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2017-05-10 23:15:02
Fox Reveals Cost of Sexual Harassment Allegations: $45 Million

LOS ANGELES — Twenty-First Century Fox disclosed on Monday that it had incurred costs of $10 million “related to settlements of pending and potential litigations” during its fiscal third quarter in the aftermath of sexual harassment allegations at Fox News.

That revelation was made in a regulatory filing to the Securities and Exchange Commission in which 21st Century Fox said it “has also received regulatory and investigative inquiries relating to these matters and stockholder demands to inspect the books and records of the company which could lead to future litigation.” The company said that in the nine months leading up to March 31, it had incurred $45 million in costs tied to litigation related to harassment allegations.

The New York Times on April 1 disclosed financial settlements involving multiple women who had accused Bill O’Reilly, the top-rated Fox News personality, of sexual harassment or behaving inappropriately. Fox News ousted Mr. O’Reilly on April 19 after conducting an internal investigation; advertisers had also left his show in droves. He has denied any wrongdoing. The housecleaning continued on May 1 with the dismissal of one of the network’s co-presidents, Bill Shine, a protégé of Roger Ailes, who was pushed out as the chairman of Fox News last summer amid his own sexual harassment scandal. Mr. Ailes has also denied any wrongdoing.

Reporting its first quarterly earnings since Mr. O’Reilly’s departure, 21st Century Fox executives managed to avoid discussing the upheaval almost entirely on Wednesday. In a 34-minute call with analysts, Lachlan Murdoch, the executive chairman, and James Murdoch, the chief executive officer, steered attention toward climbing subscriber fees for the company’s cable channels and their high expectations that regulators would approve the company’s $14.3 billion buyout of Sky, the British satellite TV giant.

Ben Swinburne, a Morgan Stanley analyst, posed the lone question about Fox News, asking about “volatility” at the network and whether they had discussed it with distributors. “The channel continues its ratings dominance,” Lachlan Murdoch responded. “We’re very confident in the future of that business.”

Still, 21st Century Fox’s filing with the S.E.C. noted that the Fox News “prime time lineup has significantly changed, which could have a negative impact on our ratings.” Since Mr. O’Reilly’s exit, Fox News has retained the top spot in cable news, but its competitors are closing in. Rachel Maddow on MSNBC has started to win her time slot by certain measures. Tucker Carlson, who replaced Mr. O’Reilly at 8 p.m., has seen his numbers fall off from those of his ousted predecessor. But Mr. Carlson still wins his time slot, and Fox News’s ratings across the board remain higher than a year ago. (The company also said in the filing that no sums paid in settlements “or reserved for pending or future claims” would have a “material” impact on its finances.)

For the quarter that ended on March 31, 21st Century Fox reported net income of $799 million, or 43 cents a share, down from $841 million, or 44 cents a share, in the same period a year earlier.

Excluding one-time items, including $37 million in unspecified restructuring charges, the entertainment conglomerate earned 54 cents a share in the most recent quarter. Analysts had expected 48 cents a share.

Revenue totaled $7.56 billion, a 5 percent increase. Analysts had expected $7.63 billion.

An 8 percent increase in subscriber fees — led by those for Fox News, Fox Sports 1, a roster of regional sports channels and the FX networks — contributed to a 5 percent increase in operating income, to $1.45 billion, at the company’s vast cable division. Domestic ad sales were flat, which was better than the declines reported in the past week by companies like Time Warner, Viacom and NBCUniversal.

Indeed, 21st Century Fox’s entertainment businesses are relatively healthy. Its television studio supplies the hit drama “This is Us” to NBC. Its FX cable channel has found a steady stream of hit shows, including “Atlanta” and “Feud: Bette and Joan.” In the most recent quarter, the R-rated superhero film “Logan” and the space-race drama “Hidden Figures” were both hits for its 20th Century Fox movie studio.

The lone problem — and it is a big one — involves the Fox broadcast network. The Super Bowl propped up its most recent quarter, but Fox’s post-“American Idol” entertainment lineup has been severely challenged. The network in recent days has canceled dramas like “Rosewood” and “Pitch.” A high-profile reboot of “24” has been a disappointment. “Empire” remains a hit, but its ratings have recently plunged at an alarming rate.

Lachlan Murdoch, apologizing for a cold at the start of Wednesday’s call, said that weakness at the Fox broadcast network “has been frustrating for us all.” He added, however, that he was “encouraged” by new shows in the works for the fall season.