FNC makes about 61% of its $2.7 billion in annual revenues from the $1.55 per subscriber that cable and satellite companies pay each month for the channel, according to Kagan, a group within S&P Global Market Intelligence.
It’s unlikely that a meaningful number of pay TV subscribers will cut the cord due to the loss of O’Reilly.
That leaves advertising, where The O’Reilly Factor has been a big money maker: It accounts for about $100 million a year in ads, Evercore ISI’s Vijay Jayant estimates. He says that’s probably about 20% of the networks ad sales, although Kagan forecasts it will see $938.5 million for 2017.
He figures that O’Reilly’s replacement in the 8 PM time slot — Tucker Carlson — will generate 35% less, which would be in line with other FNC shows.
(This might not be an issue if you assume that the dozens of advertisers who dropped O’Reilly following the disclosure that he had settled at least five sexual harassment claims out of court were lost for good.)
But FNC might not see a drop in the bottom line: News ratings are strong across the board. Viewers are tuning in to keep up with fast moving events in the early months of the Trump administration.
That will “more than compensate for O’Reilly’s departure,” Pivotal Research Group’s Brian Wieser says.
Indeed, he plans to raise his ad forecast: “Our model previously assumed cable networks would decline in ad revenue on difficult comparables during the March quarter [vs the 2016 elections], but instead we expect to see year-over-year stability.”
Meanwhile FNC could save on programming costs. O’Reilly’s said to be paid $18.5 million a year and a replacement should cost about $3 million, Jayant estimates.
His bottom line: The loss of O’Reilly advertising could shave 0.15% of 21st Century’s annual revenue.
“Fox News’ dominance stems from the consistency of its messaging and the loyalty of its broader audience more than the success of star anchors,” the analyst says.