Fox Corporation FOXA has emerged as a formidable player in the third quarter of 2024 in a media landscape marked by fierce competition and shifting viewer preferences. The company's flagship news channel, FOX News, has maintained its dominance in cable ratings, solidifying its position as a leader in the digital news space.

FOX News Digital has achieved an impressive streak, leading all news brands in multiplatform views and minutes for the 14th consecutive quarter. The platform's performance in third-quarter 2024 was particularly noteworthy, with 10.4 billion total multiplatform minutes and 5.3 billion multiplatform views. These figures represent significant year-over-year growth, indicating the platform's increasing popularity among digital news consumers.

The network's success is particularly striking when contrasted with its main competitors, Warner Bros. Discovery WBD-owned CNN and The New York Times Company NYT, which reported 3.82 billion and 4.87 billion multiplatform views, respectively, in the third quarter.

This trend suggests that Fox is not only retaining its core audience but also attracting new viewers, potentially expanding its market share in the highly competitive news industry.

Fox's strategy of expanding its reach through partnerships with platforms like EchoStar SATS-owned DISH Network and SLING TV, as well as its FOX Nation streaming service, appears to be an attempt to stay ahead of these competitive pressures.

Fox's digital strategy appears to be paying dividends, with the FOX News Mobile app averaging 6.4 million unique visitors in the third quarter. This mobile-first approach aligns with changing consumer habits and positions the company well for future growth in the digital space.

The company's social media presence has also seen remarkable growth, with FOX News leading the competitive set in total social interactions for the 42nd consecutive quarter. A 60% year-over-year increase in social media interactions underscores the effectiveness of Fox's digital engagement strategies.

The company's consistent leadership in digital news consumption, coupled with its growing social media influence, suggests a robust and adaptable business model. Shares of the company have gained 40% in the year-to-date period compared with the Zacks Consumer Discretionary sector’s 4.7% return.

Fox Corporation Price and Consensus

Fox Corporation price-consensus-chart | Fox Corporation Quote

FOXA’s Potential Headwinds Signal Caution for Investors

Despite Fox Corporation's recent successes in digital media and cable news ratings, several factors suggest investors may want to consider selling the stock.

Cord-cutting continues to accelerate, with traditional cable subscriptions declining at an alarming rate. This trend poses a substantial threat to Fox's cable news business, which has long been a cornerstone of its revenues. As viewers increasingly shift to streaming platforms, Fox's reliance on cable distribution may become a liability rather than an asset.

The company's conservative-leaning news coverage, while appealing to a dedicated audience, may limit its potential for broader market growth. In an increasingly polarized media environment, this positioning could alienate advertisers seeking to reach a more diverse demographic, potentially impacting ad revenues.

To stay ahead in the competition, the company is spending massively on buying sports rights. In fiscal 2024, operating expenses increased 6.19% year over year, primarily due to higher sports programming rights amortization and production costs related to NFL, Major League Baseball and college football content, including a higher number of live events. Increased digital investment at TUBI and FOXNews Media, costs associated with the launch of the United States Football League and higher entertainment programming rights amortization due to more hours of original scripted programming are expected to hurt the company’s profitability in the near term.

The Zacks Consensus Estimate for FOXA’s first-quarter fiscal 2024 earnings per share is pegged at $1.12 per share, down a penny in the past 30 days. The consensus mark for fiscal 2025 earnings is pegged at $3.69 per share, down 0.8% in the past 30 days.

FOXA currently has a Zacks Rank #4 (Sell), which implies that new investors may want to wait for a more favorable entry point to accumulate the stock.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.