that the MFT (Murdoch Family Trust) and the company (Fox) will not take actions that would result in the MFT and Murdoch family members together owning more than 44% of the outstanding voting power of the Class B common stock, or would increase the MFT’s voting power by more than 1.75% in any rolling twelve-month period. The MFT would forfeit votes to the extent necessary to ensure that the MFT and the Murdoch family collectively do not exceed 44% of the outstanding voting power of the Class B shares, except where a Murdoch family member votes their own shares differently from the MFT on any matter. The stockholders agreement will terminate upon the MFT’s distribution of all or substantially all of its Class B common stock.
Media analysts had forecast Q1 earnings per share of 69 cents on revenue of $2.6 billion, according to a consensus of compiled by Yahoo Finance. Fox actually reported adjusted earnings of 83 cents per share on revenue of $2.67 billion. The triumphs at the Fox News, Fox Sports and Fox broadcast network company’s top and bottom lines can be attributed much to an improvement in overall TV revenue. That, despite advertising declines that come from comparing the last year’s FIFA World Cup-boosted ratings to the Nielsen returns from three-month period ended Sept. 30, 2019. The current quarter was buoyed a bit by Fox having the Emmy Awards. Lachlan Murdoch, the executive chairman and CEO of so-called New Fox, called Q1 a “solid start” to fiscal 2020. “We’ve seen our programming investments in the Fox Network deliver ratings growth, including ‘The Masked Singer,’ ‘WWE Friday Night Smackdown,’ ‘Thursday Night Football’ and the NFL on Fox,” Murdoch (pictured above, right, with dad Rupert Murdoch) said in prepared remarks. “At the same time, we have successfully renewed distribution agreements with many of our largest partners that reflect the strength of our brands.” Rupert, the patriarch of the Murdoch family, is the founder of News Corp., which purchased Twentieth Century Fox in 1985. Murdoch’s media business and its entertainment one spun off from one another in 2013, forming 21st Century Fox. Much of that company’s assets were sold to Disney earlier this year for $71.3 billion, and “New Fox” was born. Fox stock (FOXA) closed Wednesday at $33.10 per share. In after-market trading, FOXA rose a few percentage points. Murdoch and other executives will host a conference call at 4:30 p.m. ET to discuss the quarter in greater detail. Fox Corporation’s annual meeting of stockholders is next Thursday.