The operator introduces the Fox Corporation's First Quarter Fiscal Year 2024 Earnings Conference Call and turns it over to Chief Investor Relations Officer, Ms. Gabriele Brown. She introduces the speakers, Lachlan Murdoch, Executive Chair and CEO, John Nallen, COO, and Steve Tomsic, CFO. They will discuss the company's financial performance and operating results, including forward-looking statements and non-GAAP financial measures. Lachlan thanks everyone for joining and acknowledges the difficult times, particularly the coverage of the terrorist attack and ongoing war in the Middle East by their journalists.

Fox News has a dedicated team of reporters, hosts, and producers who work tirelessly to report and analyze the news without bias. Despite the challenges of a busy news cycle and demanding conditions, they continue to provide updates on events around the world. In terms of financial performance, Fox has started off the fiscal year strong, with total revenues slightly ahead of last year. Affiliate growth was led by the TV segment, and advertising revenues decreased due to a heavier political ad cycle in the previous year.

The company is seeing inconsistency in the broader advertising market, but their focus on live sports and news has resulted in healthy pricing and demand. FOX Sports' broadcast of the Women's World Cup was the most watched game ever on US English language television. The upcoming football season and holiday season are expected to further improve engagement. Tubi, the company's streaming service, saw 30% revenue growth and surpassed 70 million monthly active users. Its extensive content library of over 60,000 titles and 300 fast channels contributes to its high engagement levels.

During the quarter, Tubi introduced Rabbit AI, a recommendation engine powered by Chat GPT four, to help users navigate their wide range of titles. The platform also offers a unique and appealing proposition for advertisers, with a recent study showing fast growth among young and diverse populations. Fox News continues to dominate in news coverage and reach, with their expanded primetime lineup solidifying their leadership position in both cable news and overall cable viewership. The network maintained its lead over competitors CNN and MSNBC in both total viewers and the key demo. October viewership increased by over 20% from the first quarter, with a 30% growth in the key demo. Fox News had the top six cable news programs in P2+ and the top seven programs in the demo. Fox Business News also beat CNBC for the sixth consecutive quarter as the most watched business cable network.

The election cycle began with a successful Republican primary debate on Fox News, leading to increased political spending. Fox Entertainment was the top network in the 18-49 demographic and had top-rated premieres. Fiscal 2024 looks promising with upcoming fall sports and continued growth at Tubi and Fox News. The company's balance sheet remains strong and the CEO congratulated his father on a 70-year career at News Corp and Fox. First quarter revenues were slightly above the previous year, driven by a 2% increase in affiliate fees.

The company faced a tough comparison to last year's record political revenues and saw a decline in advertising revenues, but other revenues increased. Quarterly adjusted EBITDA decreased due to higher expenses, resulting in a decrease in net income. The television segment saw a 4% increase in total revenues, driven by growth in affiliate fees and advertising revenues. However, the absence of last year's political revenues and lower ratings for the FOX network offset some of the growth.

In the quarter, television revenues increased by 6% due to entertainment production initiatives, but were offset by a 10% increase in expenses. Cable segment revenues decreased by 3%, with affiliate revenues down 2% and advertising revenues down 8%. Cable other revenues increased due to the timing of sports sublicensing revenues. Expenses at the cable segment increased by 13%, resulting in a decrease in adjusted EBITDA. Free cash flow was negative $70 million in the quarter.

The company has decided not to renew their contract with WWE, and this decision is based on the seasonality of their working capital cycle. They have also repurchased a significant amount of shares and have a strong balance sheet. The company will now take questions from investors. One question asked about the evaluation of the ROI of the WWE deal and the potential impact of the Disney Charter renewal on future sports rights negotiations. The CEO responds by saying there are multiple factors to consider and he will address them one by one.

The company has a disciplined approach to analyzing renewals and new rights opportunities, and they recently decided to part ways with WWE due to not meeting their ROI parameters. They are currently in negotiations for a NASCAR renewal, which has been a successful partnership. The recent Disney-Charter deal is seen as a net positive for the company and their valuable core brands. The caller's question is about unlocking value, specifically in regards to sports and Tubi.

The popularity of sports, particularly college football, has never been higher and the value of college football rights is also increasing. The speaker asks about ways to capitalize on this and the potential of Tubi, an asset that is currently undervalued within Fox. The response is that the value will continue to be built through the Fox Sports brand and distribution, as well as through monetizing college football and Tubi. Advertisers are recognizing the value of college football and are pouring in with high rates and volume.

Lachlan Murdoch discusses the future of live sports on Tubi, stating that it will not be a significant focus in the near or long-term. He emphasizes Tubi's focus on entertainment and the value of engagement with users. Murdoch also praises the new CEO of Tubi and their strategy for driving its success. In response to a question about advertising, Murdoch discusses the outlook for political advertising and the current state of sports advertising. He also touches on the potential long-term vision for Tubi as a vehicle for transitioning to streaming.

The speaker discusses the state of the advertising market, noting that it appears mixed and unsettled. However, due to their focus on sports and news, they are not experiencing the same extent of this. In the sports category, there is high demand for their NFL and college football schedule, with various categories such as pharmaceuticals, auto, and quick service restaurants being active. Their pricing is also above their upfronts, indicating a healthy market. The recent conclusion of the World Series may have an impact on this, but they have seen success with over 80 new national advertisers in primetime. However, direct response advertising is facing some challenges due to oversupply from the previous upfront.

The company is pleased with the increased viewership and revenue in sports and news due to the current news cycle, but there have been more preemptions due to in-depth reporting. Tubi, a streaming platform, has also seen growth in viewership but is facing softness in the entertainment advertising market. The local stations are performing well, except for a decrease in revenue from betting and entertainment due to the Hollywood strike and lack of movie launches. The company is focused on better monetizing its audience and taking a greater share of wallet from advertising partners.

The speaker discusses the long-term strategy for Tubi, the leading AVOD player. They mention the transition from the founder to new leadership and the potential for expansion into news and sports. They also mention the affiliate renewal process and the unique position of Fox without long-tail networks or a major SVOD platform. They question the implications for Fox in light of the recent Charter Disney renewal.

Lachlan Murdoch discusses the success of their affiliate renewal strategy and the importance of maintaining partnerships with distributors. They have successfully renewed contracts and have seen positive results due to their focus on core brands and being good partners. They have not seen any changes in their ability to work constructively with partners, and it is too early to comment on the negotiations with Charter and Disney.

Lachlan and Steve discuss the recent renewal of distribution agreements and their impact on the company. They are pleased with the results and believe it will have a positive effect on their core brands. They have achieved their pricing objectives and have a constructive relationship with their distributors. They also mention the potential for progress in the cable segment in the new year. Phil asks about the future of linear video advertising and Lachlan responds, mentioning the potential impact of Tubi and the possibility of a secular decline in linear video advertising.

The speaker explains that there is no slowdown in demand for advertising in the Sports and News categories. There was an oversupply of direct response advertising in the past, but this is expected to improve in the coming quarters. The speaker is confident in the future of linear advertising due to the reach and brand safety it offers. The conference call has ended and participants are invited to contact the speakers for further questions.

This summary was generated with AI and may contain some inaccuracies.