Fox Corporation (FOX) has done the unthinkable. On 24 April 2023, Fox (FOX) Executive Chairman Lachlan Murdoch fired Fox News’ biggest star Tucker Carlson.
Strangely, Carlson woke up on Monday morning and started preparing for his show that night. Dramatically, Murdoch fired Carlson and canceled Tucker Carlson Tonight in mid morning. Incredibly, Murdoch did not give Carlson a chance to say goodbye to his viewers.
Murdoch fired Carlson because of a harassment lawsuit and a potential libel suit, The Los Angeles Times speculates. However, Fox itself gave no reason for Carlson’s exit.
Did Being Number Two in the Ratings Get Tucker Carlson Fired?
Tucker Carlson Tonight was the second-highest rated cable news show with an average viewership of 3.246 million the first quarter of 2023, TV Newser estimates.
Carlson’s talk hour fell to number two behind Fox’s The Five in the first quarter of 2023. The Five, a panel show, averaged 3.256 million viewers in the first quarter of 2023, TV Newser estimates.
I think these ratings led to Carlson’s firing. To explain, The Five’s success showed Lachlan Murdoch and his father Rupert P. Murdoch, that they could lead the ratings without Carlson’s egomania and arrogance.
Carlson has become more arrogant in recent years. For example, Carlson<a href=" told a Heritage Foundation crowd that he no longer comes into the office on 21 April 2023. Instead, Carlson does his shows from his home in Maine.
Why did Murdoch Fire Tucker Carlson?
I think the Murdochs sent Fox News talent a message that they have to behave. Hence, the Murdochs made an example of Tucker. They told their talent everybody is replaceable, even the company’s biggest stars.
Moreover, I suspect the Murdochs think they can attract similar ratings with a panel show. Hence, they can dispense with Carlson’s diva behavior and enormous salary. Carlson was making $20 million a year at Fox, Forbes speculates.
If they replace Carlson with a cheaper panel. The Murdochs can use that money elsewhere. For example, on a new deal for one of the highest-rated shows on their Fox broadcast network, WWE SmackDown.
Fox will soon begin negotiating with Endeavor Group (NYSE: EDR) for several years of SmackDown. In 2018, Fox paid $1 billion for five years of SmackDown, Fierce Video speculates. A new Smackdown contract could be more expensive because many networks and streaming services want Smackdown’s 2.175 million viewers.
Can Fox News Survive without Tucker Carlson?
I think the Murdochs sent Fox News talent a message that they have to behave. Hence, the Murdochs made an example of Tucker. They told their talent everybody is replaceable, even the company’s biggest stars.
Moreover, I suspect the Murdochs think they can attract similar ratings with a panel show. Hence, they can dispense with Carlson’s diva behavior and enormous salary. Carlson was making $20 million a year at Fox, Forbes speculates.
If they replace Carlson with a cheaper panel. The Murdochs can use that money elsewhere. For example, on a new deal for one of the highest-rated shows on their Fox broadcast network, WWE SmackDown.
Fox will soon begin negotiating with Endeavor Group (NYSE: EDR) for several years of SmackDown. In 2018, Fox paid $1 billion for five years of SmackDown, Fierce Video speculates. A new Smackdown contract could be more expensive because many networks and streaming services want Smackdown’s 2.175 million viewers.
How World Wrestling Entertainment explains Tucker Carlson’s surprise exit
Moreover, I think the Murdochs are trying to destroy the Fox News’ star system. Similarly to 1930s movie studios and World Wrestling Entertainment (WWE), the Murdochs are trying to replace spoiled and overpaid stars with cheaper talent.
In particular, I think the Murdochs want to repeat WWE’s success of making the brand bigger than the stars. To elaborate, WWE suffered badly in the 1990s when it relied on one giant star, Hulk Hogan. When Hogan defected to the rival World Championship Wrestling (WCW) for more money, WWE almost lost the wrestling wars.
Since then, WWE boss Vincent K. McMahon Jr. and his minions often take steps to dilute individual stars’ popularity. For example, WWE Chief Content Officer Paul “Triple H” Levesque unveiled a new World Heavyweight Championship belt and title on 24 May 2023.
Why companies destroy stars
One reason Levesque created the new title is to dilute the popularity of WWE’s biggest star and champion Roman Reigns. Levesque sent Reigns a message that he is replaceable, just like Tucker Carlson.
Ironically, Levesque unveiled the new title belt on the same day the Murdochs fired Carlson. Hence, Reigns has a powerful incentive to behave himself and settle for less money when contract negotiations begin.
Like WWE, the Murdochs created a superstar, Carlson, and lost control of their creation. Now Rupert and Lauchlin have to learn to succeed without Carlson. Moreover, they face the prospect of Carlson on a rival channel.
However, I should note that WWE won wrestling’s Monday Night Wars in the 1990s. On 23 March 2001, WWE bought WCW and shut it down, putting many wrestlers, including Hogan, out of work. A few years later, Hogan humbly returned to WWE.
I think the Murdochs calculate they can win the cable news wars without Carlson. Thus, they fired the monster they created.
Can Fox Thrive without Tucker Carlson?
I think Fox Corp (FOX) can thrive without Tucker Carlson because it is a cash-rich company.
For example, Fox had $4.058 billion in cash and short-term investments on 31 December 2022. However, the cash and short-term investments fell from $4.255 billion on 31 December 2021.
Conversely, Fox’s business is not generating cash. It reported a “quarterly operating cash flow” of -$531 million and a “quarterly ending cash flow” of -$892 million on 31 December 2022.
Yet Fox can occasionally generate cash. For example, it reported a quarterly ending cash flow of $4.95 billion on 30 September 2022. There was also a quarterly operating cash flow of $1.607 billion on 31 March 2022.
Fox has some problems. For example, its quarterly revenues fell from $4.441 billion on 31 December 2021 to $4.605 billion on December 2022. In contrast, the quarterly operating income grew from $213 million on 31 December 2021 to $424 million on 31 December 2022. Impressively, Fox’s quarterly gross profit grew from $774 million on 31 December 2021 to $1.077 billion on 31 December 2022.
Hence, Fox is making money and generating cash. It can survive without Carlson.
Conversely, I think Mr. Market overpriced Fox at $32.86 on 27 April 2023. To explain, Fox had $23.126 billion in total assets on 31 December 2022. I think smart investors will avoid Fox Corporation (FOX) because they overprice it.
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