Add Fox Corp. to the growing list of media companies that have said the impact of the COVID-19 virus could have a detrimental effect on their business.
In an 8-K filing with the Securities and Exchange Commission Tuesday March 31), Fox said while its news ratings have risen as shelter-in-place orders and work-from-home mandates have swept the country, the loss of live sports programming and the halt in overall new entertainment content production could have a material impact on its broadcast and cable channels.
Major professional sports leagues -- the NBA, MLB, NHL and MSL -- all have suspended or delayed their regular seasons as the coronavirus pandemic has swept across the country. In the SEC filing, Fox said that the actual impact of the suspensions will depend on how long they last.
“While the company’s national news ratings remain strong, sports events for which the company has broadcast rights have been cancelled or postponed and the production of certain entertainment content the company acquires has been suspended,” Fox said in the filing. “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. 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 added that it also expects to enter into an amendment in its credit agreement with Citibank to draw down additional funds as the pandemic continues. Fox said it would enter into the amendment within a few business days.
Other media companies have taken to drawing down revolving credit lines and issuing bonds as the virus has impacted their businesses. Comcast has issued about $4 billion in debt, the Walt Disney Co. has issued about $6 billion in bonds and ViacomCBS has issued about $2.5 billion in bonds. Others like AMC Networks, Discovery Inc., and ViacomCBS have withdrawn 2020 guidance estimates due to the impact of the virus on business.
Fox shareholders seemed to take the announcement in stride. Fox stock was up about 1% (34 cents each) to $24.65 per share in early trading on March 31. The stock is down about 33% so far in 2020.