"While the company’s national news ratings remain strong, sports events for which the company has broadcast rights have been canceled or postponed."
Fox Corp. on Tuesday became the latest media giant to say that the financial fallout from the coronavirus pandemic could be "material" and said it is looking to amend a credit agreement. But the owner of Fox News also highlighted "strong" news ratings.
"The impact of coronavirus disease 2019 ('COVID-19') and measures to prevent its spread are affecting the macroeconomic environment, as well as the business of Fox Corporation, in a number of ways," it said. "For example, while the company’s national news ratings remain strong, sports events for which the company has broadcast rights have been canceled or postponed and the production of certain entertainment content the company acquires has been suspended."
It joined other media giants in highlighting that the specific financial implications are unclear for now. "The magnitude of the impacts will depend on the duration and extent of COVID-19 and the effect of governmental actions and consumer behavior in response to the pandemic and such governmental actions," Fox said. "The evolving and uncertain nature of this situation makes it challenging for the company to estimate the future performance of its businesses, particularly over the near to medium term, including the supply and demand for its services, its cash flows and its current and future advertising revenues. However, the impact of COVID-19 could have a material adverse effect on the company’s business, financial condition or results of operations over the near to medium term."
Fox, led by executive chairman and CEO Lachlan Murdoch, on Tuesday also said it "intends to enter into an amendment" with respect to a credit agreement. "The purpose of the amendment will be to (1) deduct a certain amount of cash from indebtedness for purposes of calculating the operating income leverage ratio and (2) provide for changes related to the adoption of the new lease accounting principles," it said. "The company believes that it will enter into the amendment within a few business days. As of March 31, 2020, the company had not drawn on the revolving credit facility provided by the credit agreement."
It was the latest entertainment industry company to comment on the fallout from the virus crisis.
ViacomCBS, led by CEO Bob Bakish, said March 27 that the new coronavirus pandemic could have a "material" impact on its results, withdrew its 2020 financial guidance and said it was planning unspecified "cost savings initiatives" to offset some of the expected revenue losses.
On March 24, cable giant and NBCUniversal and Sky owner said that the coronavirus pandemic could have a "material adverse impact" on its financials, but said it was difficult to quantify it at this stage.
On March 20, WarnerMedia owner AT&T said it was canceling planned stock buybacks, including an accelerated share repurchase agreement with Morgan Stanley to buy back $4 billion of its stock, to maintain financial flexibility. "The impacts of the pandemic could be material, but due to the evolving nature of this situation, we are not able at this time to estimate the impact on our financial or operational results," the telecom giant said.
A day earlier, the Walt Disney Co. had said that, "the impact of the novel coronavirus...and measures to prevent its spread are affecting our businesses in a number of ways," including "ad sales impacts." Disney highlighted that the impact of the virus on its revenue and earnings was difficult to predict amid the fluid situation and its impact across various businesses, saying the financial fallout would hinge on the size of disruptions and how long they last, along with "governmental regulations that might be imposed in response to the pandemic."
On March 23, U.K. TV giant ITV said it would pull its dividend and make other cost savings, including in program spending, amid the coronavirus pandemic, which it said has had an "increasing" impact on its advertising revenue. It said the moves would help boost its cash reserves by more than 300 million pounds ($350 million).
