May 9 (Reuters) – Broadcaster Fox Corp (FOXA.O) beat estimates for third-quarter revenue and adjusted profit on Tuesday, as Chief Executive Lachlan Murdoch affirmed the company’s prime-time programming strategy following its recent $787.5 million settlement with Dominion Voting Systems and dismissal of star host Tucker Carlson.
Dominion had sued Fox for $1.6 billion over its coverage of debunked vote-rigging claims about the voting technology firm. The two sides settled the dispute on April 18 prior to the start of opening statements.
“We made the business decision to resolve this dispute and avoid the acrimony of a divisive trial and a multi-year appeal process, a decision clearly in the best interest of the company and its shareholders,” Murdoch said during a call with investors.
Shares of the company were up 2.4% in early trading.
Total revenue rose 18% to $4.08 billion, inching past analysts’ estimates of $4.03 billion, according to Refinitiv data.
Fox’s ad revenue also surged 43% to $1.88 billion, well past the expectation of $1.67 billion.
Murdoch said the results were supported by higher viewership for Fox Sports’ broadcast of Super Bowl LVII and growth at its streaming service Tubi, which delivered 31% revenue growth in the quarter.
The company, however, posted a net loss of $50 million due to charges associated with costs related to the news operations’ legal settlement.
Murdoch said the company will be “ready to defend” the pending $2.7 billion lawsuit from a second voting technology firm, Smartmatic, when it goes to trial, which will likely not be until 2025.
Fox Chief Financial Officer Steve Tomsic said he expects the company’s buyback pacing to continue “whatever happens with future litigation” due to its strong cash position.
Fox finished the quarter with $4.1 billion in cash.
Fox “can handle Dominion’s (settlement charge) because they are very under-levered with a ton of cash,” said Douglas Arthur of equity research firm Huber Research Partners.
The upbeat results from Fox underscore the cautious approach by advertisers who are mostly buying slots on dominant networks.
On an adjusted basis, Fox earned 94 cents per share, above estimates of 87 cents.
Murdoch repeated Fox’s defense of its Dominion coverage, saying, “We always acted as a news organization reporting on the newsworthy events of the day.”
The judge overseeing the Dominion case had ruled in March that Fox could not use its “newsworthy” argument as a defense, finding its coverage was false, defamatory and not protected by the First Amendment.
Reporting by Yuvraj Malik in Bengaluru; Editing by Anil D’Silva
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