Fox Corporation Q4 FY2025 earnings call

Management Statement and Operational Highlights

• Financial Performance: Fiscal 2025 was an outstanding year with record revenues ($16B, +17% y-o-y), EBITDA ($3.6B, +26% y-o-y), adjusted EPS ($4.78, +39% y-o-y), and free cash flow ($3B, +100% y-o-y). Super Bowl LIX broke viewership and advertising records, and FOX News achieved a record audience share of over 70% of the cable news audience at times.
• Segment Details: FOX News ended fiscal year as most watched cable network in total day and prime, with Q4 total day audience up 25% in total viewers and 31% in demo. Tubi had over 100M monthly active users, $1.1B revenue, and 2.2% share of total U.S. television viewing. FOX Sports was first among all networks in live sports, with the Indianapolis 500 averaging over 7 million viewers.
• Upfront Results: Fiscal '26 upfront saw record-setting double-digit volume growth and strong pricing growth across FOX's portfolio.
• Share Repurchase: Announced a $5B increase in share repurchase authorization and a dividend increase to $0.28 per share, with $8.5B cumulative capital returned to shareholders since the spin.

Segment Performance

• Cable Network Programming: Delivered 7% revenue growth and 6% EBITDA growth. Cable advertising revenues grew 15% driven by FOX News engagement. Cable affiliate fee revenues grew 2% with pricing gains from renewals offsetting subscriber declines. Cable other revenues grew 39% led by higher Fox Nation subscribers.
• Television: Saw 6% revenue growth. Advertising revenues grew 3% led by Tubi's growth. Television affiliate fee revenues increased 4% due to healthy fee growth across owned and affiliated stations. Television other revenues were up 34% primarily due to higher content revenues. Tubi had 17% growth in total view time and 32% revenue growth in the fourth quarter, with over 1.5 billion YouTube views and 3.7 billion social media video views for FOX News Digital.

Guidance

• Fiscal '26 Outlook: Advertising market remains healthy. FOX One launches in August 2025 for $19.99/month, targeting cordless and pay TV subscribers with bundling opportunities. Tubi expected to improve profitability in fiscal '26, weighted to the second half. The 2026 FIFA Men's World Cup will drive results in fiscal '26 Q4 and '27 Q1.
• Share Repurchase: Continues to repurchase shares while accommodating organic investment and preserving flexibility for new businesses.

Risks

• Cyclical Event Comps: Tough comparisons from prior year's soccer tournaments in Q4.
• Working Capital Timing: World Cup rights payments in fiscal '26 and advertising receivables in fiscal '27 may impact free cash flow.
• Market Competition: Competitive CTV market, though Tubi is outpacing with stable pricing in the connected TV space.

Question and Answer

Q: Ben Swinburne from Morgan Stanley asked about fiscal '26 EBITDA expectations and digital investments.

A: Steve Tomsic discussed the mix of investments, cyclical events, and Tubi's profitability improvement, noting digital growth investments may move back towards a $350 million envelope.

Q: John Hodulik from UBS asked about cable advertising trends and LatAm strategy.

A: Lachlan Murdoch talked about FOX News' advertising strength with elevated ratings and share in cable news, while Steve Tomsic discussed LatAm investments, including organic sports rights and acquisition of Caliente TV.

Q: Michael Morris from Guggenheim asked about Tubi and NFL rumors.

A: Lachlan Murdoch spoke about Tubi's growth, including over 100M monthly active users and role in Super Bowl viewership, and emphasized strong NFL relationships.

Q: Michael Ng from Goldman Sachs asked about fiscal '26 investments.

A: Steve Tomsic and Lachlan Murdoch discussed incremental investments in LatAm and FOX One, and return expectations, with FOX One's investment focus on marketing and launch costs with modest subscriber aspirations.

Q: Jessica Reif Ehrlich from Bank of America Securities asked about M&A and ad market.

A: Lachlan Murdoch talked about M&A focus on organic growth and strong ad market performance, with national ad sales strong across pharma, financial services, and CPG categories.

Q: Steven Cahall from Wells Fargo asked about FOX One bundling and FCC impact.

A: Lachlan Murdoch discussed FOX One bundling strategy to offer convenient content packages while maintaining a targeted cordless focus, and noted positive FCC impact on affiliate relationships.