How Tucker Carlson's exit could financially impact Fox, according to experts

The seismic exit of Fox News host Tucker Carlson this week elicited reaction from politicians as varied as former President Donald Trump and Rep. Alexandria Ocasio-Cortez, D-N.Y.

But the move also sent shockwaves across Wall Street.

Shares of Fox News-parent company Fox Corporation on Monday tumbled more than 3%, which amounts to hundreds of millions in value.

Nielsen data on Tuesday showed a roughly 20% drop in audience for the first show featuring temporary replacement host Brian Kilmeade, according to The Hollywood Reporter.

The departure of Carlson, the nation's most-watched primetime cable news host, could cause significant financial damage for Fox Corporation through diminished stock value, weakened income from cable carriers and lower advertising revenue, some analysts told ABC News.

"It has the potential to be massive," Matthew Tuttle, the CEO and CIO of Tuttle Capital Management, who closely follows the media industry, told ABC News. "There's going to be a very large impact from this. I don't think you can dress it up as positive."

However, some media industry analysts downplayed the potential damage since the company has overcome previous departures of high-profile hosts and the move offers an opportunity for the 8 p.m. show to draw corporate advertisers alienated by Carlson's controversial programming, experts said.

When asked if the company would prove resilient, Huber Research analyst Doug Arthur told ABC News, "There's no doubt in my mind. The company has survived these kinds of talent hits before."

Following Carlson's departure, Fox News told ABC News it's still the most watched cable news network.

"For more than 21 years, FOX News Channel has been cable news' most-watched network in all categories with more Democrats, Independents and Republicans now tuning in than either CNN or MSNBC," a Fox News spokesperson told ABC News. "Attracting more of than 50% of the cable news viewing audience with the top 12 programs in cable news, FOX News' powerhouse team of journalists, analysts and opinion hosts are trusted more by viewers than any other news source."

The Fox Corporation did not respond to a request for comment. Carlson has yet to comment on his exit from the company.

Here's how the departure of Carlson could impact Fox Corporation, according to analysts:

Stock value

After news of the Carlson exit broke on Monday morning, shares of Fox Corporation fell more than 3% by the close of trading that day. The following morning, the decline ticked past 3.5%, amounting to a lost value of more than $500 million.

"The initial stock move was all Tucker," Tuttle said.

The market reaction stems from the loss of a high-profile star and anticipated attrition among his viewers, analysts said.

On average, Carlson's 8 p.m. show reached about 3.25 million nightly viewers over the first four months of this year, outpacing competitors in the time slot and other nighttime hosts on Fox News, according to Nielsen.

"He was their ratings leader in primetime," Huber said. "That's going to hurt."

The departure of Carlson compounds the financial damage and uncertainty caused by Fox News' recent $787.5 million settlement with Dominion Voting Systems, Huber said.

"There's a black cloud over the stock right now," he added.

Still, the stock stabilized in trading on Wednesday, ticking up slightly for the day.

"The initial reaction seemed a little bit overdone," Brandon Nispel, an analyst with KeyBanc Capital Markets, told ABC News. "I heard questions from investors: 'Is Fox worth anything without Tucker.'"

"The answer is 'yes,'" he added. "But it's clearly worth something modestly less than when they had Tucker."

Fees paid by cable carriers

Fox Corporation sales depend in part on fees paid by cable carriers like Comcast and Dish Network that distribute the company's broadcasts.

Over the three months ending in December, such fees delivered $1.7 billion or 37% of Fox Corporation revenue, the company's latest earnings report showed.

Analysts differed over the potential effect that the loss of Carlson poses for carrier fees.

Without Carlson and the promise of his sizable audience, the company will enter its next round of negotiations with cable carriers in a weakened position, potentially hurting the fees it can command, Tuttle said.

"That is a major concern because at least in the short term, they're going to lose viewers," he said. "There's going to be an impact."

However, the overall lead in audience enjoyed by Fox News in primetime will reassure cable carriers, limiting the effect of the personnel move, Arthur said.

"Their ratings lead is so large at night that I don't think any distributor is going to screw around with having Fox News fall off of their network," he said.

Nispel echoed the sentiment, saying he expects a limited effect on carrier fees.

"If anything, it will be a small margin of negative impact," he said, noting that Fox Corporation already renegotiated several carrier agreements over the past year.

Advertising revenue

Fox Corporation derives the majority of its revenue from advertising, which made up 54% of sales over the final three months of 2022, an earnings report showed.

Since it boasts the largest primetime audience, Carlson's show generated more advertising revenue last year than each of the 8 p.m. shows on CNN and MSNBC, as well as each of the other primetime shows on Fox News, a New York Times analysis of Vivvixx data showed.

In all, Carlson's show delivered $77.5 million in advertising revenue last year, according to Vivvixx data.

The likely decline in audience for the 8 p.m. time slot at Fox News, at least in the short term, will hurt advertising revenue, analysts said.

"It creates a lot of uncertainty," Nispel said. "They're losing their leader in their primetime lineup."

However, the move opens up an opportunity for the channel to attract corporate advertisers that previously balked at the controversial views expressed by Carlson, they added.

"It's going to hurt in the short term," Arthur said. But he later noted: "The point of strong ratings is to have strong advertising. If you have strong ratings but lousy advertising, what's the point?"

The opening may attract a more moderate host who reassures major advertisers, Tuttle said, but he cautioned that a replacement would feel pressure to take up similarly controversial positions as a means of gaining a large audience.

"We're in a society where controversy sells," Tuttle said.