Fox Corp Q2 FY2024 earnings call

Management Statement and Operational Highlights

• Affiliate fee revenues grew, with Television segment up 10% and Cable returning to growth, demonstrating the power of brands and programming.
• Advertising revenues down due to event comparisons, but sports advertising (NFL, College Football) was healthy; News had nuanced performance but positive trends in share, ratings, and pricing carrying over.
• Tubi saw strong engagement with 62% growth in total view time and 17% revenue growth, reaching 78 million monthly active users.
• Announced a new sports platform with Disney and Warner Bros. Discovery targeting cord nevers, launching in fall 2024, which is expected to access a new market of ~60 million households not in traditional pay TV.
• FOX Entertainment had programming strength with top new series in Krapopolis, Snake Oil, and Hell's Kitchen.

Segment Performance

• Cable: Total quarterly revenues grew 2%. Affiliate fee revenues increased by $5 million due to pricing from distribution renewals outpacing industry subscriber declines (approx. 8% decline). Cable other revenues increased $124 million, largely driven by higher sports sublicensing revenues. Cable advertising revenues declined 23%. Quarterly adjusted EBITDA at the Cable segment grew 60% over the prior year quarter.
• Television: Total quarterly revenues were $2.54 billion, down 13% from the prior year. Affiliate fee revenues grew 10% as price increases across Fox affiliated stations offset industry subscriber declines. TV advertising revenues were down 19%. Tubi's growth was offset by comparisons to prior year major events. TV other revenues declined $64 million due to SAG and WGA disputes. Quarterly adjusted EBITDA at the TV segment was a loss of $138 million vs. the prior year's $256 million contribution.

Guidance

• Advertising trends: Sports advertising (NFL post-season, DAYTONA 500, MLB season) positive; Fox News seeing improvement in VR pricing and lap comparisons for direct response; local stations facing tough comps but confident in strong political cycle.
• Tubi's growth to continue.
• New sports platform launch in fall 2024 as an opportunity to access cord nevers market.

Risks

• Impact of cord cutting on affiliate fees.
• Competition in sports rights negotiations.
• Uncertainty in political advertising cycles.
• Impact of SAG and WGA disputes on entertainment production revenues.

Question and Answer

• **Q: Thoughts on the sports joint venture and opportunity in the US market?

A: Targets cord nevers, ~60M households, huge opportunity; low risk for Fox News as it's sports-focused on cord nevers.**

• **Q: Background on sports deal and future sports rights approach?

A: Deal pushed forward by monitoring cord nevers market; no impact from Netflix-WWE deal; will aggressively compete for sports rights.**

• **Q: Cash contribution for sports JV and advertising trends?

A: Cash contribution details TBD but net-net accretive; advertising trends nuanced but improving in sports, news, local stations.**

• **Q: Sports sublicensing detail and affiliate pricing sustainability?

A: Sports sublicensing a one-off, not recurring; affiliate pricing growth sustained as renewals completed, but cord cutting rate ~8% to consider.