Fox Corporation Stock Forecast: Investing in companies you know and brands you use is a starting off point for many investors – and it is not a bad one – but you have to do your research. Otherwise, picking a stock on name recognition alone is like buying a car without a test drive or betting on a horse because you like the name.
Sometimes it works out, but most of the time you end up wishing you had worked a little harder to place your bet. Today, we are looking at Fox Corporation [NASDAQ: FOX].
What Does Fox Corporation Do?
You’ve probably heard of the Fox Corporation. The company has a television station, a news channel (FOX News), a sports channel (FOX Sports), and an entertainment company – and it has had many successes over the years.
Business Insider calls FOX a “powerhouse fourth network.” It launched as a network in 1986 and promptly turned the world of programming on its head.
The company only reached 22 percent of homes in the US, but it was poised for growth. With hits like:
- “The Simpsons,”
- “Beverly Hills 90210,”
- “Married… With Children,”
- “Melrose Place,”
- “21 Jump Street,”
- “America’s Most Wanted,”
- “In Living Color,”
- “The X Files,”
- “Ally McBeal,” and
FOX was a household name by the early 90’s. The network specifically broadcast its biggest shows during programming windows that the other networks were not targeting because of certain rules that did not apply to FOX because of its size.
This unconventional programming allowed the company to attract viewers from 18 to 49 years old and it still dominates that demographic.
Today, FOX operates in three segments.
· Cable Programing: This is effectively the company’s news and sports content. It gets distributed through cable television providers – both traditional and streaming.
· Television: This is the company’s TV programming. It has the FOX brand and it operates 28 television stations.
· Other: FOX wraps its corporate overhead costs up in this segment as well as the FOX Studios lot where it films television and movies.
FOX has several agreements in place with 21st Century Fox (abbreviated here as 21CF) and Disney after what it calls “The Transaction.”
Basically, this deal, which was value at $71.3 billion, allowed Disney to buy the 21CF studio along with Fox’s cable assets (except for FOX News and FOX Sports). It was one of the biggest deals in entertainment history.
The big question is – what is the Fox stock forecast now?
Is Fox Corporation Stock a Buy?
FOX [NASDAQ: FOX] may have sold off its 21CF assets, but it still has a lot going for it.
Per its annual report, FOX News is the most trusted news outlet in the US and “has been the number one national cable news network for 70 consecutive quarters.”
Then, there is FOX Sports. It is a popular sports channel in its own right. It has Thursday night and Sunday NFL, MLB (including the World Series), the Super Bowl, and the FIFA World Cup (Soccer).
Plus, the FOX Network has been consistently reached its demographic with 15 hours of primetime programming. It is also available almost everywhere in the US.
The company recently launched FOX Bet, which supports gambling in areas where the activity is legal, and FOX Entertainment is working on a growing number of productions.
Plus, FOX has its own pay-per-view service and on-demand streaming videos as well as a 5 percent stake in Roku, the giant streaming device company. Altogether, FOX has strong assets to leverage.
What are the Risks of Buying Fox Corporation?
Of course, there are also risks.
Consumer behavior is changing. Fewer and fewer people subscribe to cable services or watch network television and digital video streaming is evolving.
As more of them cut the cord on cable the demand for FOX is dwindling. Modern consumers have near ultimate control over what they watch and when – and that means that many of them find ways to skip advertisements.
That’s a big problem for FOX because that is one of its big revenue sources. The company’s only choice is to protect the value of its content, but it still has to meet the current trends in both programming and content delivery, or the market could pass it by.
The television broadcasting and programming industry is extremely competitive. There is no brand loyalty.
Customers gravitate towards whatever they like, and they have the ability to access a wide range of content. While there is a preference for professionally produced materials, technology makes that easier too. Companies of all sizes can have the ability to compete with FOX [NASDAQ: FOX] directly.
Sports could be a saving grace for FOX – but it could also be its downfall. Paying to air all that content costs big bucks. If the company is not able to recoup that investment through ad revenue and subscriber dollars, its ability to be profitable may be limited.
The economy comes into play as well – and the problem is twofold. On the one hand, advertisers tend to spend money in a way that is very cyclical. They take into account how the economy is performing and estimate how much they should spend on ad revenues to capture the most profit.
If people are spending less, advertisers do too. At the same time, viewership is an issue. The amount that advertisers are willing to pay for broadcast time is directly related to program or network ratings. If fewer people are watching television or they are watching television on devices that allow them to skip commercials, advertising will be worth less to those companies.
Fox Corporation Stock Forecast Summary
Investing in a television company in an age when streaming video is the trend could definitely be a risk. However, FOX [NASDAQ: FOX] is a major network with a large portfolio of valuable assets.
Would-be investors need to research the company and see how they feel about FOX’s ability to be profitable.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.