Murdochs Demand All Subscribers Cough Up Huge Increase In Fox Cable Fees
Following Fox News’ massive defamation settlement paid out to Dominion Election Systems, the network is now pursuing an even more aggressive strategy to raise revenue by increasing the fee paid by cable and satellite providers to $3 per subscriber, according to a new report from Vanity Fair.
Fox News executives insist that sponsors have not been spooked by the Big Lie scandal, nor have the cable and satellite providers that carry the network. In the negotiations that are taking place this spring between Fox and the likes of Comcast, Fox wants to break past the three-buck mark—meaning three dollars per cable household per month, according to sources familiar with the matter. Even though the American cable universe is shrinking, Murdoch and his son Lachlan Murdoch are still extracting billions of dollars.
These fees are the majority of revenue for Fox, more even than advertising, and they are significantly higher than those charged by the network’s competitors. Fox has been able to raise prices and charge disproportionately high rates due to its history of deceptive and aggressive negotiating tactics during contract renewal talks with providers.
During a February 2022 earnings call, Fox Corp. CEO Lachlan Murdoch announced that 70% of the network’s cable and satellite contracts will be up for renewal during fiscal years 2023 and 2024. Murdoch has signaled to investors that Fox aims to continue to increase affiliate revenue even as the cord-cutting trend continues to accelerate, shrinking the consumer base.
Dominion sued Fox News and Fox Corp. for defamation over the network’s 2020 election coverage that falsely claimed the company’s election machines had been used to alter votes, among other debunked conspiracy theories. The two parties settled the case immediately before the trial was set to begin this week, with Fox paying out $787.5 million to Dominion. Still, as Media Matters President Angelo Carusone wrote in an MSNBC op-ed, “Fox News is about to burn brighter and hotter” to shore up the loyalty of its audience, which the network will then leverage during upcoming negotiations.
The impact of Dominion’s lawsuit was always going to be limited because of Fox’s ultimate weapon: cable carriage fees.
The dirty secret about Fox News is that it is one of the only commercial TV channels that doesn’t need a single advertisement to be profitable, if not the only one. In fact, Fox could have zero dollars in ad revenue and still have at least a 35% profit margin. This is the result of carriage fees and the guaranteed revenue they provide Fox.
During what would have been the Dominion trial, Fox News is actively renewing, or gearing up to renew, its contracts with at least three major cable providers — a potentially even bigger financial stake than the case. These three renewals alone, even without increases, would be worth nearly $1 billion annually to Fox.
Since negotiations are ongoing, the exact amount of money Fox will be able to extract hasn’t yet been finalized, but Vanity Fair’s reporting allows for a reasonable estimate.
Per S&P Global, there are approximately 61.9 million multichannel video subscribers, including cable, satellite, and other delivery service providers. If Fox is collecting $2.18 from each of them, as is their current affiliate fee rate, that’s over $1.3 billion in revenue. If that rate goes up to $3 per subscriber, Fox News would be earning more than $1.8 billion from affiliate revenue alone — mostly from customers who don’t watch the channel and have no desire to fund the network’s defamation settlement.
This means that Fox has every incentive to ramp up its extremism, rather than attempt to moderate it. Back to Carusone:
For Fox, success here necessitates that its audience be as fervent as ever. Accordingly, you can expect the network to raise the temperature of its simmering cauldron of deceit and extremism to a full-on boil. It has no other choice.
That process has already begun; Fox has told more than 60 lies about the election and January 6 prosecutions in 2023 alone.
For more information on Media Matters’ campaign to protect consumers from Fox’s affiliate fee greed, click here.
Reprinted with permission from Media Matters.
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