Fox Corporation Q2 FY2025 earnings call

Management Statement and Operational Highlights

• Wildfires: Fox supported staff affected by Los Angeles wildfires, donated over $5 million, and focuses on long-term community recovery.
• Financial Results: Fox achieved 20% revenue growth and EBITDA of $781 million, with net income attributable to stockholders at $373 million ($0.81 per share).
• Fox News: Most watched cable network in total day and PrimeTime, with total day audience up nearly 40% and PrimeTime up 45% year-over-year. Digital views strong, e.g., 410 million views on YouTube in January.
• Tubi: Ad revenues increased 31%, and it will stream the Super Bowl for the first time to engage cordless viewers, leveraging its diverse audience.
• Sports: Strong MLB, NFL, and College Football viewership, but Venu sports streaming joint venture with WB Discovery and Disney ended due to legal distractions.

Segment Performance

• Cable Segment: Affiliate fee revenues grew 4% year-over-year, with pricing gains from renewals outpacing subscriber decline impact. Other revenues increased by $350 million due to higher sports sublicensing revenues. However, expenses in the cable segment rose 38%, primarily driven by sports amortization and increased news/sports production costs.
• Television Segment: Revenue grew 16%. Advertising revenues at the television segment increased 19% due to political, MLB, and Tubi growth. Affiliate fee revenues rose 9%, and other revenues were up 33% from higher content revenues. Expenses in the television segment increased 3% due to Tubi investments. Overall, EBITDA at the Television segment grew to $205 million year-over-year. Fox's total revenue for the quarter was over $5 billion, with EBITDA more than doubling to $781 million.

Guidance

• D2C: Targeting launch by end of calendar year, focusing on cord cutters/cord nevers with no exclusive rights costs. Modest subscriber expectations and pricing accordingly.
• Affiliate Renewals: All affiliate renewals impacting fiscal 2025 completed, with positive trends in affiliate revenues due to focused portfolio in skinny bundles.
• Tubi: On track to reach breakeven/profitability, with continued investment but scaling leading to positive EBITDA impact.
• Sports Betting: Talking to 26 states for licensing, with sports betting strategy positive, holding 18.6% of FanDuel and 2.5% of Flutter.

Risks

• Legal Distractions: Venu sports streaming joint venture ended due to legal issues surrounding the business.
• Subscriber Trends: Subscriber declines improved but still a factor, with impact of skinny bundles not yet significantly felt.

Question and Answer

Q: D2C timing, pricing, and affiliate pricing A: Targeting end of calendar year launch, modest subscriber expectations, pricing reflective of focused portfolio in skinny bundles due to distributors valuing the content.

Q: FOX News advertising strength and Tubi Super Bowl A: FOX News sees new advertisers due to strong ratings, Tubi's Super Bowl live stream aims to engage cordless viewers with low incremental costs.

Q: Tubi investment and sports betting licensing A: Tubi on track to breakeven, talking to 26 states for sports betting licensing with process moving forward.

Q: Subscriber trends and digital losses A: Subscriber declines improving, digital losses on track to improve as investments are optimized.

Q: Sports rights competition and D2C content A: Fox positions to compete with broad reach across platforms, D2C package includes holistic content from sports and news