Fox Corporation Q3 FY2025 earnings call

Management Statement and Operational Highlights

• Advertising Revenue: Total company advertising revenue grew 65% in the quarter, with Super Bowl generating over $800M gross advertising revenue, a record for Fox's national broadcast network and local TV stations. Scatter pricing outpaced upfront rates.
• News and Viewership: Fox News was most watched cable network, second most watched network in Monday-Friday prime, with record audience share. Fox News Digital had 11B page views (up 18% YOY) and highest YouTube views in history. Fox Sports was industry leader in live sports event viewership with 3.3B hours viewed (17% better than closest competitor).
• Tubi and Digital: Tubi continued strong growth with 35% revenue growth, benefited from Super Bowl promotion, and has a large, young, diverse, engaged cordless viewer base. Fox Entertainment had strong broadcast season, topping primetime among adults 18-49.
• Free Cash Flow: Record quarterly free cash flow of over $1.9B, consistent with working capital cycle seasonality. Repurchased $800M through share buyback program, cumulative repurchases $6.4B (30% of shares outstanding since 2019).

Segment Performance

• Cable Network Programming: Delivered 11% revenue growth and 7% EBITDA growth. Cable Advertising revenues grew 26% driven by Fox News linear ratings and digital engagement. Cable affiliate fee revenues grew 3% with pricing gains from affiliate renewals outpacing net subscriber declines (under 7% now). Cable other revenues grew 79% due to high sports sub licensing revenues. Expenses increased 16% primarily due to sports rights amortization and production costs.
• Television segment: Delivered 40% revenue growth. Advertising revenues grew 77% led by Super Bowl LIX ($800M+ gross advertising revenue). Excluding Super Bowl, TV segment advertising revenues had solid underlying growth. Television affiliate fee revenues increased 4% with healthy growth across owned and affiliated stations. Television other revenues up 3% due to higher content revenues. Expenses increased 47% due to Super Bowl broadcast and Tubi investment. EBITDA was $60M vs $145M prior year.
• Tubi: Revenue growth of 35% year-on-year, accelerating from 31% in prior quarter. Played role in extending Super Bowl reach, attracting over 8M new registered viewers, with total view time up 24% year-over-year in April.

Guidance

• Fox One: On track to launch before football season this fall, targeting cordless market, pricing in line with wholesale pricing, and planning partnerships with other distributors.
• Fiscal '26 Considerations: Political revenue not present in off year, Super Bowl deficit not in '26, but Tubi growth and Fox One investment to consider. FIFA crossover into '26-27, and focus on advertising growth at Fox News and Tubi.

Risks

• Regulatory Uncertainty: Potential FCC actions on reverse retrans, though affiliate network relationships seen as healthy and left to market negotiation.
• D2C Impact on Affiliates: Concern about competing with affiliate relationships through D2C launch, but intent is not to undermine traditional distribution models, and Fox One available to traditional subscribers.

Question and Answer

Q: About Fox One, pricing, addressable market, partnerships, and fiscal '26 thoughts A: Lachlan Murdoch said Fox One pricing in line with wholesale, targets cordless market, will partner with distributors. Steve Tomsic noted fiscal '26 considerations around political revenue, Super Bowl impact, and Tubi/Fox One investments Q: Update on brand advertising growth on Fox News, direct response vs brand A: Lachlan Murdoch said over 200 new advertisers since election, direct response up over 30%, scatter pricing up over 50% off upfront Q: Tubi's path to profitability, drivers, balance sheet options A: Lachlan Murdoch highlighted Tubi's 18% total viewing time growth leading to 35% revenue growth, Steve Tomsic noted strong balance sheet with $4.8B cash, $7.2B debt, and capital allocation focus on best for shareholders Q: D2C strategy, affiliate revenue growth, FCC reverse retrans A: Lachlan Murdoch said supportive of traditional cable bundle, D2C targets cord nevers, FCC actions can't be speculated on, affiliate relationships seen as healthy Q: Digital investments, Fox Lot plans A: Lachlan Murdoch said Tubi continues to be invested in, Fox One on track, Steve Tomsic discussed FanDuel option licensing; Lachlan Murdoch addressed Disney vacating Fox Lot, noting office space vacate is less than a third and valuable real estate