Having sold off most of its entertainment assets to Disney (NYSE:DIS), the subsequently christened Fox Corporation (NASDAQ:FOXA) now relies moving forward largely on its non-fictional channels, most notably (and notoriously) Fox News. That was achievable given that management very well could have gotten away with a hands-off approach to FOXA stock in the booming economy. Then, the novel coronavirus rudely stormed into town.
Throughout coverage of the crisis, Fox News could have reported with intellectual consistency and integrity. Back in 2014, the conservative news channel routinely criticized then President Barack Obama for not doing more to prevent the spread of Ebola in the U.S. But in the early days of the coronavirus pandemic, Fox News blasted its liberal counterparts for sensationalism.
The difference in tone between the two outbreaks couldn’t be starker.
Most importantly, Fox News – or more specifically, the editorial content, such as Fox & Friends and what I term Fox After Dark: Tucker Carlson, Laura Ingraham and Sean Hannity – hardly bothered to challenge Trump on his rants about Covid-19. For instance, TheGuardian.com quoted Trump at a late-February rally in Charleston, South Carolina:
The Democrats are politicising the coronavirus. They’re politicising it. One of my people came up to me and said: ‘Mr President, they tried to beat you on Russia, Russia, Russia.’ That did not work out too well. They could not do it. They tried the impeachment hoax. This is their new hoax.
To be fair, the president did not directly call the coronavirus a hoax. But there was enough of a “wink, wink” moment, if you will, that supporters were more than willing to believe and spread Covid-19-related conspiracy theories. Further, the bad takes by Fox editorialists, such as suggesting the pandemic was no big deal, added fuel to the fire.
Of course, none of this really hurt FOXA stock (aside from the initial coronavirus-fueled broader market collapse). However, not maintaining some journalistic independence and instead adopting a sycophantic attitude toward Trump may have financial consequences.
FOXA Stock Tied to the Boy Who Cried Wolf
Currently, the biggest news item in conservative media is ongoing allegations of voter fraud. From dead people voting to machines reallocating Trump votes for Biden, anything and everything was pushed to attempt an ultimate reversal of the election results.
Here’s the thing: I agree that election night was weird. When I eventually punched out, I was convinced that Trump was on his way to a second term. But the next few days turned the table remarkably for Democratic challenger Joe Biden.
As an American that cares about free and fair elections, my attitude has always been that the truth, no matter how personally painful, should be our guide. Therefore, if the 2020 election was rigged, then the citizenry deserves to know. However, extraordinary claims require extraordinary evidence.
A Pattern Emerges
Like millions across the nation, I waited for that evidence. Instead, I received nothing but insults and assertions. Later, I realized that these accusations represented a pattern with Trump.
Back during the runup to the 2016 election, Republican candidate Trump accused U.S. Sen. Ted Cruz of “cheating to win the Iowa caucuses.” The real estate mogul then called for the results to be invalidated.
Then, when Trump was the Republican party’s man, he stated that the election is “absolutely rigged” by the “dishonest media” and “at many polling places,” according to BBC.com.
Not only that, after Trump won four years ago, he sent out a bizarre tweet, stating, “In addition to winning the Electoral College in a landslide, I won the popular vote if you deduct the millions of people who voted illegally.”
I mean, the language hasn’t changed here! And that’s when I started to comprehensively realize that FOXA stock might have some problems.
Playing Russian Roulette with a Madman
As you can imagine, I’ve butted heads with my friends and colleagues during this year of pandemics and mass delusions. From coronavirus conspiracies to election fraud allegations, my bottom line response is simple: show me the evidence.
Again, I hear a lot of noise but no evidence. Further, with Trump mouthing off at every opportunity, his ardent supporters have forgotten a crucial irony. When everything is a conspiracy, how does an outside observer – such as an undecided voter – determine objectively what is real?
I’m still trying to figure that one out myself. However, it wasn’t until the first presidential debate between Trump and Biden that I got the initial faint inkling that FOXA stock was headed toward choppy waters.
During a personal discussion, one of my friends lamented that Trump was debating two people: Biden and the moderator. At that point, I had more than my fair share of nonsense. Exasperated, I blurted out that I didn’t know what debate my friend was watching. Chris Wallace is a Fox News employee, for goodness sake!
As well, Trump could have prepared for the debate, conducting himself in a savagely cool and collected manner. Instead, he rampaged throughout that night, turning off half of the country. Still, that didn’t stop Trump supporters from blaming and lashing out at Wallace.
But the pivotal issue is that when you have undisciplined, unprincipled (and I would add childish) support, that support can turn on you precisely because it is undisciplined and unprincipled. Thus, while FOXA stock once benefited from the love of Trump supporters, it was only in the fire of conflict where their true character was revealed.
Today, what is the latest rallying cry of Trump supporters? You guessed it: Fox News sucks!
Play with Fire and You Get Burned
One particular passage from the Bible – you know, that thing that Republicans supposedly read – is emblematic of this political race: A double-minded man is unstable in all his ways.
It may be just coincidence. Still, I find it interesting that FOXA stock is down 25% year-to-date. In comparison, CBS Corporation (NASDAQ:VIAC) is down 22% YTD, while Disney, which owns ABC, is just 3% below parity for the year. The biggest winner of course is the New York Times (NYSE:NYT), which is up more than 22% YTD.
Strangely, while these are liberal organizations, Trump supporters might actually respect them more than Fox News right now. Another Bible verse comes to mind: So then, because you are lukewarm, and neither cold nor hot, I will vomit you out of My mouth.
Sense of Betrayal
Trump supporters understood from day one that CBS and the New York Times are “fake news.” But they felt that Fox News was on their side, in part because of the unchallenged and unmitigated sycophantic behavior during the Trump administration. When some members of Fox grew a conscience (and journalistic integrity), that was it. Trump supporters felt betrayed.
To be frank, I can appreciate why. This election was too important for journalistic integrity. If that was an attribute worth seeking, Fox should have pursued it back in 2016. But once you agree to be on the Trump train, you stay in until it stops.
And that was the problem. Fox News should never have suggested that the organization will be a subservient mouthpiece for Trump. Now, supporters are running to outlets like One America News Network and Newsmax (which are just like Fox News but with editorial content too extreme for Fox News). Ultimately, that’s not a great path for FOXA stock.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.