Fox News Profits Grow Even as Viewership Declines

Fox News, the cable news giant controlled by Rupert Murdoch, kept its parent company flush in the first three months of the year, notching a slight gain in profit and sales despite a drop in viewers.

Altogether, Fox Corporation beat Wall Street expectations with a sevenfold increase in profit to $567 million and a 6.5 percent drop in revenue to $3.2 billion compared with the same period a year prior. A change in how the company valued some of its assets was a key reason for the profit surge. Investors were looking for a $332 million profit and $3.1 billion in sales.

But revenue at most of its businesses dropped as fewer viewers tuned into the company’s cable channels and the Fox broadcast network, in part because Fox did not host the Super Bowl this year. Total advertising sales fell 24 percent to $1.2 billion, with the cable segment, primarily Fox News, seeing ad revenue drop 7 percent to $283 million.

The decrease in advertising mirrors the performance at other media conglomerates and spotlights a significant shift in the advertising market. Ad revenue jumped at Facebook, Google and even smaller digital publishers in the first quarter as advertisers were more willing to spend their budget on digital platforms, often at the expense of television.

Fox News still makes up the vast majority of Fox Corporation’s profits. The cable division that houses the news network generated $899 million in pretax income, accounting for 95 percent of the company’s total pretax profit. The company’s businesses include several sports cable networks and the free streaming platform Tubi.

The company also announced on Wednesday the acquisition of OutKick Media, the publisher of its namesake sports news site. The company is run by Clay Travis, a sports commentator who has been known for making controversial statements. Last year, he called the coronavirus “overrated” and downplayed the severity of the brewing pandemic.

In a statement announcing the acquisition, Lachlan Murdoch, chief executive of Fox Corporation and the son of Rupert Murdoch, welcomed Mr. Travis. “Clay and his team have quickly made OutKick a content powerhouse with a very large, loyal and engaged audience.”

Despite the drop in viewers at Fox News, the network benefited from contractually triggered rate increases that cable operators pay to carry the channel. Licensing fees rose 6 percent to $1.07 billion. Advertising fell despite charging higher ad rates.

The younger Mr. Murdoch claimed victory for Fox News in a call with investors after the earnings report.

“Fox News reclaimed its leadership position as America’s No. 1 cable news network and the most-watched cable network in prime time,” he said before taking a moment to take a jab at rivals.

“MSNBC lost more than one-third of its audience and CNN lost over half,” he said. “Over half.”

Uber said its business was recovering from the slowdown caused by the pandemic, although it continued to lose money.

The company said on Wednesday that revenue was $2.9 billion in the first three months of the year, down 11 percent from the same period a year ago.

The decline in earnings included $600 million that Uber has earmarked to pay for settlements with drivers in Britain, where the Supreme Court ruled in February that drivers should be classified as workers and be entitled to a minimum wage and vacation time.

Excluding the settlement fund, Uber’s revenue was $3.5 billion, an 8 percent increase from the previous year that outpaced Wall Street expectations of $3.28 billion.

Uber lost $108 million, an improvement from the previous year, when it lost $2.9 billion. Uber attributed the change to the sale of its autonomous vehicle unit, which was acquired by the self-driving truck start-up Aurora in December. Uber’s operating loss for the quarter was $1.5 billion — also made worse by the British driver settlement.

On Tuesday, Uber’s primary competitor in the United States, Lyft, said that it was also recovering from the slowdown caused by the pandemic as riders began to return to the platform. Still, Lyft’s revenue for the quarter was $609 million, a 36 percent decline from the previous year. Losses were $427.3 million, 7 percent more than its losses the previous year.

“Uber is starting to fire on all cylinders, as more consumers are riding with us again while continuing to use our expanding delivery offerings,” Dara Khosrowshahi, Uber’s chief executive, said in a statement.

Uber’s stock price dropped more than 4 percent in after-hours trading on Wednesday evening.

While consumers have avoided travel over the past year, Uber’s business has been bolstered by its food delivery service, Uber Eats. Revenue from delivery was $1.7 billion, a 270 percent increase from a year ago. Despite reopenings in Sydney and New York City, Uber said that customers have continued to order food delivery at a strong pace.

But while riders have started returning to Uber and Lyft, drivers have been more hesitant. Both companies said they have faced driver shortages. During a call on Tuesday with financial analysts, Lyft’s president, John Zimmer, said he expected drivers who saw food delivery as a safer option during the pandemic would return to ride hailing because the pay is better and because drivers miss social interactions with riders.

Uber said it had 3.5 million active drivers and couriers during the first three months of the year, down 22 percent from the previous year.

The Treasury Department on Wednesday called on Congress to address a looming cap on the amount of debt the government can issue, warning that a surge of expenditures related pandemic could render its traditional tools for keeping the nation from breaching the debt limit less effective.

A divided Congress passed a two-year budget deal in 2019 that suspended the so-called debt ceiling until July 31. The agreement, which was made before the pandemic struck, was intended to put off budget battles and give clarity over spending going into a presidential election year. Now, the Biden administration and a Congress controlled by Democrats must make sure the government can continue borrowing to pay its bills.

“If Congress has not acted by July 31, Treasury, as it has in the past, may take certain extraordinary measures to continue to finance the government on a temporary basis,” said Brian Smith, Treasury’s deputy assistant secretary for federal finance. “In light of the substantial Covid-related uncertainty about receipts and outlays in the coming months, it is very difficult to predict how long extraordinary measures might last.”

Negotiations over raising or suspending the debt limit are often fraught, and Treasury has developed tools over the years to give the federal government more flexibility as the deadline approaches. Those “extraordinary measures” include suspending sales of State and Local Government Series Treasury securities and suspending reinvestment of the Exchange Stabilization Fund. Treasury can also redeem existing investments of the Civil Service Retirement and Disability Fund and the Postal Service Retiree Health Benefits Fund and suspend reinvestment of the Government Securities Investment Fund.

In the past, those measures have allowed the Treasury Department to extend the debt limit deadline on its own for months. But Mr. Smith said Treasury was studying potential scenarios “in which extraordinary measures could be exhau
sted much more quickly than in prior debt limit episodes.”

Asked in a press briefing if Treasury was considering prioritizing payments if the deadline is missed, Mr. Smith said: “Congress needs to raise or suspend the debt limit, that’s the way to resolve this issue.”

The debt limit warning came as part of the Treasury Department’s quarterly announcement about its financing plans. Treasury said this week that it expects to borrow more than $1 trillion during the rest of the fiscal year as the United States continues spending heavily to combat the coronavirus crisis.

Video

transcript

Back

transcript

Facebook Oversight Board Upholds Ban of Trump

A Facebook-appointed oversight board ruled to uphold the social network’s ban of former President Donald J. Trump at a panel on Wednesday.

Our decision this morning is relatively simple and straightforward. First, we agree that Facebook had sufficient justification to remove Mr. Trump’s Jan. 6 posts for violation of the policy against praising or encouraging violent actors. Second, we agree that Facebook had sufficient justification to suspend Mr. Trump’s account, at least for the duration of what the Department of Homeland Security called a, quote, “heightened risk of violence.” But we hold that it was improper, that is to say, in violation of Facebook’s own rules, as well as generally accepted principles of freedom of expression, for Facebook to make that suspension indefinite.

Lawmakers lashed out at the ruling by Facebook’s oversight board on Wednesday to uphold the social network’s ban on former President Donald J. Trump, at least for now.

Driving the discontent was that the oversight board, a quasi-court that confers over some of Facebook’s content decisions, did not make a black-and-white decision about the case. Mr. Trump had been blocked from the social network in January after his comments online and elsewhere incited the storming of the Capitol building.

While the oversight board said on Wednesday that Facebook was justified in suspending Mr. Trump at the time because of the risk of further violence, it also said the company needed to revisit its action. The board said Facebook’s move was “a vague, standardless penalty” without defined limits, which needed to be reviewed again for a final decision on Mr. Trump’s account in six months.

That angered both Republicans and Democrats. Republican lawmakers have pointed to Mr. Trump’s ouster by Facebook, Twitter and others as evidence of an alleged anti-conservative campaign by tech companies, calling the decisions a dangerous precedent for censorship of political figures.

Senator Ted Cruz, Republican of Texas, tweeted that the board’s decision on Wednesday was “disgraceful” and warned it could have dangerous ripple effects.

“For every liberal celebrating Trump’s social media ban, if the Big Tech oligarchs can muzzle the former President, what’s to stop them from silencing you?” Mr. Cruz said in his tweet.

Senator Marsha Blackburn, Republican of Tennessee, said in a statement that the move showed that “it’s clear that Mark Zuckerberg views himself as the arbiter of free speech.” Republican members of the House judiciary committee tweeted that the decision was “pathetic,” and Jim Jordan of Ohio, the ranking member, tweeted about Facebook: “Break them up.”

Democrats, also dissatisfied with the murky decision, took aim at how Facebook can be used to spread lies. Frank Pallone, the chairman of the House energy and commerce committee, tweeted: “Donald Trump has played a big role in helping Facebook spread disinformation, but whether he’s on the platform or not, Facebook and other social media platforms with the same business model will find ways to highlight divisive content to drive advertising revenues.”

Representative Ken Buck, Republican of Colorado and the ranking member of the House antitrust subcommittee, accused the oversight board of political bias.

“Facebook made an arbitrary decision based on its political preferences, and the Oversight Board, organized and funded by Facebook, reaffirmed its decision,” he said.

But scholars who support free speech welcomed the decision. They have warned that as social media companies become more active in determining what stays online and what doesn’t, that could potentially lead to a slippery slope where tech giants have too much sway over digital speech.

“The Facebook Oversight Board has said what many critics noted — the ban of former President Trump, while perhaps justified, was worrisome in its open-endedness and lack of process,” said Gautam
Hans, a law professor at Vanderbilt University. “To the degree that the decision draws attention to how ad hoc, manipulable, and arbitrary Facebook’s own content policies get enforced, I welcome it.”

Mike Isaac contributed reporting.

Video

transcript

Back

transcript

Facebook Oversight Board Upholds Ban of Trump

A Facebook-appointed oversight board ruled to uphold the social network’s ban of former President Donald J. Trump at a panel on Wednesday.

Our decision this morning is relatively simple and straightforward. First, we agree that Facebook had sufficient justification to remove Mr. Trump’s Jan. 6 posts for violation of the policy against praising or encouraging violent actors. Second, we agree that Facebook had sufficient justification to suspend Mr. Trump’s account, at least for the duration of what the Department of Homeland Security called a, quote, “heightened risk of violence.” But we hold that it was improper, that is to say, in violation of Facebook’s own rules, as well as generally accepted principles of freedom of expression, for Facebook to make that suspension indefinite.

A Facebook-appointed panel of journalists, activists and lawyers ruled on Wednesday to uphold the social network’s ban of former President Donald J. Trump, ending any immediate return by Mr. Trump to mainstream social media and renewing a debate about tech power over online speech.

But the board also said that Facebook’s penalty of an indefinite suspension was “not appropriate,” and that the company should apply a “defined penalty.”

Read our ongoing coverage here:

Facebook Oversight Board Upholds Social Network’s Ban of Trump

A company-appointed panel ruled that the ban was justified at the time but added that the company should reassess its action and make a final decision in six months.

British Political Veteran Steers Facebook’s Trump Decision

Nick Clegg, a former deputy prime minister, has shaped the company’s handling of Donald Trump at every turn.

The Limits of Facebook’s Supreme Court

In the On Tech newsletter, Shira Ovide explains the decision on the company, its implications and the board’s severe limits.

What Is the Facebook Oversight Board?

The panel of about 20 people includes academics and political leaders.

Lawmakers Slam Facebook Board’s Decision to Uphold Trump Ban

“What’s to stop them from silencing you?” Senator Ted Cruz replied on Twitter.

A federal judge on Wednesday struck down the nationwide moratorium on evictions imposed by the Trump administration last year and extended by President Biden until June 30, a ruling that could affect tenants struggling to pay rent during the pandemic.

The decision, by Judge Dabney Friedrich of the U.S. District Court for the District of Columbia, is the most significant federal ruling on the moratorium yet, and follows three similar federal court decisions. The Justice Department immediately appealed, and will seek an emergency stay of the decision, potentially delaying a final resolution of the case past the moratorium’s planned June 30 expiration.

It remains unclear how wide an impact the decision will have on renters. It does not necessarily bind state housing court judges, who rule on eviction orders, and two other federal courts have upheld the moratorium, adding to the confusion about its fate.

“There are now numerous conflicting court rulings at the district court level, with several judges ruling in favor of the moratorium and several ruling against,” said Diane Yentel, president of the National Low Income Housing Coalition, a national tenants advocacy group.

Still, tenants’ rights groups said the decision on Wednesday could leave more low-income and working-class tenants vulnerable to eviction in coming weeks even as the Biden administration is beginning to disburse tens of billions of dollars in aid to help them catch up on unpaid rent.

Landlords said the decision validated their arguments that the legal basis for the federal moratorium was unsound and overstepped the government’s power.

The case was brought in November by the Alabama Association of Realtors and a group of real estate agents in Georgia who claimed the moratorium shifted the burden for rent payments from the tenants to landlords at a time when many owners have been struggling to meet their own expenses.

The moratorium has had a substantial effect. Despite the sharp economic downturn created by the pandemic, eviction filings declined 65 percent in 2020 over the usual annual rate, according to an analysis of court data by the nonprofit group Eviction Lab.

Housing analysts warned that Wednesday’s ruling could embolden more landlords to begin eviction proceedings against tenants before the federal government can disburse $45 billion in emergency housing assistance appropriated by Congress.

“It couldn’t come at a worse time,” said Mary K. Cunningham, who studies housing with the Urban Institute, a nonpartisan policy group. “This is happening just as communities are trying to beat the clock, waiting for the federal government to get its new housing subsidies out the door before the moratorium expires on June 30. It’s terrible news.”

Landlords and real estate agents downplayed concerns that lifting the moratorium will create an eviction crisis. “With rental assistance secured, the economy strengthening and unemployment rates falling, there is no need to continue a blanket, nationwide eviction ban,” a spokesman for the National Association of Realtors said in a statement.

The executive order covers any single renter making less than $99,000 a year and families making twice that much. About 8.2 million tenants reported that they had fallen behind in their rent payments during the pandemic, according to Census Bureau estimates.

Federal decisions, like the one issued Wednesday, are significant but serve as guidance rather than an order — although an unequivocal ruling from a prominent federal court is likely to sway some local judges, said Eric Dunn, director of litigation for the National Housing Law Project, a tenant advocacy group.

A global shortage of computer chips that has forced automakers to idle plants in recent weeks is expected to take an even heavier toll on the industry in second quarter.

General Motors said on Wednesday that it made a $3 billion profit in the first three months of the year, up from just $294 million a year earlier. But the company warned that its profit would be significantly smaller in the second quarter because of the shortage.

“Every region of the world has been dealing with the supply-demand imbalance for semiconductors, and we’ve been working through some significant disruptions to production,” G.M.’s chief executive, Mary Barra, said in a conference call with reporters.

The company expects net income for the first half of the year to total about $3.5 billion, implying a profit of around $500 million in the second quarter. It said it expected a rebound in the second half of 2021 and predicted net income for the full year to range from $6.8 billion to $7.6 billion.

The G.M. forecast comes a week after Ford Motor said the shortage would likely cut its output of cars and trucks in half in the second quarter of the year from its previously planned level. Separately, Stellantis, the company formed by the merger of Peugeot SA and Fiat Chrysler, said on Wednesday that its production in the first quarter was 11 percent lower than planned because of the chip shortage, and it also warned that the second quarter would be weaker than the first.

Stellantis reported revenue of 34 billion euros ($41 billion) since the merger was completed on Jan. 17. Had the merger been completed earlier, the new company’s revenue for the full first quarter would have been 37 billion euros, up 14 percent over the same period a year ago.

Modern vehicles require dozens of computer chips for the electronics that control everything from brakes and transmissions to entertainment and navigation systems and tire-pressure monitors.

Last year, as many automakers closed factories to prevent the spread of the coronavirus, sales of consumer electronics like laptops and game consoles took off, and semiconductor manufacturers shifted their production.

Now, chip makers are struggling to meet demand to the type of chips used by automakers, which are seeing a strong rebound in demand for cars and trucks.

Ms. Barra said G.M. was helped in the first quarter by directing the chips it did have to plants making its more profitable and top-selling models. “A lot of really good work is being done across our company to source semiconductors, allocate them to our most in-demand, capacity-constrained products,” she said.

One positive from the shortage for automakers is that tight inventories of new vehicles has forced consumers to pay close to list prices for many models. G.M. said the average price paid for the vehicles it sold in North America in the first quarter was $3,500 higher than a year ago, lifting the company’s profit in the region.

Dogecoin, the cryptocurrency that started as a joke, is on a tear. A surge in the past day pushed it to another record, sending it some 14,000 percent higher than it started the year.

Year-to-date performance of cryptocurrency prices

One theory is that the upcoming appearance of Elon Musk, the Tesla chief executive and noted Dogecoin superfan, as the host of “Saturday Night Live” on May 8 could get more people interested in trading the crypto token. It’s as good a reason as any for those who try to rationalize its movements.

The latest bout of Dogecoin mania has somewhat overshadowed what’s going on in Ethereum, the second-largest cryptocurrency, which also set records this week and made its 27-year-old co-creator, Vitalik Buterin, a billionaire (in dollars). The price of Ether, the crypto token built on the Ethereum blockchain, is up more than 350 percent for the year to date, outpacing Bitcoin’s relatively pedestrian 90 percent gain — which, for context, outpaces every stock in the S&P 500 over that period.

The European Union’s administrative arm said Wednesday that it would take action against foreign companies that received financial support from their governments, a move clearly aimed at China amid signs of deteriorating ties.

The tougher line against China comes only four months after Brussels and Beijing seemed to be moving closer, working out an agreement in December intended to make it easier for European companies to invest in what has become the bloc’s most important trading partner for goods.

But since then, relations have gone downhill because of tension over Chinese policy toward minority groups in the Xinjiang region.

Legislation proposed by the European Commission on Wednesday would give it power to investigate and take measures against foreign companies that used government subsidies to get an unfair advantage over domestic competitors, an accusation often leveled at China. A separate proposal, also announced Wednesday, is intended to make Europe less dependent on China for crucial goods like semiconductors, drugs and batteries.

A day earlier, Valdis Dombrovskis, the European commissioner for trade, said work on making the December investment agreement with Beijing final was on hold because of repressive Chinese policies.

In March, the European Commission issued sanctions against four Communist Party officials after accusing them of being responsible for human rights violations against members of the Muslim Uyghurs and other minority groups in Xinjiang.

China retaliated with sanctions against numerous members of the European Parliament, several scholars, and employees of human rights organizations and think tanks that have been critical of China.

In light of the sanctions war, Mr. Dombrovskis told Agence France-Press
e on Tuesday that “it’s clear the environment is not conducive for ratification of the agreement.”

Europe’s tougher line toward China brings it closer to the stance adopted by the Biden administration, which objected to the investment agreement. But Europe remains divided over how to approach an important trading partner that is also a geopolitical rival.

Markus J. Beyrer, director general of BusinessEurope, a leading business lobby, said in a statement Wednesday that the proposal on subsidies was “a step in the right direction in addressing existing legal loopholes and preventing market distortions.”

But a prominent business group in Germany, which is highly dependent on exports to China, was critical.

“The proposed regulation is very complex, and there is a risk that its implementation will lead to considerable additional bureaucracy and legal uncertainty for our member companies,” said Ulrich Ackermann, managing director of foreign trade at V.D.M.A., which represents German makers of industrial equipment.

Stocks rebound

• Stocks on Wall Street were mixed on Wednesday.

• The S&P 500 rose 0.1 percent, while the Nasdaq composite dropped 0.4 percent.

• The Stoxx Europe 600 index rose 1.8 percent, and the FTSE 100 in Britain gained 1.7 percent.

• Oil markets ended the day mostly unchanged.

European economy

• New data on the European economy from IHS Markit reflected continued strengthening. The eurozone composite purchasing managers’ index (PMI) for April grew for the second consecutive month. Significantly, the service sector grew after seven months of contraction.

• “The updated services PMIs for April confirmed that the worst for the eurozone economy should be over,” said Nicola Nobile, the lead eurozone economist for Oxford Economics, in a note to clients. “The vaccination progress and the gradual reopening of some of the economies point to” an increase in economic output already underway, she added.

More chip worries

• Stellantis, the name for the merger of Fiat Chrysler and PSA, the maker of Peugeot, said the semiconductor shortage caused an 11 percent decline in production of automobiles in the first quarter, representing about 190,000 vehicles.

• Dealer inventories were down in all areas, “primarily due to the semiconductor shortage,” the company said. Despite that, Stellantis reported net revenue up 14 percent. The company’s shares gained 7 percent in Europe and the U.S.