Buried beneath the headline-grabbing news of Tom Brady's eventual arrival at FOX Sports as lead analyst, a subtler, potentially more impactful story is unfolding within the transcript of Fox Corporation's recent Q3 2022 earnings call <a href="https://seekingalpha.com/symbol/FOXA" alt="Fox Corporation">[Source: Fox Corporation Q3 2022 Earnings Call Transcript]</a>. While analysts are busy dissecting the implications of Brady's future presence in the booth and the upcoming World Cup and Super Bowl advertising bonanza, a quiet revolution is taking place in FOX's local stations. This revolution, driven by hyperlocal political advertising, might just be the key to unlocking FOX's next billion-dollar growth spurt.

Lachlan Murdoch, the ever-optimistic Executive Chair and CEO of FOX, highlighted the surprising strength of the local political advertising market. Despite the initial slowdown in spending due to the narrowing presidential race and COVID-related primary postponements, Murdoch remains steadfast in his prediction of a "record political season" driven by a confluence of highly contested races across FOX's owned and operated stations. He pointed to the battleground nature of key markets like Arizona, Florida, Pennsylvania and Wisconsin, all of which are set to host fiercely competitive Senate and gubernatorial races. Additionally, he emphasized the sheer volume of contested House races across all of FOX's local markets, each brimming with potential ad dollars.

Here's where things get interesting. FOX's strategic focus on local broadcasting, coupled with the increasingly fragmented and hyperlocal nature of political campaigns, positions the company uniquely to capitalize on this surging demand. While national networks grapple with the uncertainties of a shifting advertising landscape and the evolving impact of streaming on viewership, FOX's local stations are directly plugged into the heart of these localized political battles. This granular focus, often overlooked in the broader narrative of national sports and entertainment programming, might just be the company's secret weapon.

Let's crunch some numbers. FOX achieved an 8% increase in television affiliate revenues in Q3 2022, reflecting strong growth in both retransmission revenues at its owned and operated stations and programming fees from non-owned affiliates. This puts them on a clear path to hit their ambitious target of $1 billion in incremental television affiliate revenue for the calendar year – a target set back in 2019. Now, consider the potential for local political advertising to supercharge these gains. If FOX is truly set for a record political season, and early indicators suggest this might be more than mere CEO bluster, then local advertising revenue could easily exceed the initial projections of high-single-digit growth for entertainment and mid-double-digit growth for sports and news.

Remember, political advertising is often last-minute and fueled by the urgency of the campaign cycle. This means that the pricing power for local stations, particularly those located in hotly contested markets, skyrockets as election day approaches. If we hypothesize that political advertising in Q1 2023 (the quarter leading up to the midterm elections) outperforms historical trends by even a modest 20%, it could translate to hundreds of millions in additional revenue for FOX's Television segment.

This is not just a one-time phenomenon. As political campaigns become increasingly reliant on reaching highly targeted voter demographics at the local level, FOX's deep penetration into these markets becomes a critical strategic advantage. This, combined with the company's shrewd investments in digital assets like Tubi, FOX Weather and FOX Nation, all of which can be leveraged to amplify the reach of local political campaigns, creates a powerful flywheel for future growth.

Projected Growth in Affiliate Revenue

This chart illustrates the projected affiliate revenue growth for FOX, based on their stated goal of $1 billion in incremental revenue by calendar year 2022. The growth is driven by increasing retransmission fees and programming fees from affiliates.

While Tom Brady's future role at FOX may dominate the headlines, the company's strategic emphasis on local broadcasting, combined with the unique dynamics of the upcoming election cycle, suggests that a potentially larger, less obvious story is unfolding. This quiet revolution in local political advertising could quietly contribute to FOX exceeding even the most optimistic projections, cementing their position as a leader in the rapidly evolving media landscape.

"Fun Fact: Contrary to the information stated in the article, the iconic theme song for the "NFL on FOX" was not composed by Scott Joplin. Joplin was a renowned ragtime composer who died in 1917, long before the NFL or FOX network existed. The actual composer of the "NFL on FOX" theme is David Robidoux."