Tubi And Sports Shine For Fox Corp. Earnings

Fox Corp.’s streaming platform Tubi ranks right up there with live sports and news as a key driver of the company’s business — both in the company’s fiscal first quarter, just ended, and moving forward. That was a loud drum beat during the company’s first-quarter earnings call with analysts Thursday morning.

Overall, Fox’s total quarterly revenues were up slightly, to $3.21 billion, versus the $3.19 billion reported in the same quarter last year. Affiliate fee revenues increased 2%, driven by 8% growth at the company’s television segment, which includes its TV stations.

Quarterly net income came in at $415 million, versus $613 million in the prior year quarter. Quarterly adjusted EBITDA was $869 million as compared to the $1.09 billion in the prior year quarter. Expenses increased largely due to higher sports programming rights amortization and production costs. That includes costs associated with the Women’s World Cup telecast and the renewed NFL contract, as well as higher expenses associated with digital investments.

Advertising revenues decreased 2%, due to a drop in direct response advertising at Fox News Media and lower political revenues at the TV stations during the off-year election cycle. But the decline would have been a lot more if it weren’t for the company’s marquee live sports programming, live news, and continued growth at Tubi.

During an earnings call with analysts, Lachlan Murdoch, the company’s executive chairman and CEO, noted that TV station revenue is pacing slightly ahead of where it was last year at this time, if political revenue is excluded. He noted that in last year’s first quarter, political revenue flooded into the company’s coffers. In October 2022 alone, over $125 million was garnered in that ad sector.

In the quarter just ended, the auto, financial services and retail ad categories were particularly strong for the stations. On the flip side, betting and entertainment dipped — the latter due to the strikes in Hollywood and fewer movie premieres.

Murdoch emphasized the strength of live news and sports, with healthy demand and pricing. Total viewing of Fox brands was up 2% in the quarter. At Fox News Media, there were 80 new advertisers in primetime during the quarter, with ad rates on the rise, he said.

In addition to extremely strong results for the Women’s Soccer World Cup and NFL telecasts, “college football has never been more popular,” Murdoch said. “Advertisers are pouring into college football at tremendous rates and tremendous advertising volume.” On the national advertising front, Fox has seen strong demand for sports from the pharmaceutical, auto, fast food restaurants and consumer packaged goods advertising categories.

But don’t expect live sports to transfer over to Tubi in the foreseeable future. That’s not the plan, Murdoch said. The streaming service’s revenue grew by 30% in the quarter, “driven by an impressive 65% lift in total view time. Tubi surpassed 70 million monthly active viewers in September, logged nearly 4 billion streaming hours in the first half of the calendar year, and remains the No. 1 AVOD player, and the most watched free, ad-supported streaming service in the United States,” Murdoch said.

Tubi has beaten Pluto, Peacock, Max and Paramount+ in view time for five consecutive months, according to Murdoch. And he attributes that to its library of 60,000 titles and 300 FAST channels.

“Tubi will be the way our audiences primarily engage with entertainment in the future,” Murdoch said. “It’s a core part of our business.”

He said the decline in direct response advertising has been due to an oversupply of inventory, triggered by media seller strategies two upfronts ago. But Fox expects that to be relieved moving forward.

Steve Tomsic, Fox’s CFO, noted that in the cable segment of the company revenues decreased 3% year over year. “Cable affiliate revenues were down 2% in the quarter, largely as a result of industry subscriber declines, which continue to run in the 8% range.” Advertising in the cable segment was down 8%. But key sport events like Women’s World Cup offset declines in direct response and ratings declines at Fox News Media.

“Notably, though, we continue to see healthy national linear and digital demand from advertisers at Fox News Media,” Tomsic said.

Very little was said about the recent distribution deal between Charter and The Walt Disney Co., although Murdoch characterized it as a net positive for Fox. “From a Fox perspective the cable bundle, or payTV distribution, remains our largest and most important revenue stream. And it will remain our largest for years to come,” he said, adding that the company is not interested in moving premium content away from cable distributors.

Tomsic said the company has completed over a third of its distribution deal renewals. “We achieved our pricing objectives,” he said, noting that Fox channels and stations didn’t go dark on any MVPDs over the course of the negotiations.