Stop us if you have heard this before, but there has been a good deal of news coming out of 21st Century Fox in the past 18 hours.
21CF’s quarterly filing with the SEC was made public yesterday, and the company added a warning about Fox News:
“The Company and certain of its current and former employees have been subject to allegations of sexual harassment and discrimination related to alleged misconduct at the Company’s Fox News Channel business. The Company has settled some of these claims and is contesting other claims in litigation. To date, none of the amounts paid in settlements or reserved for pending or future claims, is individually or in the aggregate, material to the Company. We have also received regulatory and investigative inquiries and stockholder demands to inspect the books and records of the Company which could lead to future litigation. Since the allegations of misconduct in July 2016, the CEO of Fox News Channel has resigned and there have been significant changes in the management of the business unit. In addition, the network’s primetime lineup has significantly changed which could have a negative impact on our ratings.”
The filing also noted that FNC paid out $10 million in claims related to harassment suits in the first three months of 2017, and a total of $45 million in the last 9 months. That number doesn’t include the money paid out to former Fox News host Bill O’Reilly as part of his severance because he left the company in this current quarter.
The company’s co-chairman Lachlan Murdoch also led a call with Wall Street analysts to discuss the company’s first quarter results.
21st CF reported total quarterly revenues of $7.56 billion, a +5 percent increase from the $7.23 billion reported in Q1 2016.
“This revenue growth reflects higher advertising revenue at the Television segment, led by the broadcast of Super Bowl LI, and higher affiliate revenues at both the Cable Network Programming and Television segments,” the earnings report states.
But as Murdoch discussed Fox News touting its status as the No. 1 cable news network in total viewers for 61 consecutive quarters, he stayed away from the sexual harassment and racial discrimination scandals that have cast a very dark cloud over the company in recent months.
One analyst from Morgan Stanley finally addressed the elephant in the room, saying on the call, “a lot of change there and a lot of commentary in the press about advertisers showing some frustration and then coming back.” Lachlan Murdoch replied by saying, “As we have said, the channel continues its ratings dominance … so we are very confident in that business.”
In a separate conversation, 21CF CEO James Murdoch expressed the company’s “confidence” that British regulators will approve the company’s bid to acquire Sky, one of the largest broadcasters in Western Europe. “We’re confident that the proposed transaction will be completed by the end of this calendar year,” the CEO said.