Wells Fargo & Co earlier this week downgraded shares of Fox Corp FOX FOXA. This came after the turbulent spring and summer that included Fox settling the Dominion Voting Systems and the gender discrimination suits, as well as the exit of prime time anchor Tucker Carlson, further fueling concerns about viewership pressures.
The FOX/FOXA Analyst: Steve Cahall downgraded Fox Corp from Equal Weight to an Underweight rating, and lowered the price target from $35 to $31, citing an increasingly negative earnings outlook and “ecosystem risks” associated with Fox News.
“Fox’s earnings are mostly Fox News earnings, and Fox News is facing viewership and share pressures,” Cahall said to investors.
Viewership figures for Fox News saw a 19% decline from January to June, compared to the same period two years earlier. The analyst said the primary reasons for the drop in numbers were escalating cord-cutting trends and programming challenges that rose after the dismissal of Carlson.
“Fox News was 52% of cable news prime time viewership for 2020-22, 51% in Jan’23 and that has slid to a low of 38% in June ’23 post-Tucker Carlson,” Cahall said.
Fox News announced its new prime time lineup last month, scheduled to take effect on July 17.
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While the Rupert Murdoch-owned corporation hopes the changes could reignite viewership numbers, the analyst highlighted the situation as a “Show Me viewership story.”
Despite viewership concerns, Fox News still managed to finish the second quarter of 2023 as cable's most-watched network in total day viewership and second in primetime, behind only NBA-driven TNT, according to Yahoo! Finance, which cited Nielsen data.
Though, the analyst also flagged potential threats from ESPN’s direct-to-consumer plans, with an expectation that more streamers will pivot towards live sports while the cost of sports rights for broadcasters continues to soar.
Cahall also noted the potential for future asset value in Fox Corporation’s sports betting investments, including FOX Bet and a call option for 19% of FanDuel, if valuations and options change.
Price action: Shares of Fox Corp closed Wednesday's regular trading session down 0.18% at $33.67, according to Benzinga Pro.
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