Fox Corporation

(NASDAQ Global Select)
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Bullish +70

FOX Q3 Earnings Call Highlights

AI-generated analysis

πŸ“ˆ Fox Corporation beat Q3 expectations with $4 billion in revenue and adjusted EBITDA rising 11% to $954 million.

πŸ’° Adjusted earnings per share increased 20% year-over-year to $1.32, though reported EPS remained lower due to the prior Super Bowl comparison.

πŸ“Ί Distribution revenue grew 3% overall, with cable distribution specifically up 5% as pricing gains offset stable net subscriber declines of under 6.5%.

🎬 Direct-to-consumer service Fox One exceeded subscriber addition expectations while management excludes it from reported third-party decline due to its early-stage status.

πŸ“° Fox News delivered its strongest advertising revenue on record, finishing as the most-watched cable network in total day and prime time metrics.

🌐 Digital momentum strengthened with double-digit growth in Fox News Digital YouTube and social media views alongside 23% revenue growth for Tubi.

⚽ Sports performance was highlighted by a 150% ratings increase for the World Baseball Classic final and strong audience gains for IndyCar and MLB opening weekend.

🏈 The company acquired two additional regular-season NFL games, including an overseas game from Munich expected to create the first broadcast television Sunday tripleheader.

πŸ—³οΈ Political advertising is identified as a major tailwind with record off-year revenue in battleground states like Florida and Georgia ahead of upcoming midterms.

πŸ” Management described the broader advertising market as healthy with low option exercise rates and limited cancellations despite some price gaps vs. broadcast peers.

πŸ’¬ CEO Lachlan Murdoch emphasized "unabated momentum" across distribution, advertising trends, and digital platforms offsetting the Super Bowl absence.

πŸ”„ CFO Steve Tomsic noted that more than one-third of distribution income is up for renewal in fiscal 2027, with a skew toward television contracts.

Bullish Signals
  • FOX beat expectations in fiscal Q3 with revenue of $4 billion and adjusted EBITDA up 11% to $954 million.
  • Adjusted EPS rose 20% to $1.32, demonstrating strong profitability even while accounting for the absence of last year's Super Bowl broadcast.
  • Distribution and direct-to-consumer growth remained strong, with distribution revenue up 3% and cable distribution revenue up 5% on pricing gains.
  • Fox One exceeded expectations for subscriber additions and retention, contributing to healthier revenue trends as a significant contributor to subscriber trends and revenue across cable affiliate and television distribution.
  • Fox News posted its best third-quarter advertising revenue ever, while the company finished the quarter as the most-watched cable network in both total day and prime time.
  • Tubi revenue climbed 23% with nearly 100 million monthly active users, highlighting strong digital momentum.
  • Fox Sports delivered major audience gains, including average ratings rising more than 150% for the World Baseball Classic versus 2023 with over 10 million viewers for the final.
  • Fox acquired rights to two additional regular-season NFL games for the coming season, expanding its sports slate and increasing advertising opportunities.
  • Murdoch reported that Fox added 200 new premium advertising clients in fiscal 2026 following 350 new clients in fiscal 2025, indicating growing demand.
  • The advertising market is healthy heading into the upfront presentation with low option exercise rates and limited cancellations.
  • Third-party estimates put the midterm political ad market at $11 billion, representing a potential tailwind with record political revenue already being seen in an off-year period.
Risk Factors
  • Reported advertising revenue declined compared to the prior-year quarter specifically due to the absence of last year's Super Bowl broadcast, masking underlying performance.
  • Net income per share fell significantly to $0.38 from $0.75 in the prior year, indicating a sharp drop in bottom-line profitability despite adjusted earnings growth.
  • Cable distribution revenue experienced net subscriber declines which were only offset by pricing gains of 5%, suggesting potential pressure on subscriber retention.
  • The company excludes Fox One subscribers from reported third-party subscriber decline figures because the direct-to-consumer service is still in its early stages, indicating uncertainty about long-term subscriber metrics.
  • There remains a significant gap between the CPMs and national pricing achieved by Fox News compared to broadcast network pricing levels.
  • The upcoming NFL additions are limited to two regular-season games (Week 10 overseas game and Week 15 Saturday game), which may be insufficient to offset potential market changes or costs.
  • Political advertising is highlighted as a potential tailwind for an off-year period, but relying on this sector creates concentration risk ahead of the next election cycle.
Full Analysis
Fox Corporation delivered a strong fiscal third-quarter performance, beating revenue and earnings expectations despite the absence of Super Bowl LIX advertising. The company reported revenue of $4 billion and adjusted EBITDA of $954 million, representing an 11% increase year-over-year. Adjusted earnings per share rose 20% to $1.32, driven by robust growth in distribution and direct-to-consumer segments which offset lower advertising revenue compared to the prior period's Super Bowl broadcast. Key growth drivers included exceptional performance from Fox News, which posted its highest third-quarter advertising revenue on record, and Tubi, whose revenue climbed 23% with nearly 100 million monthly active users. Distribution revenue grew 3%, while cable distribution specifically increased by 5% due to pricing gains. Executive Chair and CEO Lachlan Murdoch highlighted strong subscriber additions and retention for the Fox One streaming service, which exceeded expectations in subscriber growth and retention metrics. Looking ahead, executives noted significant tailwinds including upcoming NFL broadcast additions and the FIFA Men's World Cup, expected to support future results. The company emphasized a healthy advertising market with low option exercise rates and limited cancellations, identifying pharmaceutical, technology, and finance as key categories for upfront market growth. Additionally, political advertising was highlighted as a potential opportunity, with the company expecting stations in battleground states like Florida, Georgia, and California to benefit from midterm election spending.