Fox Boycott Push Faces Tough Reality: Ad Revenue Isn’t Essential

(Bloomberg) -- Activists seeking an advertising boycott at Fox News face a conundrum: The network’s main source of revenue comes from cable subscribers, making it harder to inflict damage by putting the squeeze on sponsors.

Groups such as Media Matters, the liberal-leaning media watchdog, have started circulating lists of the network’s advertisers, including big-name companies like General Motors Co. and Procter & Gamble Co. But so-called affiliate fees from pay-TV providers are far more vital to its operations.

“Fox News in its current form could survive, albeit less profitably, without advertisers,” said Brian Wieser, an analyst at Pivotal Research Group LLC. “But it couldn’t survive without affiliate fees.”

Fox News is a frequent target of activists, but the drumbeat has grown louder in recent days. Media Matters was particularly incensed by comments made by Judicial Watch’s Chris Farrell on the Fox Business Network. He said billionaire George Soros, a Democratic Party supporter, was behind a caravan of Central American migrants heading toward the U.S. border. Conservative journalist Matt Drudge also criticized Fox News this week, saying it behaved insensitively in the wake of the mass shooting at a Pittsburgh synagogue.

‘Agenda-Driven Intimidation’

Gary Schreier, senior vice president of programming for Fox Business Network, condemned Farrell’s comments and said the episode would be pulled from repeat airing. In response to Drudge, who complained about Fox News commentators smiling on the channel when appearing to talk about the shooting, an official said there was no joking about the events.

Marianne Gambelli, president of ad sales for Fox News and Fox Business, said the company won’t be swayed by advocates seeking a boycott.

“We cannot and will not allow voices to be censored by agenda-driven intimidation efforts,” she said in a statement.

21st Century Fox Inc. doesn’t break down the network’s revenue sources, but S&P Global Market Intelligence estimates that about 37 percent of its $2.7 billion in operating revenue came from ads in 2018. Affiliate fees, meanwhile, generated about 60 percent.

That pool of money might be a more vulnerable target for activists, Wieser said.

“I’m a little surprised Media Matters might not try to encourage consumers to boycott their cable and satellite operators, rather than attempting to drive pressure on advertisers,” he said.

Even so, ad boycotts may have had some effect in the past. Bill O’Reilly, who faced allegations of sexual harassment, was ousted after activists targeted sponsors. Other hosts, such as Laura Ingraham, also have been hit by boycotts.

And Fox News could be less insulated after its parent company completes a $71 billion deal with Walt Disney Co. As part of that agreement, the news channel will be spun off into a new business focused more on news and sports. Fox News will be two-thirds of new company’s earnings, according to Wieser.

The latest controversies don’t appear to be hurting Fox News ratings. The outlet, founded by Rupert Murdoch and Roger Ailes in 1996, continues to beat rivals CNN and MSNBC -- including among the key demographic for advertisers, adults 24-54.

The network hopes to capitalize on its fan base with a new streaming service that $5.99 a month. The offering, called Fox Nation, would further decrease the channel’s reliance on advertising.

©2018 Bloomberg L.P.