Fox said it expects advertising revenue at its owned TV stations to be down 50% during the current quarter, which is the company’s fiscal fourth quarter.
On the company’s earnings call with analysts Wednesday CEO Lachlan Murdoch said the stations were pacing down about 50% because of the COVID-19 pandemic.
“The local auto, local retail, local travel and local entertainment categories are leading this decline for us and the rest of the local TV market,” Murdoch said. “We will only see the pattern of how these categories will return after states and municipalities open back up for business.”
Fox still expects political advertising revenue, but political ads usually slow down in Fox’s fourth quarter before picking up in the first quarter as election day nears in November.
Nine of the local markets where Fox owns stations are in battleground states and in two the governor is up for election. “We are certainly positioned well to capture the lion’s share of political revenue,” Murdoch said.
Fox CFO Steve Tomsic noted that advertising at the company’s national news and entertainment businesses “are expected to be more insulated in the immediate term.”
Still, he estimated that demand for advertising at the company during the fourth quarter would be between $200 million and $240 million, down 25% to 30% compared to prior years.
Sports have largely been shut down by the coronavirus. Fox’s biggest sports properties play during the fall, so it hasn’t been as affected as some other companies. And executives on the call saw hopeful signs that games would be played and advertisers will sponsor them.
NASCAR returns on May 17 and Murdoch said Fox has seen strong demand from advertisers to be in that race and future races. On Thursday, the NFL will release its schedule for the upcoming season. That will trigger Fox to have more specific conversations with advertising clients, he said.
“We’re seeing tremendous pent-up demand for sports programming and live event programming," he said.
Another good sign was that in the last couple of weeks fewer advertisers have been requesting flexibility with their ad schedules. “I think marketers are starting to look forward into the first quarter of the next fiscal year and they are beginning to think about how they get their products and their brands in front of consumers again. It’s early days, but we’re just beginning to see that positive shift.”
The upfront remains hard to predict. “We don’t see a virtual, singular upfront as the right thing to do today because all of our clients are affected by COVID-19 in different ways,” Murdoch said. “And they will emerge from their COVID-19 impacted in different ways.”
He said Fox’s ad sales staff has been fully engaged with clients over the past six weeks to “understand what their needs are and tailor our partnership with them in very unique and specific ways.”
Murdoch added that Fox’s entertainment schedule looks incredibly stable. Many shows have already been filmed and edited and the production schedule for the company’s animated programming has not been affected by the coronavirus. The only question mark is whether The Masked Singer will be ready for the fall, he said.
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