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Twenty-First Century Fox Inc (FOXA) Isn’t a Factor Without Bill O’Reilly

Without controversial anchor Bill O'Reilly, Fox News is bound to suffer

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The impossible has happened at Twenty-First Century Fox Incs (NASDAQ:FOX, NASDAQ:FOXA) Fox News. Famed — and some would say notorious — news anchor Bill O’Reilly was fired Wednesday afternoon. Allegations of sexual harassment proved to be too much of a liability for the cable news network. As expected, the dismissal of a cable news titan sent shockwaves throughout the media. Now, the question remains how this will affect Fox News specifically, and FOXA broadly.

Twenty-First Century Fox Inc (FOXA) Isn't a Factor Without Bill O'Reilly
Source: Wikipedia

We often say that there is no “I” in team. For the vast majority of cases, this is true. Even the great Tom Brady couldn’t win a single game without his teammates’ contributions.

That said, exceptions to the rule exist. One can easily make the argument that Bill O’Reilly was the face of Fox News. His strong performances on prime time segued into less appealing shows. Without him, I doubt that the other programs would generate their current viewership stats.

I’m not disparaging any of the talented Fox News anchors and contributors. What I am saying are the facts. Twenty-First Century Fox chose Bill O’Reilly to interview President Trump during the Super Bowl halftime. It wasn’t just for the ratings. Unlike anchors like Sean Hannity, Bill O’Reilly leans Republican, but he doesn’t opine as their lapdog apologist.

This even-handed approach has served Fox News, and broadly, FOXA stock, very well. Although it’s obviously far from a perfect comparison, Twenty-First Century Fox is up over 9% year-to-date. Time Warner Inc (NYSE:TWX), which owns fierce rival CNN, is up only 3.4%.

In recent days, however, the table has turned. FOXA shed 1% on the O’Reilly firing, and has lost more than 5% for the month. In contrast, TWX has gained 2%. If you’re a Twenty-First Century Fox investor, you should expect more pain to come.

The Awesome Power of Bill O’Reilly

Bill O’Reilly is a media phenomenon.

With his presence, Fox News had an asset that transcended the superficial appeal of other anchors. That’s the real “O’Reilly Factor.” It’s also the reason why, similar to President Trump, nothing stuck to the controversial anchor. Allegations of misconduct were previously leveled at Bill O’Reilly, but they ultimately failed in denting Fox News. As evidence, the ratings for the “Factor” increased when the latest misconduct news first broke, and when advertisers jumped ship.

Apparently this time, the liability of keeping Bill O’Reilly in the Fox News lineup was no longer worth it. That’s a weighty sentiment for Twenty-First Century Fox and FOXA shareholders. “Factor” was by far the biggest cable news program over the last several years. In the first quarter of 2017, Bill O’Reilly averaged nearly 4 million viewers per episode. The second-largest haul was “Tucker Carlson Tonight,” which brought in 3.3 million viewers. “Hannity,” another Fox News program, rounds out the top three.

What’s even more astounding is the “residual” star power of Bill O’Reilly. Rerun episodes of the “Factor” actually outgunned live broadcasting of rival offerings from Time Warner and Comcast Corporation (NASDAQ:CMCSA). Notable shows taking the walk of shame include CNN’s “Anderson Cooper 360” and MSNBC’s “All In With Chris Hayes.”

Although it’s a contested assertion, TV news industry experts believe that prime-time ratings for Fox News could fall 25%. For what it’s worth, I don’t believe these doomsday forecasts are exaggerations.

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