Fox predicts record political ad spend in US midterm elections

Lachlan Murdoch, head of Fox Corporation, hailed an “unprecedented wave” of political advertising sweeping America this year and which is expected to exceed spending ahead of the 2020 election.

As he unveiled Fox’s annual revenue, Murdoch said the financial muscle deployed in tight Senate, House and gubernatorial races would make November’s midterm election cycle the most lucrative in the world. United States history.

Murdoch told investors on Wednesday that in the three months to the end of June, revenue from political advertising on Fox’s 29 local TV network was “about three times larger” than the equivalent quarter of the presidential cycle. of 2020, which was itself “an all-time record for the company”.

“We are seeing an unprecedented wave of political spending that is accelerating as we head into November,” he said, adding, “The outlook is remarkably strong.” Shares of New York-based Fox rose 3.7%.

The buoyancy of political advertising has been a welcome boost for the media industry as it prepares for an economic downturn that could hit advertising, pay-TV and streaming subscription revenues hard.

Lachlan Murdoch, chief executive of Fox Corporation, said ‘we are seeing an unprecedented wave of political spending’ © Drew Angerer/Getty Images

GroupM, the WPP-owned media buying agency, forecast that political advertising budgets in America will hit a record $13 billion in 2022. That figure tops the $12 billion spent during the year. election 2020, when Joe Biden defeated Donald Trump. That’s more than double the $6 billion spent on the 2018 midterm election cycle.

Since Rupert Murdoch agreed to sell his prized TV and movie studios to Disney in 2017, the remaining Fox company has become a much thinner group built around news and live sports, two genres less vulnerable to disruption. streaming. The Fox News cable channel remains the company’s profit engine.

While the group’s footprint in traditional television makes it more vulnerable to any publicity downturn than some of its peers, Murdoch insisted that Fox had yet to see any “unfavourable” signs in the market, put at share some softness in some segments of digital advertising.

Thanks to Fox News and its local stations, Fox is also well positioned to benefit from increased political spending this year. Murdoch pointed to the high expenses expected for races in Arizona, Florida and Georgia.

“Excluding the impact of runoff from Georgia[in 2020]. . . this midterm cycle looks certain to surpass the 2020 presidential cycle on our local stations,” he said.

Rival local TV groups Nexstar and Sinclair also said early signs point to a bumper year.

Perry Sook, founder of Nexstar, which has 200 broadcast stations in its network, noted that questions had been asked about the possibility of “catching up with Bloomberg’s money from 2020”, referring to the high-spending presidential campaign. billionaire Michael Bloomberg.

“I think we’ve proven it in spades,” he told investors. Although he wouldn’t commit to a firm financial forecast, Sook said “everything indicates this will be a record midterm election.”

Fox reported a 5% increase in fourth-quarter revenue of $3 billion, roughly matching Wall Street estimates, while net income of $308 million beat expectations.

Ad revenue for Fox’s local television arm rose 4% to $698 million in the fourth quarter, while Fox News generated $358 million in the same period, an increase of 14%.

Murdoch said he expects Fox to report record revenue and operating profits in 2023.