Scale is important; has to be focused right: Fox executive chair & CEO Lachlan Murdoch

Mumbai: Addressing analysts during a conference call to announce the company's Q1’23 results, Fox executive chair & CEO Lachlan Murdoch spoke about the importance of scale. Fox's assets include the juggernaut Fox News. Fox posted revenue of $3.19 billion, up 5 per cent a year ago.

"Look, I think you know the scale; it has to be focused right. Scale is important, and what we've seen amongst our media peers over the last few years is that our peers are getting bigger through mergers and acquisitions (M&A), and so I think scale lends flexibility in many ways. So, we continue to grow our business, we continue to look at M&A and be very disciplined in how we look at it, but we also do look at the importance of scale, particularly over the next couple of years when, I think, opportunities in the marketplace will emerge. They have the scale to be flexible, and how we deal with them will be important," he said.

In terms of a potential reunion of Fox and News Corporation, Murdoch declined to take questions. "As has been made public, both Fox and News Corporation have formed separate special committees to explore a potential combination following letters received from my father, Rupert Murdoch, and the Murdoch Family Trust. For a combination transaction to proceed, it will need the approval of both special committees and a supportive vote by the majority of the minority non-affiliated shareholders of each company."

He added, "The special committee has not made any determination at this time, and there can be no certainty that the company will engage in such a transaction. Given the importance of the work of the special committees, I'm not in a position to take any questions on the proposed transaction at this time." 

Murdoch pointed out that the company's fiscal year is off to a good start. "The September quarter results once again highlight the strength of our leadership brands, and we are just getting started on what promises to be a banner year for Fox. We are encouraged by the operating trends across the portfolio and the early returns on our digital investments. When paired with our strong balance sheet and low leverage, the Fox story remains a differentiated one amongst its media peers. And while we continue to be mindful of how the macroeconomic environment evolves during the months ahead, Fox remains well positioned to navigate and outperform through any potential uncertainty."

Talking about the ad scene, he said that the ad growth in the quarter was driven by strong pricing at Fox News and Fox Sports. "Record first quarter political revenues at the local stations, and in a quarter where industry-wide digital advertising revenues appear to have been under pressure, to post standout revenue growth of almost 30 per cent."

He added, however, that the company recognises that there is a lot of commentary around advertising headwinds as the macro environment evolves. "Yes, the broader national advertising market is looking more fluid compared to the time of our last earnings call. However, the macro impact is not uniform across our verticals."

"We have observed some softness in the linear entertainment scatter marketplace. Remember that Fox does not over-index to network entertainment. So, any impact there is, is nominal to us and has been more than offset by the digital entertainment strength delivered by Tubi," he went on.

Murdoch said, "Additionally, despite the economic headwinds, we are seeing continued strength across our linear news and sports portfolios, led by the pharmaceutical, restaurant, and streaming categories. These dynamics underscore a flight to quality, and the importance of our focus on live content, with over two-thirds of our advertising revenue generated by live sports and news."

Fox News, he noted, turned in another stellar performance, finishing the fiscal first quarter as the number one channel on cable and the third most viewed network in Weekday Prime in all of television, behind only NBC and CBS.

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