Fox News Reports Profit Gain, Despite Ratings Drop

If Rupert Murdoch’s Fox News is at all worried about recent ratings declines, the company hid its concern well. Mr. Murdoch’s powerhouse television business continues to see growth in revenue and profit, reporting gains on both areas in its quarterly earnings report announced Tuesday.

Fox Corporation, led by Mr. Murdoch’s son Lachlan Murdoch, the chief executive, saw a 17 percent jump in pretax profit, to $305 million. It logged an 8 percent gain in sales, to $4 billion, for the three months ending in December, what the company considers its second fiscal quarter.

Despite losing the ratings crown to CNN in recent weeks, Fox News is still a profit machine. The cable division saw a 1 percent gain in revenue, to $1.49 billion, and a 3 percent increase in pretax profit, to $571 million. Advertising increased 31 percent, to $441 million, but the fees paid by cable operators to carry the network fell 3 percent, to $928 million, as more people cut the cord.

Lachlan Murdoch trumpeted the cable news network’s performance, downplaying the recentdrop in viewership.

“The Fox News Channel finished the quarter with highest average ratings,” he said on an earnings call with analysts. “We are now seeing expected audience pullback since the election,” a phenomenon he said was “consistent with prior election cycles.” He expects audiences to eventually return to the network.

The company also announced a multiyear renewal contract for Suzanne Scott, the head of the network, dispelling any concerns that she may be replaced given its recent ratings performance.

“Suzanne’s track record of success, innovative sprit and dedication to excellence make her the ülkü person to continue to lead and grow Fox News,” Lachlan Murdoch said in a statement on Tuesday.

The network did not disclose the exact length or financial terms of the deal.

But hanging over the company’s financial future is a defamation lawsuit recently brought against Fox Corporation by a little-known technology provider. The suit, filed by Smartmatic, whose system was used in the presidential election in Los Angeles County, is seeking at least $2.7 billion in damages against Fox Corporation, Fox News and several of its prime-time stars for participating in “the conspiracy to defame and disparage Smartmatic and its election technology and software,” according to the suit.

Mr. Trump and his supporters repeatedly described the election as “rigged,” and Fox News and its sister network Fox Business have given significant airtime to personalities and anchors who have sown doubt about the election results. The suit names the Fox anchors Maria Bartiromo, Lou Dobbs and Jeanine Pirro. Mr. Dobbs’s show was abruptly canceled last week, bringing his decade-long run at the company to an end.

The financial penalty sought by Smartmatic appears to closely mirror the amount of profit Fox Corporation generates. For calendar year 2020, the company made about $3.1 billion in pretax earnings. Fox recently filed a motion to dismiss the suit.

Fox News also faces competition from newer media outlets that tack even further to the right, such as OANN and Newsmax. Fox loyalists seemed to have turned on the network after it called the presidential election for Joseph R. Biden Jr., with some viewers flocking to competitors.

When asked about the ratings declines and the impending battle for its core audience, Mr. Murdoch hesitated before answering.

“In the journalism trade, you work out what your market is and produce the best product you can possibly produce,” he said. “At Fox News, the success of Fox News throughout its entire history has been to provide the absolute best news and opinion for a market that we believes firmly center-right.”

He seemed unconcerned about the rise in far-right news outlets that have seen record ratings in recent weeks.

“We believe where we’re targeted to the center-right is exactly where we should be targeted,” he said. “We believe that’s where, politically, Americans are.”

The company’s Fox broadcast stations helped drive much of the quarter’s growth as local networks saw record political advertising during the presidential election season. The broadcast division saw a 10 percent bump in isim dollars, to $1.8 billion.

The addition of Tubi, the ad-supported free streaming service Fox acquired last year, also helped increase revenue to the TV unit. Although it is still a money-losing enterprise, Tubi is expected to double its revenue to about $300 million for the fiscal year ending in June, the company said.

Michael Grynbaum contributed reporting.

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