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Fox stock downgraded on cord-cutting risks as viewership declines post-Tucker Carlson

Wells Fargo downgraded Fox Corporation stock (FOXA) to Underweight from Equal Weight on Monday as analyst Steve Cahall cited "ecosystem risks" surrounding Fox News.

"Fox's earnings are mostly Fox News earnings, and Fox News is facing viewership and share pressures," he wrote in a new note to clients. "With ecosystem risks also elevated we find our estimate outlook more negative and below the Street."

Cahall, who also lowered his price target on the stock to $31 a share from the prior $35, explained viewership numbers for Fox News were down 19% from January to June compared to the same period two years ago.

The analyst blamed the declines on escalating cord-cutting trends and programming challenges following the ousting of longtime host Tucker Carlson in April.

Tucker Carlson, host of
Tucker Carlson, host of "Tucker Carlson Tonight," poses for photos in a Fox News Channel studio on March 2, 2017, in New York. (AP Photo/Richard Drew, File) (ASSOCIATED PRESS)

"Fox News was 52% of cable news primetime viewership for 2020-22, 51% in Jan'23 and that has slid to a low of 38% in June '23 post-Tucker Carlson," the analyst wrote. "Fox News' share of conservative news viewers has fallen from 94% to 84%. While the new primetime lineup could drive a rebound, we think Fox News is a Show Me viewership story."

Last month, the network announced its new primetime lineup, which will officially go into effect on July 17.

Jesse Watters is set to take over Carlson's coveted 8 p.m. slot. Laura Ingraham, who formerly hosted the 10 p.m. hour, will move to 7 p.m. as Greg Gutfeld shifts to 10 p.m. Sean Hannity will remain at 9 p.m.

In a press release, Fox — citing the latest data from Nielsen — said its news channel continues to rank high in total day and primetime viewership with the most politically diverse audience in cable news.

The Fox News Channel finished the second quarter of 2023 as cable’s most-watched network in total day viewers and second in primetime — behind NBA-driven TNT, according to Nielsen.

This combination of photos show Fox News commentators Laura Ingraham, from left, Jesse Watters, Sean Hannity and Greg Gutfeld. Watters will host an opinion show in the time slot formerly occupied by Tucker Carlson, Fox News Channel announced Monday. “Jesse Watters Primetime
This combination of photos show Fox News commentators Laura Ingraham, from left, Jesse Watters, Sean Hannity and Greg Gutfeld. (AP Photo) (ASSOCIATED PRESS)

Cahall added overarching media industry hurdles could further hammer Fox's bottom line, despite its strong balance sheet.

"Fox gets ~50% of [fiscal year 2023 and 2024 estimated revenue] from US affiliate fees — among the highest in our media coverage universe," he said. "We estimate 7-8% cord cutting, with a downside bias."

He added ESPN's direct-to-consumer plans could add more fuel to the fire as analysts expect more streamers to embrace live sports while the costs of sports rights skyrocket for broadcasters.

Cahall argued although TV has better top-line growth compared to direct-to-consumer channels, there is less ability to reduce costs which threatens long-term growth.

"Fox could look to cost cuts, but that could threaten revenue. Licensing sports content to streamers could be incremental revenue/EBITDA, but investors will weigh this against the added downside to linear cash flows."

Fox shares were down about 1% in early afternoon trading following the downgrade.

Alexandra is a Senior Reporter at Yahoo Finance. Follow her on Twitter @alliecanal8193 and email her at

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