Fox Earnings Preview: How Much Will Dominion Settlement, Tucker Carlson Departure Impact Fox's Bottom Line?

Fox Corp FOXA FOX is set to report fiscal third-quarter earnings on Tuesday morning before the market open, and investors will likely be watching closely to see what the company has to say about its recent $787 million legal settlement with Dominion Voting Systems and the departure of Fox News' highest-rated prime-time TV host, Tucker Carlson.

What To Watch: Fox investors will first be looking for the company's first-quarter performance numbers. Analysts are expecting Fox to report quarterly adjusted EPS of 87 cents on revenue of $4.03 billion. That number would represent 16.7% revenue growth compared to a year ago.

In February, Fox aired the Super Bowl, and CEO Lachlan Murdoch said the company anticipated about $600 million in gross advertising revenue tied to the event. The company charged peak prices of $7 million for 30-second Super Bowl commercials.

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Tucker And Dominion: Fox's third-quarter numbers will not include its $787.5 million settlement with Dominion that came on April 18. The settlement involved allegedly libelous statements Fox made on air about Dominion's machines being used to manipulate the vote count during the 2020 U.S. presidential election.

Following the settlement, Morningstar analyst Neil Macker said Fox has plenty of resources to cover the settlement payment, which he said will not materially impact Fox's business.

"Given the information already released, the pretrial setback, and the potential further embarrassment from chairman Rupert Murdoch, other Fox executives, and a number of high-profile hosts taking the stand, we believe that Fox views the settlement as a win and possibly just the cost of doing business," Macker said.

Morningstar has a Neutral rating and a $43 fair value estimate for FOX shares.

In addition to the Dominion settlement, Fox management may address the recent departure of Carlson, who was fired from Fox News on April 24. In the first week following Carlson's departure, Fox News' primetime ratings reportedly dropped 29.6%, placing it third among cable networks.

Benzinga's Take: Given all the news headlines at Fox since the end of March, guidance and management commentary may be far more important to the market than Fox's fiscal third-quarter numbers. Fox shares are down 5.9% overall in the past month heading into earnings.

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