(Bloomberg Opinion) — Fox News needs Donald Trump to win — but not for the reason you think.
A press release landed in media reporters’ inboxes last week: “Fox News Channel Earns Highest-Rated Primetime Monthly Average in the History of Cable Led by Tucker Carlson Tonight.” Carlson, Fox’s biggest moneymaker, drew more than 5 million viewers on average to his show last month, with Sean Hannity’s program close behind. Ratings for Fox News overall surged 43% during the third quarter from a year earlier as it moderated the first U.S. presidential debate and covered the race — and the many controversies surrounding it — in its own Fox way. Stirring outrage among an ever-loyal audience of President Donald Trump’s supporters has worked for Fox these last four years, but the election result could make or break the next four, or longer.
Fox’s continued dominance is all but ensured if Trump wins again as they both fight the same perceived enemy, the “radical left.” But should Democrat and former Vice President Joe Biden be elected, as polling predicts, Fox may face a new, genuine adversary: Trump TV.
There is no such cable network or streaming service yet, but it seems to be the most obvious way for Trump to keep capitalizing on MAGA mania outside the White House in the best way he knows how. A round-the-clock Trump channel — well, an official one — would easily threaten Fox’s ratings supremacy. While Rupert Murdoch’s news networks and the Trump administration have enjoyed a cozy relationship, the president has already started turning his followers against Fox for not being pro-Trump enough:
Trump TV wouldn’t even necessarily have to start from scratch. One America News Network — described by my Bloomberg News colleagues in their recent profile of the company as a “24/7 Trump boat parade” — may be ripe for a Trump takeover or partnership. The network makes Fox look almost moderate. It’s willing to go further than Fox in peddling conspiracy theories and pushing controversial far-right viewpoints, much to Trump’s liking. According to a Wall Street Journal article in January, OAN received an overture from Hicks Equity Partners, which is owned by a family with close ties to Donald Trump Jr.
If Trump were to shift from ratings driver to business foe, it could damage Fox’s parent, Fox Corp. By positioning itself as the anti-media network, Fox has separated itself from the crowd of mainstream news networks. That said, Fox’s audience skews old — it’s your parents’ news channel. And it has so deeply embraced Trump that it has inspired in viewers greater allegiance to him than to its own network. If Trump emerges as Fox’s first true competitor and he comes for its large base of cable-loving retirees, what then?
Fox’s growth would have to come from appealing to younger voters who lean more liberal (but who advertisers would much like to reach). That would entail a bigger digital push as young consumers ditch cable TV. The country’s four biggest pay-TV service providers — AT&T Inc., Charter Communications Inc., Comcast Corp. and Dish Network Corp. — together lost about 3.4 million subscribers in the first half of the year. Meanwhile, online streaming use surged 57% in North America last quarter, according to Conviva. Social media has become the news hub for millennials and Gen Z, and while important context and nuance is often missing from online meme-speak, it’s a language in which Trump is fluent.
Fox has tiptoed into streaming with its direct-to-consumer Fox Nation on-demand app and its $445 million acquisition of Tubi in April. But make no mistake, the business still depends on cable’s profits and aging demographics. The same can be said for Comcast’s MSNBC and, to a slightly lesser extent, AT&T’s CNN, but neither faces the immediate threat that a social-media-savvy, Trump-branded network would pose to Fox. The company reported quarterly results Tuesday that beat analysts’ estimates. That lifted its shares about 4% in early trading on Election Day, even though that outcome is far more important to Fox’s stock price going forward than its latest business report card.
At stake is a 67% cash flow margin and $16 billion of shareholder money, much of which makes up the Murdoch fortune. It was just last year that the elder Murdoch and his son Lachlan, the company’s CEO, sold Fox’s Hollywood studios, entertainment networks and popular TV and film franchises to Walt Disney Co. for some $85 billion, including debt. Murdoch saw that the industry was heading toward the less profitable future of streaming and wanted out. Focusing solely on news and sports, as the anchor tenants of the lucrative cable-TV bundle, seemed like the safer bet — before Covid-19 at least.
Trump — along with this family — always seemed to want fame more than the presidency. If he loses, the real loser is Fox News. It will be interesting to see how that plays out, but investors already know what happened to Dr. Frankenstein.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Tara Lachapelle is a Bloomberg Opinion columnist covering the business of entertainment and telecommunications, as well as broader deals. She previously wrote an M&A column for Bloomberg News.
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