Fox Corp Q3 FY2024 earnings call

• FOX achieved 7% EBITDA growth. FOX News ended the quarter as the most watched cable network in total day and primetime, gaining share. - Tubi had 22% revenue growth, with 36% increase in total view time and 20% growth in monthly active users to under 80 million. It has an expansive content library and a differentiated user base. - FOX Sports had a strong quarter with strong viewership in NFL playoff games and college sports. Launched the UFL and will present summer of soccer coverage. - Formed a sports-focused digital distribution platform with Disney and Warner Bros Discovery, hired a world-class CEO, and the JV is building an innovative product. - FOX Entertainment had a successful spring slate with top new primetime series.

Cable revenues were $1.47 billion, down 6% from the prior year quarter, while EBITDA grew 3%. Cable affiliate fee revenues increased 1% due to pricing from distribution renewals outpacing industry subscriber declines. Cable advertising revenues fell by 6%, with national sports networks affected by the absence of Super Bowl-related programming. Television segment revenues were $1.94 billion, down 22% from the prior year, while EBITDA increased 24%. TV affiliate fee revenues grew 9% as price increases across owned and operated stations offset subscriber declines. TV advertising revenues were down 40% on a headline basis due to the absence of the Super Bowl and fewer NFL playoff games.

• Tubi will face difficult comparable sales in the next quarter due to strong revenue growth in the prior year's fourth quarter. - Expect strong political advertising for national and local races as well as local ballot issues in the first half of fiscal '25, which will benefit the station group. - Focus on live content and must-watch events like the presidential election cycle and next year's Super Bowl in the upcoming upfront presentation.

• Market competition could impact CPMs at Tubi as new entrants in the AVOD market affect pricing. - Tubi faces challenging comparables in the next quarter due to strong revenue growth in the prior year's corresponding period.

Q: Strong growth again at Tubi. What's driving the growth in TVT? Any color you guys can provide on CPMs?

A: Growth comes from new subscribers/viewers finding the platform. It has a large content library and 90% of viewing is proactively on demand. Confident in holding CPMs despite market CPM drops as competitors overpriced earlier and we are efficient.

Q: Given all the press about the NBA negotiations underway, just curious if you can think a little bit as far as your broader sports rights go? And how do you think about the value of FOX Broadcast Network as you negotiate those future sports, right? And then the flip side of that is you feel like you're at a competitive disadvantage without your own SVOD service to compete for future rights?

A: Happy with sports portfolio, broadcast TV is still valuable. Not at a competitive disadvantage as can partner with others and leagues need broadcast distribution.

Q: On the streaming JV, any more you can share with us on sort of what you think is really differentiated about the product?

A: The streaming app is innovative, focused on cord nevers and cord cutters, and is a digital-first product with a lot of engineering work behind it.

Q: On political advertising, Lachlan, you seem pretty confident that it will come back. But I guess the question is really -- will it come back to linear the way it has in the past and what's your overall outlook?

A: Confident in strong political advertising in 2025 H1 due to tight races in key markets and ballot issues.

Q: The first one is on the JV and some of your existing distribution partners have brought up concerns. It's in some way unfair to them for you to have a sports-only JV. It seems that you would disagree by virtue of the fact that you're moving forward. So, I'd love if you could address those concerns and whether you think there will be changes in the marketplace or whether you think those concerns are unfounded?

A: Support traditional cable bundle, the JV is focused on non-traditional Pay TV viewers to minimize cannibalization.

Q: Television profit was notably strong in the quarter, given that on a year-over-year basis, you did not have the Super Bowl or those extra playoff games. So, can you maybe unpack a little bit?

A: Affiliate fee growth in the segment offset the lack of Super Bowl, and entertainment programming cost changes contributed to the profit growth.