Fox Corporation Class A ((FOXA)) has held its Q3 earnings call. Read on for the main highlights of the call.
Protect Your Portfolio Against Market Uncertainty
- Discover companies with rock-solid fundamentals in TipRanks' Smart Value Newsletter.
- Receive undervalued stocks, resilient to market uncertainty, delivered straight to your inbox.
Fox Corporation’s latest earnings call revealed a strong positive sentiment, driven by record-breaking advertising revenue and free cash flow, as well as leadership in cable news viewership. Despite some challenges, such as a decline in net income and increased operating expenses, the overall outlook remains optimistic, highlighting the company’s robust financial performance.
Record-Breaking Advertising Revenue
Fox Corporation reported a remarkable 65% growth in total advertising revenue for the quarter, largely attributed to the Super Bowl, which generated over $800 million in gross advertising revenue. This achievement set a new record for Fox’s national broadcast network and local TV stations, underscoring the company’s strong market presence.
Highest Free Cash Flow in Fox’s History
The third quarter marked a significant milestone for Fox Corporation, as it achieved the highest free cash flow in its history, exceeding $1.9 billion. This impressive figure was driven by a robust working capital cycle and strategic sports rights payments, reinforcing the company’s solid financial foundation.
Fox News Channel Leadership
Fox News Channel maintained its position as the most-watched cable network, finishing the quarter with impressive viewership metrics. It was the second most-watched network in Monday through Friday prime time, surpassing all but one broadcast network, highlighting its continued dominance in the cable news sector.
Tubi’s Rapid Growth
Fox’s streaming platform, Tubi, demonstrated significant growth, with a 35% increase in revenue year-on-year and an 18% rise in total viewing time. This rapid expansion solidifies Tubi’s status as a leading player in the streaming market, contributing to Fox’s diversified media portfolio.
Continued Affiliate Revenue Growth
Affiliate revenues experienced a notable quarter, with a 3% growth in total revenue. This was driven by higher rates and improved subscriber declines for the third consecutive quarter, reflecting Fox’s ability to adapt to changing market dynamics.
Decline in Net Income
Despite the positive revenue trends, Fox Corporation reported a decline in net income, which fell to $346 million or $0.75 per share, down from $666 million or $1.40 per share in the previous year. This decrease highlights some challenges the company faces in maintaining profitability.
Higher Operating Expenses
The quarter also saw an increase in operating expenses, with adjusted EBITDA dropping to $856 million from $891 million in the prior year quarter. This was primarily due to higher sports rights amortization and production costs, impacting the company’s overall financial performance.
Forward-Looking Guidance
Looking ahead, Fox Corporation remains optimistic about its future prospects. The company highlighted several key metrics, including a 65% rise in total advertising revenue and a 3% growth in affiliate revenues. Fox News Channel continues to lead in viewership, with digital consumption also on the rise. Tubi’s growth trajectory remains strong, and the upcoming launch of Fox One, a direct-to-consumer platform, aims to capture the cord-cutting market. With a robust financial position and strategic initiatives, Fox is well-positioned for continued success.
In summary, Fox Corporation’s earnings call painted a picture of strong financial performance, driven by record advertising revenue and free cash flow, as well as leadership in cable news viewership. While challenges such as a decline in net income and increased operating expenses persist, the company’s forward-looking guidance suggests a positive outlook, with strategic initiatives poised to drive future growth.