NFL contract concerns lead BofA to slash Fox shares with two-level downgrade

Fox Faces Challenges Amid NFL Negotiations

The National Football League continues to strengthen its hold on American viewers, a trend that could create difficulties for Fox Corp. as it prepares for upcoming contract talks, according to the only Wall Street analyst with a negative outlook on the stock.

On Wednesday, Bank of America downgraded Fox, led by Lachlan Murdoch, from a "buy" to an "underperform" rating and set a $45 price target—the lowest among major analysts. The concern is that Fox’s heavy dependence on NFL programming could lead to negotiations that reduce earnings by as much as 20%.

“The NFL stands as the most valuable content available today,” wrote analysts led by Jessica Reif Ehrlich. “No matter how negotiations unfold, uncertainty over the NFL contract will likely weigh on Fox’s share price until an agreement is reached.”

Unlike its competitors, Fox has focused on live sports and news, especially after selling 21st Century Fox to Disney, rather than investing heavily in streaming. While companies like Disney and Comcast may also feel the effects of new NFL deals, their broader business portfolios could help absorb any negative impact, according to Bank of America.

As of 2:07 p.m. in New York, Fox’s stock had dropped 4.3%. Among analysts tracked by Bloomberg, there are nine buy ratings, 13 holds, and only Bank of America recommends selling. Since the start of the year, Fox shares have declined by 27%.

With sports leagues drawing large audiences and media rights becoming more valuable, teams have gained greater leverage in negotiations. The NFL is expected to begin discussions to update its $110 billion broadcast and streaming contracts in the near future, according to recent reports.

Fox could find itself at a disadvantage if it enters negotiations early. According to Ehrlich, no other programming is as critical to Fox as Sunday NFL games. If Fox loses or weakens its partnership with the NFL, its position in both traditional and digital media would be significantly harmed.

Ehrlich also warned that an early increase in rights fees could pose long-term risks for legacy media companies.

“More tech giants with deep pockets are entering the competition for premium live sports,” Ehrlich noted. “Traditional broadcasters now face tough choices: pay much higher fees to maintain their market share, accept less favorable contract terms, or risk losing rights entirely.”

Potential Consequences for Fox

If Fox were to lose NFL broadcasting rights, the company could face lasting challenges, especially in terms of retransmission fees and advertising revenue, according to analysts.

For now, the ongoing uncertainty around contract renewals is expected to continue putting pressure on Fox’s stock, Ehrlich said.

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