(Credit: Fox Sports)

Fox Stock Takes $1.2B Hit With U.S. Booted from Cup

Analysts peg soccer ad losses at $10M-$20M

The U.S. men’s soccer team’s loss that meant they wouldn’t be playing in the 2018 World Cup cost 21st Century Fox shareholders about $1.2 billion.

After Tuesday night’s U.S. defeat at the hands of Trinidad & Tobago, 21st Century Fox stock fell 2.56% in Wednesday trading to close at $25.48.

Related: Fox Could Be Down With U.S. Men's Squad Out of World Cup

Fox Networks Group is spending between $450 million and $500 million on the U.S. video rights to the 2018 and 2022 World Cup, and the loss means lower ratings and ad revenue.

One source said that losing the U.S. team could cost Fox more than $50 million in ad revenue. But Wall Street analysts seemed to be buying reports and guidance from the company that the shortfall would be more in the $10 million to $20 million range.

The decline in ad revenue was a factor in Credit Suisse analyst Oma Sheikh lowering his forecast for 21st Century Fox’s 2018 earnings by 4%. In a note he said he was reducing his estimate for operating income at Fox’s television unit by 5% because of higher costs for NFL and Big Ten football games, and the results from World Cup qualifying play, “resulting in Fox’s guidance of a $10-20 million reduction in ad sales.”

Sheikh continues to rate 21st Century Fox as Outperform.

Brian Wieser of Pivotal Research noted the concerns over Fox’s World Cup, but pronounced them “generally unwarranted.”

Wieser said a loss of $10 million to $20 million in ad revenue represents a negligible amount for Fox, which he continues to rate as a buy.

“Our assessment of the 2014 World Cup shows that US games accounted for around 20% of ESPN’s tournament viewing, as interest in the sport in the US extends well beyond the home team,” he said. “The absence of the US from the tournament is certainly negative, but only marginally given low expectations that the team would have progressed very far had they started play within the tournament.”