Fox (FOXA) Q1 2027 Earnings Call Transcript

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DATE

Mon., Nov. 2, 2026

CALL PARTICIPANTS

• Chief Investor Relations Officer - Gabrielle Brown
• Executive Chair and Chief Executive - Lachlan Keith Murdoch
• President and chief operating officer - John Nallen
• Chief financial officer - Steven Tomsic

TAKEAWAYS

• Revenue -- $4.57 billion, growing 22% due to the broadcast of the FIFA Men's World Cup and higher political advertising revenue.
• Adjusted EBITDA -- $1.64 billion, increasing 54% as record revenue was partially offset by higher sports programming and digital content costs.
• Adjusted EPS -- $2.54 per share, representing a 68% increase compared to $1.51 per share in the prior year period.
• Advertising Revenue -- $2.08 billion, rising 47% driven by the World Cup and continued growth at the Tubi streaming service.
• Distribution Revenue -- $2.08 billion, up 9% reflecting contractual price increases and an increase in the average number of subscribers.
• Political Advertising Revenue -- $350 million to date for the current midterm cycle, which management reported as a record for a midterm period.
• Tubi Revenue -- growth of 35% year over year, supported by a 23% increase in total view time across its content library.
• Cable Network Revenue -- $1.80 billion, an 8% increase driven by higher sports advertising and pricing growth from affiliate renewals.
• Television Segment Revenue -- $2.71 billion, up 32% primarily due to the World Cup and early midterm political spending at owned stations.
• Television EBITDA -- $934 million, growing 134% as revenue gains outweighed higher sports programming rights amortization.
• Cable Network EBITDA -- $859 million, a 7% increase reflecting affiliate pricing growth partially offset by higher news and sports programming costs.
• Free Cash Flow -- $503 million, benefiting from the timing of working capital related to the collection of World Cup advertising receivables.
• Cash and Debt -- ended the quarter with $4.5 billion in cash and cash equivalents and $6.6 billion in total debt.
• Fox 1 Subscriber Acquisitions -- reported a 30% increase in Sept. compared to the start of the previous football season.
• Incremental Fox 1 Subscribers -- management stated that 97% of new subscribers to the service do not have a traditional cable subscription.
• Industry Subscriber Trends -- third-party distributor subscriber declines improved to a rate below 6%.
• Total Operating Expenses -- increased 10% due to costs associated with the World Cup and higher digital content investments.
• NFL Viewership -- "America's Game of the Week" averaged nearly 25 million viewers, maintaining its position as the top show on television.
• MLB Postseason -- the five-game World Series averaged 12 million viewers, with per-game revenue exceeding management's expectations.
• Political Ad Breakdown -- included $20 million to $25 million at local stations and $50 million each for Tubi and national news and sports.

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RISKS

• Murdoch stated, "as we move forward, the FOX 1 subscriber base is going to be somewhat seasonal with sports seasons coming and going," noting that the service may not always offset traditional ecosystem subscriber losses.
• Murdoch acknowledged that Fox News experienced ratings declines compared to the prior year, noting that viewers have "some viewer fatigue" following a heavy news cycle and the 2026 inauguration.

SUMMARY

Fox Corporation (NASDAQ:FOXA) reported record first-quarter revenue and EBITDA driven by the broadcast of the FIFA Men's World Cup and record political advertising spend. Management indicated that the company is proceeding toward the close of its Roku acquisition after receiving necessary shareholder and foreign regulatory approvals. The company reported a 22% increase in total revenue and noted that 97% of Fox 1 subscribers were incremental to its existing base. Capital allocation plans include a return to share repurchases in the current quarter, following a temporary pause during the first quarter.

• Murdoch noted that the political cycle has been "a dramatically positive sort of political revenue cycle, across the board."
• Tomsic stated that the improvement in free cash flow was largely due to the timing of "advertising receivables" being collected from the World Cup broadcast.
• Management reported that Tubi's mostly cordless audience is being recognized by political campaigns as a target for investment during the midterm cycle.
• The company is continuing to work with the Department of Justice to obtain HSR clearance for the pending Roku transaction.
• Management indicated that Tubi is expected to become a 20% range margin business once the platform reaches further maturity.

INDUSTRY GLOSSARY

• Tubi: An advertising-supported video-on-demand (AVOD) streaming service owned by Fox.
• Fox 1: A direct-to-consumer streaming service offering sports and news content.
• EBITDA: Earnings before interest, taxes, depreciation, and amortization, used to measure operating performance.
• HSR Clearance: Regulatory approval required under the Hart-Scott-Rodino Antitrust Improvements Act for certain large transactions.
• TVT: Total view time, a metric used to measure engagement on streaming platforms.
• CPM: Cost per mille, a marketing term representing the cost an advertiser pays for every 1,000 impressions of an advertisement.

Full Conference Call Transcript

Operator: Ladies and gentlemen, thank you for standing by. Welcome to the Fox Corporation First Quarter Fiscal Year 27 Earnings Conference Call. At this time, Peter, we will conduct a question and answer session. I would like to emphasize that functionality for the question and answer queue will be given at that time. If you require assistance during the call, please press *0 on your touch tone keypad. As a reminder, this conference is being recorded. I will now turn the conference over to Chief Investor Relations Officer, Ms. Gabrielle Brown. Please go ahead, Ms. Brown.

Gabrielle Brown: Thank you, Polly. Good morning, and welcome to our fiscal 27 first quarter earnings call. Joining me on the call today are Lachlan Keith Murdoch, Executive Chair and Chief Executive John Nallen, president and chief operating officer and Steven Tomsic, our chief financial officer. First, Lachlan and Steven will give some prepared remarks on the most recent quarter. And then we will take questions from the investment community. Please note that this call may include forward looking statements regarding Fox Corporation's financial performance and operating results. These statements are based on management's current expectations, and actual results could differ from what is stated as a result of certain identified on today's call and in the company's SEC filings.

Additionally, this call will include certain non GAAP financial measures. Including adjusted EPS, and adjusted EBITDA, or EBITDA as we refer to it on this call. Reconciliations of non GAAP financial measures are included in our earnings release and our SEC filings. Which are available in the Investor Relations section of our website. We also refer to free cash flow, which we define as net cash provided by operating activities less capital expenditures. And with that, I am pleased to turn the call over to Lachlan.

Lachlan Keith Murdoch: Thank you, Gabby, and thank you all for joining us this morning to discuss our fiscal first quarter earnings. Good morning to you all. Fiscal 27 is off to an outstanding start. We posted revenue growth of 22% to reach $4.6 billion and EBITDA growth of 54% to reach $1.6 billion Both our first quarter records both a direct result of the focused strategy we are executing on and both reflective of the strength of our content and brands, driving consistently exceptional results. Advertising revenue rose 47% in the first quarter, driven by our successful broadcast of the FIFA Men's World Cup and healthy trends across the Fox portfolio which continue into this current quarter.

Distribution revenue rose 9%, with cable distribution up 10% on increased rates and the strength of Fox 1. Along with a meaningful improvement in industry subscriber trends. In fact, when including the incremental subscribers from Fox 1, we saw positive subscriber growth for the trailing 12 months. Fox 1 launched just over a year ago, and has consistently exceeded our expectations for users and engagement. We are encouraged by Fox 1's trajectory are confident in its potential to drive incremental growth in the quarters ahead. Notably, related to Fox 1's momentum, in the month of September, subscriber acquisitions increased over 30% versus the start of last year's football season.

And we have seen a very healthy engagement balance by subscribers between news, and sports consumption. Sports as expected, drove a considerable amount of engagement across the entire Fox this past quarter. We began the quarter with a historic broadcast of the FIFA Men's World Cup final, the most watched soccer telecast in US history. This was followed by the start of the Major League Baseball postseason and, of course, the opening weekends of the National Football League and college football seasons. We just wrapped an exciting world series between the Milwaukee Brewers and the Tampa Bay Rays. A 5 game series that averaged 12 million viewers and capped an MLB playoff that exceeded our expectations.

Per game revenue was robust, which is illustrative of the strength of the sports market. Looking at the NFL season to date, Fox's America's game of the week is the number 1 show in all of television an average of nearly 25 million viewers. With plenty of football still to come, we look forward to an NFL triple header on Fox in 15. A strong Thanksgiving holiday weekend that will feature 1 of college football's biggest rivalries, Michigan versus Ohio State, and a blockbuster NFL matchup between the Eagles and the Cowboys on Thanksgiving Day. The NFL Thanksgiving Day game will also stream live on Tubi, which posted another record quarter.

Tubi grew revenue 35%, year on year, underpinned by a 23% increase in total view time. Engagement was driven by Tubi's deep content offering, including its tremendous library its World Cup hub, 10 new originals, and viral content. From more than 600 creators. Fundamental momentum at Tubi continues into the second quarter. Supplemented by the recognition of political campaigns of Tubi's large mostly cordless audience as an ideal destination to invest for this year's midterm cycle on a targeted basis. More broadly across our businesses, political advertising has surpassed $350 million. A record for a midterm cycle. This encapsulates the full Fox portfolio, working together at scale during 1 of the biggest news events of the year.

As you would expect, audiences have turned to Fox for our comprehensive coverage of this election cycle. With national coverage led by the Fox News team while our broadcast stations provide essential local perspective. Particularly in many battleground states. Heading into tomorrow's vote, more Americans have relied on Fox News than any other news network for coverage of the key issues and news this cycle. While we had difficult ratings comparisons to last year, Fox News notably finished the quarter as the most watched cable news network while maintaining audience share levels that are higher than our peers in both prime and total day.

These first quarter results underscore the position of financial strength we are approaching the Roku transaction from. Since the announcement of the Roku acquisition, our confidence in the strategy and our conviction in the opportunity has only grown. Combining Roku's leading streaming platform with our premium sports news, and entertainment content, we will build our position in the fastest growing segments of the media landscape and will deliver both sustained growth for the company and value for our shareholders. From a process standpoint, we have made significant progress towards closing. Including receiving all required Fox and Roku shareholder approvals and foreign regulatory approvals.

We are continuing to work cooperatively with the DOJ in order to obtain HSR clearance and expect to close the transaction as soon as we can. After a record fiscal year 2026, and first quarter 2027, fiscal 2020, will once again demonstrate our differentiated strategy, the quality of our assets, our ability to deliver both on screen and financially, and the strength of our balance sheet. All while creating value for our shareholders, in a deliberate and disciplined manner. I will now turn it over to Steven to discuss the financials.

Steven Silvester Tomsic: Thanks, Lachlan, and good morning, everyone. The strong momentum we saw throughout our fiscal 2 thousand and 26 has continued unabated into the first quarter of fiscal 2 thousand and 27. Highlighted by total revenue growth of 22% and record quarterly EBITDA of $1.64 billion. Advertising revenue across the company grew 47%, led by led by our broadcast of the 2 thousand and 26 FIFA Men's World Cup with higher political advertising revenue and continued growth at Tubi. Distribution revenue grew 9% over the prior year, growth of both our cable and television segments. Content and other revenues were broadly in line with prior year, with lower entertainment content revenue, partially offset by higher sports sublicensing revenue.

Total expenses increased 10% led by costs associated with the World Cup and higher digital content costs. Net income attributable to stockholders was $943 million or $2.20 per share as compared to the $599 million or $1.32 per share reported in the prior year period. Excluding noncore items, adjusted net income was $1.09 billion adjusted EPS was $2.54. Up 68% compared to the $1.51 recorded in the prior year period. Now turning to our operating segments. Starting with the cable segment, which reported an 8% increase in revenue and a 7% increase in EBITDA.

Cable advertising revenue was up 8% primarily a result of higher sports advertising revenue including the broadcast of the World Cup partially offset by lower digital news advertising revenue. Cable distribution revenue grew 10% driven by pricing growth from our affiliate renewals and a net increase in subscribers. The subscriber growth reflects the combined benefit of an improving rate of subscriber declines across our third party distributors which is now running at below 6% coupled with a meaningful positive contribution from Fox 1. Cable content and other revenue increased 1% driven by higher sports sublicensing revenue.

Expenses at the cable segment increased 10% due to higher sports programming rights and production costs, including the World Cup, and higher news programming costs. Turning to our television segment, which delivered 32% growth in revenue and a 134% increase in EBITDA. Television advertising revenue was up 60% driven by the World Cup and early midterm political advertising revenue, primarily at our owned and operated television stations. Tubi was once again a highlight. Delivering mid-30% revenue growth and growing its year on year EBITDA contribution. Television distribution revenue grew 4% driven by healthy growth in fees across Fox owned and operated stations, and a net increase in subscribers.

Television content and other revenue fell 4% as a result of lower content revenues tied to our entertainment production studios. Expenses at the television segment increased 8% due to higher sports programming rights amortization and production costs, led by our broadcast of the World Cup. Along with higher content costs at Tubi. These were partially offset by lower NFL costs associated with the timing of games. Now turning to cash flow, where free cash flow was $503 million in the quarter. As a reminder, the strong improvement in quarterly free cash flow was in large part due to the timing of working capital related to the World Cup.

Where rights payments to the tournament landed in fiscal 2 thousand and 26 while advertising receivables continue to be collected through the first half of fiscal 27. In terms of capital allocation, while we are temporarily inactive with our buyback program in the quarter, we continue to expect full year share repurchases to be in line with our historical range and anticipate returning to share repurchases this quarter. This is all supported by the strength of our balance sheet where we ended the quarter with approximately $4.5 billion in cash and $6.6 billion in debt. And with that, I will turn the call back over to Gabby.

Gabrielle Brown: Great. Thanks, Steven. And now we would be happy to take questions from the investment community. Please note that as with our prior earnings call, we do not anticipate taking questions about Fox pending Roku transaction. We have filed materials with the SEC that provide information about the transaction. And for today, we would ask that questions focus on Fox's stand alone results.

Operator: Ladies and gentlemen, I would like to emphasize the functionality for the question and answer queue. If you wish to ask a question, please press star. Then 1 on your touch tone keypad. You will hear a tone indicating you have been placed in queue. You may remove yourself from queue at any time by once again pressing *1. If you are using a speakerphone, please pick up the handset before pressing the numbers. It has been requested that you limit yourself to 1 question. Once again, if you have a question, please press *1 at this time. Have a question from Michael Ng of Goldman Sachs. Please go ahead.

Michael Ng: Hi, good morning. Thank you for the question. I wanted to ask about Fox 1 and the impact on distribution revenues. Very encouraging to hear about the net positive subscriber growth in the trailing 12 months. What does that tell you and inform how you think about long term distribution revenue growth? And if you could talk a little bit about the biggest opportunities for Fox 1 gross adds, especially as we head into NFL season more firmly, that would be helpful. Thank you.

Lachlan Keith Murdoch: Thanks, Mike. So look. I think in summary, Fox 1 has hit it out of the park. it is. You know, executing on the strategy we laid out for it, extraordinarily well. The most pleasing aspect of this is the fact that the subscribers are almost entirely incremental to our subscriber base. Which is why we can offset. We have been able to offset in this quarter traditional subscriber declines with Fox 1 additions. I think it is something like 97% of new subscribers into Fox 1 subscribers into Fox 1. 97% do not have a cable subscription. that is a tremendous result.

And frankly, when we did our strategy and our budgets for Fox 1, frankly, did not believe that we would be able to achieve that. it is really the result of being very focused, being very careful in our marketing, you know, understanding that a subscriber from the Pay TV system into-- into Fox 1 does not do us any favors. And so we have been, I think, remarkably focused on achieving that result, and the team's done a tremendous job. Now having said that, as we move forward, the FOX 1 subscriber base is going to be somewhat seasonal with sports seasons coming and going.

So I would just sort of press a sort of modest note of caution that, you know, as we move forward, is Fox 1 always going to be able to supplant some of their. The subscriber losses in the traditional ecosystem are probably not as seasons. Sports seasons come and go. So I will just add that 1 small note of caution.

Operator: Great. Next question, please. We have a question from John Hodulik of UBS. Please go ahead.

John Hodulik: Great. Thanks, and good morning, everyone. Maybe just a couple of quick questions on the advertising side. First of all, can you give us an update on your efforts to sort of close the CPMs on the broadcast side or on the news with what you are seeing in the broadcast market. And then you guys seem to buck the trend with Tubi in terms of revenue growth. Given what we have seen from YouTube and Netflix. Any comments, Lakin, on what you are seeing in terms of the health of the CTV ad market? Thanks.

Lachlan Keith Murdoch: Great. Good morning, John. So overall, you know, advertising trends for us, and I cannot talk to the market, but are incredibly healthy. I really cross across our portfolio. it is always a point in time every couple years you have got to be careful to understand the strength of the, you know, political cycle. This is clearly been a dramatically positive sort of political revenue cycle, across the board, and then we are the beneficiary of a lot of that I mentioned it before, but it is, you know, now over $350 million in political revenue. Throughout the cycle. That breaks down into sort of $20 million to $25 million plus on the local stations.

What tends to happen in local stations, you run out of availability. So that pushes some of the base market aside. In the during that cycle, but it is an incredibly positive number. Then we have about $50 million of Tubi revenue. Throughout the cycle. Which is you can allocate that as sort of as effectively local revenue because it is targeted. And another-- and this is another fantastic number. Another $50 million plus of national political advertising revenue that sits across sports and news and entertainment. So that is tremendously strong. In terms of CPMs bridging the gap between Fox News and broadcast, we still have a tremendous amount of upside and room to go.

As you know, the strength of Fox News, we do compete more with broadcast networks as opposed to our news. Our cable news peers. So I. You cannot really call them peers, but our cable news competitors. And we have tremendous in terms of continuing to push our CPMs into the broadcast CPM range. And then and then on Tubi, our revenue growth, as we have said it before on calls, Tubi's business is really driven by TVT growth continues to be very strong. that is for a number of reasons that you well know. it is based around the fact that such a large percentage of them, while they are young, they are diverse, and they are.

The majority of them are coreless. They are very hard market for advertisers to reach. And which is which is 1 of the reasons why Tubi has been so successful in garnering that advertising revenue. The pleasing thing is that we are seeing this growth continue into the current quarter. And so to be continues from to go from strength to strength.

Operator: Next question, please. We have a question from Michael Morris of Guggenheim. Please go ahead.

Michael Morris: Thank you. Good morning, guys. I wanted to ask, Nielsen has reported some ratings declines at Fox News ahead of the midterm elections. I am hoping that you can share your thoughts on why this may be the case. What it means for the ad revenue trend. as well as any strategic or content changes you might consider or make going forward? Is the Fox 1 viewing, is that accurately included in the Nielsen ratings as well? And, if I could just ask 1 second 1 on bundling of Fox 1. You know, John recently said that bundles had only had a modest impact from Fox.

For Fox, I am wondering why these bundles have not been impactful and what you might need to see to strike a deeper distribution agreement with a large streaming platform. Thank you, guys.

Lachlan Keith Murdoch: Thanks, Michael. So let me start with the Fox 1 ratings. So, you know, again, we have finished the year in congratulate everyone. Sorry. Talking about talking about news. I misspoke. Fox News. Ratings. You know, we finished the year incredibly strong. Number 1, with more share. than, you know, our 2 cable competitors combined. So we have-- The business is in incredibly good shape, and, you know, we are very proud of the team. What we are seeing though is some viewer fatigue. Where our viewers have gone through some incredible news cycle last few years.

I think the last year was a record, really hard comps for us to comp against with the, you know, inauguration, the Charlie Kirk tragedy. Doge, I think the flooding, was a tremendous new cycle this time last year, which we are comping against. But having said that, we are seeing some viewer fatigue, which we have seen before. it is that this cycle is analogous not entirely, but somewhat analogous to the 2006 midterms when you have a second term president going into their midterms halfway through the second term, and you just see this bureau fatigue. Those viewers are not going to any other news channel. They are not switching to MSNBC now or to CNN.

They are just, you know, fatigued and watching, you know, slightly less television overall. So we feel pretty confident where we are and we have seen this playbook. And we know how to move through it. Fox 1 bundling, you know, Fox 1 will bundle with all sorts of distributors and platforms and other content providers. You know, it is it is in its infancy, Fox 1. And so you will see we will roll out-- we will roll out further bundles as the service develops.

Operator: Next question, please. We have a question from Jessica Reif Ehrlich of Bank of America. Please go ahead.

Jessica Reif Ehrlich: Thank you. Good morning, everyone. 2 quick questions. First, on Tubi. Lachlan, I remember, I do not know if it was a year or 2 ago, but Tubi reached, like, mid-teens growth, you said. Like, do not think it is sustainable or do not expect it to be sustainable. Now we are at 30% plus revenue growth, and I think you just said that is continuing in the current quarter. What can you say about like the margin outlook for Tubi Anything, where it is now, where you think it can go? Then I think Steven just said that buybacks will resume in the current quarter.

Does that what does that say about the timing of the-- does that say something about the timing of the road will close? Did you say it was on hold until it closes?

Lachlan Keith Murdoch: Hey, Jessica. Good morning. So thank you for proving me wrong on Tubi. I do not remember saying that, but I am sure I did if you said it. And then look. it is been it is been, you know, doing, you know, tremendously well. Our TBD continues to grow. Obviously, a ton of work has gone into that. And as I said, we are seeing that growth continue into this current quarter. So thank you for calling me out on that 1. And margins, we think, you know, I think we have said many times before, we think it will be a 20% range margin business. Once it reaches further maturity.

Steven Silvester Tomsic: Yeah. And to reinforce that point, Jessica, too, we had a nice amount of EBITDA growth this quarter versus last, so continuing on that. Well and truly positive EBIT. EBITDA momentum. On the buyback, you should not draw that linkage between us restarting the buyback and our expected timing for the transaction to close. They are 2 separate decisions.

Operator: Great. We have time for 1 more question. We have a final question from David Karnovsky of JPMorgan. Please go ahead.

David Karnovsky: Hey, thank you. Maybe just following up on the advertising questions The release called out lower year over year ad revenue for cable digital news. I just wanted to see if you could unpack that a bit. How your platforms are operating amid a kind of difficult web traffic environment generally And then just separately, given the success of the World Cup on Fox, right, how are you thinking about rights for the 2030 cycle, where I think FIFA is looking to sell English and Spanish language on a combined package. Thank you.

Lachlan Keith Murdoch: Thanks, David, and welcome. On sort of digital, you know, the you know, I should be aware of Fox News Digital is the number 1 digital news site in America. The. From a revenue perspective, you know, I think it is a, you know, hyper-competitive market. And we are very pleased with the with the results there. On the World Cup, I think the question was just, will we be bidding for World Cup rights? You know, we obviously happy with the performance of the World Cup this past year. And we will be looking at the rights for 2030 and 2034 in a disciplined manner as we would with all sports rights.

Gabrielle Brown: Great. At this point, we are out of time. But if you have any further questions, please give me or Charlie Costanzo a call. So much for joining us today.

Operator: Thank you. Ladies and gentlemen, that does conclude the Fox Corporation First Quarter Fiscal Year 27 Earnings Conference Call. Thank you.

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