Release Date: August 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Fox Corp (FOX, Financial) delivered nearly $14 billion in revenue and $2.8 billion in EBITDA for fiscal 2024.
- Tubi cemented its position as the most-watched free TV and movie streaming service in the US, with viewing time growing 57% year-over-year.
- Fox News was the most-watched network in cable news for fiscal 2024, with a 52% higher viewing time than its closest competitor.
- Fox Sports achieved high viewership for events like the UEFA European Championship and Copa America, with significant growth over previous years.
- The company saw strong upfront commitments, with year-over-year growth in both linear and digital advertising commitments.
Negative Points
- Total company advertising revenues declined by 18% year-over-year, impacted by the absence of marquee events like the Super Bowl and FIFA Men's World Cup.
- Total company other revenues were down 4% year-over-year, affected by lower content revenues due to the SAG and WGA labor disputes.
- Television advertising revenues fell by 1% in the fourth quarter, with lower ratings and pricing at the Fox Network.
- Expenses at the television segment grew by 8% year-over-year, driven by costs associated with UEFA Euros and Copa America and digital investments in Tubi.
- Net income attributable to stockholders decreased to $319 million in the fourth quarter, down from $375 million in the prior year quarter.
Q & A Highlights
Q: How are you thinking about the Venu product now that it's about to launch, and what impact will it have on financials in fiscal '25?
A: Lachlan Murdoch, CEO: Venu is set to revolutionize how Americans view sports. The initial launch price of $42.99 is well-targeted, and we aim for 5 million subscribers over five years, focusing on cord-cutters and cord-nevers. Steve Tomsic, CFO: Financially, Venu will take time to break even, but it should be accretive to us fairly quickly, benefiting from affiliate fee revenues in both cable and TV.
Q: Can you delineate what you're seeing in the TV ad market, particularly in sports versus entertainment, and provide an outlook for cable ads?
A: Lachlan Murdoch, CEO: Overall, our pricing is strong, with both pricing and volume increases from the upfront. Sports inventory, including marquee events like the Super Bowl, is particularly strong. Fox News also saw volume increases, driven by remarkable ratings and strong direct response pricing. We expect a record political cycle, with significant money flowing into emerging markets like Atlanta and Phoenix.
Q: What are your expectations for growing affiliate fees in fiscal '25, and how much room is there to drive retrans pricing?
A: Lachlan Murdoch, CEO: We expect modest growth in affiliate fees despite subscriber declines. Our focus on core brands like Fox News and Fox Sports allows us to drive appropriate value without the baggage of legacy channels. Steve Tomsic, CFO: Content spend will continue to grow, particularly in sports and Tubi, with a slight shift back to scripted content in entertainment.
Q: What changes has the new ad sales team implemented, and where do you see the next opportunity for deploying capital?
A: Lachlan Murdoch, CEO: The new ad sales team, led by Jeff Collins, has done a tremendous job. We retain expertise across verticals like sports, news, entertainment, and digital, which proved effective in this year's upfront. Regarding capital deployment, we will continue to be prudent, focusing on organic investment, shareholder returns, and potential M&A opportunities.
Q: Can you provide more details on Tubi's performance and your outlook for digital investment losses in fiscal '25?
A: Lachlan Murdoch, CEO: Tubi continues to grow robustly, with mid-10s revenue growth despite heightened competition. We expect further growth as the year progresses. Steve Tomsic, CFO: Tubi was the largest driver of investment in fiscal '24, with consistent investment levels expected in fiscal '25, leading to improved EBITDA.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
