Fox Corporation (FOXA) Earnings

Management highlights

### Full Year Fiscal 2026 Financial Performance - Record full year total revenue exceeded $17 billion, with record full year EBITDA of $3.9 billion. - Company-wide advertising revenue grew 7% YoY, outperforming the prior year's Super Bowl 59 and presidential election cycle comparison baseline, led by World Cup broadcast and Tubi growth. - Distribution revenue grew 4% YoY, with 5% growth in the cable segment leading the way despite a light year for affiliate renewals. - Content and other revenue grew 4% YoY, driven by higher sports hub licensing revenue in the cable segment. - Full year total expenses increased 4% YoY, driven by World Cup rights and production costs, first-year Fox One costs, and higher digital content costs. - Reported net income attributable to stockholders was $1.7 billion ($3.84 per share), compared to $2.3 billion ($4.91 per share) in fiscal 2025. Excluding non-core items, adjusted EPS was $5.42 per share, up 13% YoY. ### Fourth Quarter Fiscal 2026 Financial Performance - Total revenue grew 28% YoY, with EBITDA growing 27% YoY, driven by a 78% YoY increase in advertising revenue from the World Cup and accelerating Tubi growth. - Distribution revenue grew 5% YoY. - Reported net income attributable to stockholders was $691 million ($1.61 per share), compared to $717 million ($1.57 per share) in the prior year quarter. Excluding non-core items, adjusted EPS was $1.79, up 41% YoY. - The company generated $726 million in quarterly free cash flow, which was impacted by World Cup working capital timing (rights payments were made in fiscal 2026, while advertising receivables will be collected in early fiscal 2027). ### Capital Allocation and Balance Sheet - In fiscal 2026, Fox repurchased $2 billion in shares via its buyback program and distributed $243 million in dividend payments. - A 29 cent per share semi-annual dividend increase was announced, bringing cumulative capital returned to shareholders since the spin-off to $10.7 billion, including $8.6 billion in share repurchases (representing ~36% of total outstanding shares as of November 2019). - Ended the quarter with $4.2 billion in cash and $6.6 billion in debt. ### Operational Milestones - Tubi achieved 35% YoY revenue growth in fiscal 2026, was EBITDA positive in all four quarters, and grew total viewing time by 17% YoY. Approximately 70% of Tubi's viewers are cord-nevers or cord-cutters, and 96% of viewing is user-selected on-demand content. - Fox One performance is running ahead of internal expectations, and Fox One subscribers are fully incremental to traditional MVPD customers, with churn well below management expectations.

Guidance

- Fiscal 2027 will retain World Cup revenue benefits in the first quarter, with the majority of total tournament revenue already recognized in fiscal 2026, and 2027 World Cup revenue heavily weighted toward the television segment (which hosted most knockout stage matches). - The 2026 US midterm election cycle is expected to be a record midterm for Fox political advertising revenue, with particular benefit to local stations within the television segment. Independent trackers estimate over $11 billion in total midterm political ad spending nationwide. - Distribution revenue will return to a more normalized level of renewals in fiscal 2027, skewed toward the television segment, and management expects both the cable and television segments to contribute to full year distribution revenue growth. - Digital investment spending declined from just under $300 million in fiscal 2025 to less than $200 million in fiscal 2026, and management expects continued bottom line improvement for digital growth initiatives (Tubi and Fox One) in fiscal 2027 as the investment pace moderates further. - For the pending Roku acquisition, management expects closing leverage to be approximately 2.8x net leverage, which preserves significant flexibility for the company to continue its share repurchase program through the transaction closing and beyond.

Segment performance

### Cable Network Programming Segment - Quarterly revenue grew 9% year-over-year. EBITDA declined 3% year-over-year. - Quarterly advertising revenue grew 22% YoY, driven by 2026 FIFA Men's World Cup broadcast. - Quarterly distribution revenue grew 7% YoY, as affiliate renewal pricing gains outpaced net subscriber declines (which remained under 6.5% across third-party distributors, consistent with the prior quarter). - Quarterly content and other revenue declined 39% YoY due to timing of sports sub-licensing revenue. - Expenses increased 20% YoY, primarily due to higher World Cup-related sports programming rights amortization and production costs. ### Television Segment - Quarterly revenue grew 45% year-over-year. EBITDA grew 129% year-over-year. - Quarterly advertising revenue grew 108% YoY, led by World Cup broadcast, higher political advertising at local stations, and continued growth at Tubi (which was EBITDA positive in every quarter of fiscal 2026). - Quarterly distribution revenue was flat YoY. - Quarterly content and other revenue grew 14% YoY, primarily due to higher content revenues from entertainment production studios. - Expenses increased 27% YoY, primarily driven by higher World Cup-related sports programming rights, amortization, and production costs.

Risks & headwinds

- The connected TV (CTV) ad market remains highly competitive with large amounts of new inventory entering the market, creating pricing pressure for all CTV providers. - The cable segment continues to face net subscriber declines across third-party distributors, though the rate of decline has remained stable, and pricing gains have outpaced the impact of subscriber losses to date. - There is uncertainty around future sports rights renewal negotiations for incumbent properties including MLB, FIFA World Cup, and NFL rights that come up for renewal over the next several years.

Analyst Q&A

• Q: Can you provide an update on underlying ad market conditions across linear, sports/news inventory, and CTV, and confirm whether NFL rights pricing will stay unchanged until 2030?

  A: Management reports very strong demand across Fox’s entire portfolio (sports, news, local stations, Tubi, entertainment) with double-digit upfront volume growth across key segments, and leading rate changes vs peers. Eight of 10 tracked ad categories grew in the upfront, and momentum has continued into fiscal 2027’s first quarter. Tubi achieved 35% revenue growth in a competitive CTV market, outperforming peer trends. Management confirmed no NFL rights pricing changes will occur before the 2030 season, and declined to provide additional background on the contractual arrangement.

• Q: What was Tubi’s World Cup revenue contribution, how much did digital investment decline year-over-year, and what is the outlook for digital investments and free cash flow?

  A: World Cup revenue for Tubi was meaningful, but relatively small compared to Tubi’s overall fiscal 2026 revenue growth. Tubi’s core growth is driven by 17% viewing time growth, its large base of hard-to-reach cordless viewers, and high-engagement user-selected content. Digital investment spending fell from just under $300 million in fiscal 2025 to under $200 million in fiscal 2026, driven by better-than-expected performance from Tubi and Fox One, with further bottom line improvement expected for digital initiatives in fiscal 2027.

• Q: What are political advertising expectations for the 2026 midterm cycle, and will share buybacks continue after the Roku transaction announcement?

  A: Management expects the 2026 midterm cycle to be a record for Fox political ad revenue, exceeding the $260 million achieved in the prior 2022 midterm cycle. The company’s balance sheet is in line with expectations for the Roku transaction, which is projected to close at ~2.8x net leverage, giving Fox significant capital allocation flexibility. Management confirmed share buybacks will continue uninterrupted through the transaction process and after closing.