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    Fox Corp (FOXA)

    Business Description

    Fox Corporation (FOXA) operates as a news, sports, and entertainment company, managing its businesses through various segments . The company produces and licenses content distributed through multiple platforms, primarily in the U.S., and is involved in producing, acquiring, marketing, and distributing programming . FOXA's revenue is generated from affiliate fees, advertising, and other operating activities .

    1. Cable Network Programming - Produces and licenses news and sports content distributed through traditional and virtual multi-channel video programming distributors and other digital platforms, primarily in the U.S. .
    2. Television - Involves producing, acquiring, marketing, and distributing programming through the FOX broadcast network, Tubi (an advertising-supported video-on-demand service), and 29 full-power broadcast television stations .
    3. Credible - Operates as a U.S. consumer finance marketplace, included in Corporate and Other due to not meeting separate reporting criteria .
    4. FOX Studio Lot - Provides television and film production services, included in Corporate and Other due to not meeting separate reporting criteria .

    Q1 2025 Summary

    Initial Price$34.51June 29, 2024
    Final Price$42.27September 29, 2024
    Price Change$7.76
    % Change+22.49%

    What went well

    • Tubi is experiencing impressive growth, on track to surpass $1 billion in revenue this fiscal year , and is becoming a significant recipient of political advertising due to its large, hard-to-reach audience and advanced targeting capabilities . This growth is accelerating into Q2 .
    • Strong advertising revenue growth across all platforms, driven by political advertising, record-breaking sports events (e.g., the most-watched World Series in 7 years with almost 19 million viewers for Game 5 ), and robust news ratings, especially in the key 25-54 demographics where total audience grew more than 60% year-over-year , leading to higher direct response pricing .
    • Moderation in subscriber declines, with the rate of industry subscriber declines improving slightly to just under 8% , and the company believes there is a floor to these declines . Fox's strong brands across news, sports, and entertainment ensure continued demand for their core packages .

    What went wrong

    • Ongoing Subscriber Declines and Uncertainty: Despite slight improvements, Fox executives acknowledge that traditional cable subscriber declines persist, and they are unsure where the bottom is. Steven Tomsic noted that subscriber declines are "running at a touch under 8%," and while there is "moderation in subscriber declines," they rely heavily on pricing increases for revenue growth, which may not be sustainable long-term.
    • Reliance on Cyclical Political Advertising Revenue: Fox's strong financial performance is significantly bolstered by political advertising, which is inherently cyclical and will decrease after the election cycle. Lachlan Murdoch admitted that political spend has "assisted us both in the station group, which will have record political revenues, but also in Tubi," but there may be a revenue gap once the election period ends.
    • Rising Costs and Potential Margin Pressures: The company is facing increased costs due to higher sports programming rights fees. Steven Tomsic mentioned that "NFL scheduling will be a headwind from an advertising revenue perspective" in Q2, and while the Super Bowl will be "very cash flow accretive for the company," it will "not be from an EBITDA perspective," indicating that margins may be under pressure despite revenue growth.

    Q&A Summary

    1. Tubi's Growth and Potential
      Q: How big can Tubi get with current momentum?
      A: Tubi's growth continues to be impressive, on track to reach $1 billion in revenue. Even excluding political advertising boosts, we foresee continued growth in the second quarter and beyond. We've significantly improved our fill rate while maintaining pricing, accelerating revenue growth. Tubi is becoming the way Americans watch free television, boasting the largest AVOD library and increasing viewer engagement.

    2. Advertising Outlook Post-Election
      Q: How is the ad environment shaping up post-election?
      A: Our advertising revenues remain very healthy, with strong growth across sports, news, and entertainment. We expect no significant impact from the election outcome. Sports programming, including a successful World Series exceeding expectations, and the upcoming Super Bowl—sold out at record pricing—bolster our outlook. News ratings are strong, especially in the key 25-54 demographics, leading to significant increases in direct pricing.

    3. TV EBITDA and Fiscal Outlook
      Q: What are the EBITDA components for TV in fiscal '25?
      A: We anticipate strong performance in our TV segment, driven by political advertising tailwinds and momentum in Tubi and Fox News. While increased sports rights fees and the absence of certain events may present headwinds, they're partially offset by cost reductions from discontinued content like WWE and TMZ. The Super Bowl in Q3 will be very cash flow accretive, though less impactful on EBITDA.

    4. Flutter and FanDuel Update
      Q: How long to get through Flutter/FanDuel approval?
      A: We need licensing in every state where FanDuel operates—an in-depth process we expect to complete within a year. We see tremendous potential in this asset and are progressing smoothly through approvals.

    5. Comcast Separation Impact
      Q: How might Comcast's split impact FOX or the industry?
      A: We don't think Comcast's potential separation affects us at all. At FOX, we derive tremendous synergy across our platforms—entertainment, sports, news, and local television stations—and breaking apart would be difficult from a customer and revenue synergy standpoint.

    6. Advertising Shift to Tubi
      Q: Is Tubi cannibalizing ad dollars from local stations?
      A: We haven't seen any evidence of cannibalization; in fact, it's the reverse. Tubi is capturing political ad dollars that couldn't be fully absorbed by our stations due to inventory limits. This demonstrates Tubi's scale and marketplace awareness have elevated it to a must-buy for advertisers aiming to reach a younger, diverse audience.

    Key Metrics

    View all financials →
    Revenue by Segment - in Millions of USDQ2 2019Q3 2019Q4 2019FY 2019Q1 2020Q2 2020Q3 2020Q4 2020FY 2020Q1 2021Q2 2021Q3 2021Q4 2021FY 2021Q1 2022Q2 2022Q3 2022Q4 2022FY 2022Q1 2023Q2 2023Q3 2023Q4 2023FY 2023Q1 2024Q2 2024Q3 2024Q4 2024FY 2024Q1 2025
    Cable Network Programming1,416,0431,3871,6581,4721,4385,9551,597
    - Affiliate Fee7442,8767357568348113,136806
    - Advertising6885,2049101,6549396794,1821,008
    - Other155630135132165125557139
    Television1,5878,7101,7802,5421,9381,6157,8751,953
    Other, Corporate and Eliminations351604034379820965
    Total Revenue3,03214,9133,2074,2343,4473,09213,9803,564

    Executive Team

    NamePositionStart DateShort Bio
    Lachlan K. MurdochExecutive Chair and CEOOctober 2018Lachlan K. Murdoch is the Executive Chair and Chief Executive Officer of Fox Corporation. He has held the position of Executive Chair since January 2019 and Chief Executive Officer since October 2018. He has extensive experience in the media industry, having led various international and domestic media companies .
    John P. NallenChief Operating OfficerOctober 2018John P. Nallen serves as the Chief Operating Officer of Fox Corporation. Before joining Fox, he was the Senior Executive Vice President and Chief Financial Officer at 21st Century Fox (21CF) from 2013 to March 2019, and its Executive Vice President and Deputy Chief Financial Officer from 2001 to 2013 .
    Adam CiongoliChief Legal and Policy OfficerDecember 2023Adam Ciongoli serves as the Chief Legal and Policy Officer at Fox Corporation. He has been with the company since December 2023. Before joining Fox, he worked at Campbell Soup Company from 2015 to December 2023, where he held roles including Executive Vice President, General Counsel, and Chief Sustainability Officer .
    Steven TomsicChief Financial OfficerOctober 2018Steven Tomsic serves as the Chief Financial Officer of Fox Corporation. He has been with the company and its predecessors for 22 years. Before becoming CFO in October 2018, he served as Deputy Chief Financial Officer of 21CF for two years. He oversees all corporate and operational finance activities .

    Questions to Ask Management

    1. With Tubi expected to cross $1 billion in revenue this fiscal year, how sustainable do you believe this growth is, especially considering rising competition in the AVOD space and potential increases in content acquisition costs?
    2. Affiliate fee revenues grew 3% at Cable and 10% at Television, but subscriber declines are still close to 8%; how confident are you that this moderation in subscriber losses is sustainable, and what strategies are you implementing to address long-term cord-cutting trends?
    3. Political advertising significantly boosted your revenues this quarter; with the election cycle concluding, how do you plan to compensate for the anticipated drop in political ad spending in the coming quarters?
    4. Cable expenses increased by 9%, primarily due to higher sports programming rights amortization; can you discuss the long-term profitability of your sports rights investments amid escalating costs and intense competition for viewers?
    5. Regarding your investment in Flutter and the exercise of your options in FanDuel, what factors are influencing your timing, and how does this align with your overall strategy in the sports betting market, especially considering the regulatory challenges in obtaining state licenses?

    Share Repurchase Program

    Program DetailsProgram 1
    Approval DateNot specified
    End Date/DurationNo time limit
    Total additional amount$7 billion
    Remaining authorization amount$1.15 billion (as of 2024-09-30)
    DetailsThe program may be modified, suspended, or discontinued at any time.

    Past Guidance

    Q1 2025 Earnings Call

    • Issued Period: Q1 2025
    • Guided Period: FY 2025
    • Guidance:
      1. Tubi Revenue: On track to reach $1 billion in revenue.
      2. Political Advertising: Expected strong revenue, benefiting local stations and Tubi.
      3. Super Bowl 59: Anticipated significant growth in advertising revenues and free cash flow.
      4. Affiliate Revenue: Continued growth expected despite subscriber declines.
      5. Content and Programming: Investment in digital-led growth initiatives, focus on Tubi, and a shift back to scripted content.
      6. Sports Programming: Positive contributions from a strong NFL season.
      7. Subscriber Trends: Slight improvement in subscriber decline rates .

    Q4 2024 Earnings Call

    • Issued Period: Q4 2024
    • Guided Period: FY 2025
    • Guidance:
      1. Major Event Cycle: Significant growth in advertising revenues and free cash flow from Super Bowl 59 and election cycle.
      2. Affiliate Revenue: Light year of renewals, with 25% of distribution revenues up for renewal.
      3. Digital Investments: Continued investment in digital growth, with Tubi as a focus.
      4. Content Spend: Increases in sports amortization, Tubi content investment, and a shift to scripted content.
      5. Political Advertising: Robust election advertising cycle expected.
      6. Venue Sports: Launch expected in the fall.
      7. Shareholder Returns: Increase in semiannual dividend to $0.27 per share and continued share repurchases .

    Q3 2024 Earnings Call

    • Issued Period: Q3 2024
    • Guided Period: FY 2025
    • Guidance:
      1. Political Advertising: Strong expectations for national and local races.
      2. Super Bowl and NFL Schedule: Anticipated growth in advertising revenues and free cash flow.
      3. Affiliate Revenue: Continued growth supported by affiliate renewals.
      4. Tubi: Continued growth and investment in digital-led initiatives.
      5. Venue Sports Streaming Service: Planned launch in the fall.
      6. Capital Allocation: Increase in semiannual dividend and commitment to share repurchases .

    Q2 2024 Earnings Call

    • Issued Period: Q2 2024
    • Guided Period: Q2 2024
    • Guidance: The documents do not provide specific guidance metrics for this period. The call primarily discusses past performance and strategic initiatives without explicit forward-looking guidance metrics .

    Competitors

    Competitors mentioned in the company's latest 10K filing.

    • ABC, NBC, and CBS: These networks broadcast a significantly greater number of hours of programming than the FOX Network, allowing them greater flexibility in designating or changing broadcast time periods .
    • Other broadcast television networks, cable television systems and networks, direct-to-consumer streaming and on-demand platforms and services, mobile, gaming and social media platforms, audio programming, and print and other media: These are general categories of competitors for audiences, programming, and advertising revenue .
    • Other television stations or cable networks: These may change their formats or programming to compete directly with FOX's stations or networks .
    • SVOD services with advertising-supported offerings, AVOD services, and FAST products: These have intensified competition for audiences and advertising .
    • Other content creators: Compete with FOX's entertainment programming production businesses for creative talent, new content ideas, intellectual property, and content distribution .
    • Other content licensors and sellers: Compete with FOX Entertainment Global for content distribution .