Fox stock price outlook after Tucker Carlson exit: buy or sell?
The Fox (NASDAQ: FOX) stock price plunged hard on Monday after the company decided to part way with Tucker Carlson, the controversial host. The shares retreated to a low of $29.29, the lowest level since January. This means that they have retreated by more than 10% from the highest point in March, meaning that they have moved into a correction.
Tucker Carlson ousted by Fox NewsCopy link to section
The biggest media news this week was the risky decision by Fox News to oust its biggest star. While the reason for the ouster was not revealed, analysts believe that it was because of the recent Dominion lawsuit in which the company paid over $700 million in a settlement. As such, the company hopes to avoid similar damaging lawsuits in the future.
Therefore, there are concerns about what this ouster will mean for Fox News and the stock. The initial reaction means that investors anticipate that it will result in major losses. Besides, Tucker was the biggest person in cable news. Another risk is that Tucker could join a competing network like Newsmax.
Most importantly, his exit could lead to a loss of subscribers for Fox Nation, a product that the company hopes to build on.
There is no doubt that Fox Corporation is going through challenges. However, history suggests that the company will evolve and do well. The company has done quite well after it fired Bill O’Reilly a few years ago. At the time, Bill was also the biggest name in the company and in the cable news.
Fox Corp advertising and affiliate revenueCopy link to section
Further, the company could see an uptick in advertising revenue as companies that suspended it return. It is worth noting that despite the ad boycotts, the company’s advertising revenue jumped to $5.9 billion in 2022. Because of these boycotts, Tucker had no major advertisers. In a statement, a PR exec said:
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“The show has almost no big-name advertisers left right now. This is just not an issue you want to be on the wrong side of, if you’re a mainstream brand.”
Fox stock price will also likely do well in the long term because of how the company makes money. Most of its revenue comes from affiliate fees.
These affiliates include monthly subscriber-based license and retransmission consent fees paid by programming distributors and fees received from non-owned and operated television stations that are affiliated with the FOX Network. As such, affiliate and ad revenue will remain being stable in the near term.
I suspect that Fox share price will go through volatility in the coming months as the company adjusts to the new normal. In the near term, we could see a loss of subscribers, especially to Fox Nation since Tucker was a big player in the ecosystem. But Fox Nation is only a small part of the company.
Therefore, while investors expect the company’s revenue to drop in the long term, I believe that these fears are exaggerated. The company will do just fine.