Industry Insider: Investigating Fox Corporation’s Q4 Earnings Call

Lachlan Murdock (CEO & Executive Officer) and Steve Tomsic (CFO) led FOX Corporation's 4th Quarter Call on August 8th. Lachlan began the presentation of the 4th Quarter with records of the entirety of 2023’s full fiscal year. He then jumped into the revenue growth patterns, stating that advertising growth increased by 12%, and listed a few supplementary causes for this. These are also highlighted with a quote taken from Lachlan in the June 2023 earnings release. 

“Fiscal 2023 showcased the very best of FOX’s portfolio while achieving record annual revenue and EBITDA. From the exceptional sports calendar that included Super Bowl LVII and the FIFA Men’s World Cup, to the record-breaking political midterm cycle and the impressive growth seen at Tubi, the power of the FOX platform was on full display. We enter Fiscal 2024 with a focused strategy and best-in-class balance sheet as we continue to drive shareholder value.” 

However, there was one more aspect that Lachlan gave credit to during the call that was amiss from the previous quote. FOX’s more recent renewal concerning one-third of the company’s distribution saw a 3% increase in affiliate growth. Attributing this growth, at least partially, to the 8% decline in industry subscribers would provide context to FOX Entertainment’s overall position in 2023. 

Principally, this distribution benefited the company’s TV segment with a lead of 8% increase year-over-year. 

 ‘The broadcast of SuperBowl 57 was the most viewed TV show of all time’. With, this level of engagement, FOX has solidified their placement in the market. This is greatly emphasized during Steve’s breakdown of their television segment for this quarter. Each quarter of 2023 saw a 4% increase for this segment overall but this was due to the many setbacks in the cable division. Most of which was affected by the advertisement; for instance, in direct correlation to FOX News station there was a substantial decrease of 11% in cable advertising. However, Steve notes that the second season of the USFL generated a 7% increase, with the other revenues impacted by cable. While the quarterly adjusted EBITDA for cable was down by 7%, the television segment hit a plateau for its quarterly adjusted EBITDA overall. Steve justifies these percentages claiming the expenses were due to production costs for FOX Sports and the cost expenses for programming rights at Tubi:

“Fox Corporation’s relationships with advertisers and distribution partners, combined with the company’s dominance in news and sports programming, will help Tubi continue to grow and differentiate itself in the high-growth ad-supported streaming marketplace…”

However, Tubi didn’t add unnecessary weight to FOX because Tubi’s revenue growth outweighed the expenses. Lachlan reported that Tubi furthered the brand’s momentum and that the TBT growth rate increase is owed to Tubi’s success. The streaming service fostered a 79% increase in total consumption during 2023, and these consumption levels are said to be equivalent to the top 5 cable networks. Tubi is meant to be of great focus in FOX’s plans for the 2024 fiscal year. 

With 2024 peeking around the corner Steve and Lauchlan address the company’s forward-looking statements. FOX’s cable sports are expected to maximize within the next fiscal year, with college sport renewals and an increase in net for sub-licensing. So with that, another third of the company’s distribution will be up for renewal; which will seemingly benefit the company projected in the later part of the year. Additionally, this renewal will once again position itself to take shape in the corporation’s television segment. In terms of entertainment, Steve commented during the call that FOX will continue to invest in growth initiatives such as Tubi. Tubi is anticipated to maintain the EBITDA from this fiscal year or surpass it with the implementation of the alternative minimum tax policies cash flow which should be elevating cash taxes sooner rather than later. In total, FOX Corporation had an adjusted Q4 net income increase of 443 million dollars, with the EPS increasing by 19% to 88 cents per share. Along with this, shareholders of the company have seen great return value on FOX’s capital, foreseeing a cumulative return of six billion dollars since 2019, which reflects the steady rise of the corporation’s value and amplifies their commitment to their goals.