The operator introduces the Fox Corporation's second quarter fiscal year 2024 earnings conference call. Chief Investor Relations Officer, Ms. Gabrielle Brown, welcomes the participants and introduces the speakers - Executive Chair and CEO Lachlan Murdoch, COO John Nallen, and CFO Steve Tomsic. They will give prepared remarks on the recent quarter and answer questions. The call may include forward-looking statements and non-GAAP financial measures, and reconciliations are available on the company's website. Lachlan Murdoch thanks everyone for joining and highlights the strength of Fox in the midst of an active news cycle and fall sports schedule.

The company saw significant growth in affiliate fee revenues in the quarter, with the Television segment growing by 10% and the Cable segment returning to growth. Advertising revenues were down due to comparisons to last year's major events, but the company's focus on News and Sports, as well as the success of Tubi, helped offset this. Sports advertising, particularly for the NFL and College Football, was strong. At News, there were some challenges but the company saw positive trends in ratings and pricing. The CEO also expressed sympathy for the victims of a recent attack and praised the work of the company's staff in reporting on important events.

In 2023, Fox dominated in live sports viewing, with 96 of the year's top 100 most watched telecasts being live sports events. The network's NFL coverage had record-breaking viewership numbers, and Tubi, Fox's streaming service, also saw significant growth. Fox Entertainment had successful programming with top-rated shows like Krapopolis, Snake Oil, and Hell's Kitchen, as well as new hits like We Are Family and The Floor.

Fox has announced a new sports platform in partnership with Disney and Warner Bros. Discovery, which will launch in 2024 and offer a variety of sports content. The company remains committed to its traditional pay TV market, but sees this new platform as an opportunity to access a new market. The company's affiliate fee revenues grew by 4%, driven by successful affiliate renewals. Advertising revenues were impacted by the absence of the FIFA Men's World Cup and mid-term political revenues, as well as lower advertising revenue at FOX News Media.

In summary, the decline in advertising revenues, absence of major events, and decrease in original programming led to an 8% decrease in total company revenues for Fox. However, expenses decreased by 5% and there was growth in other revenues, resulting in a quarterly adjusted EBITDA of $350 million. Net income and adjusted EPS were also impacted, with a 12% effective tax rate and $0.34 adjusted EPS. In the Cable segment, there was a 2% growth in total revenues, driven by affiliate fee and other revenue increases, but offset by a 23% decline in advertising revenues.

The Cable segment of FOX News Media saw a 60% increase in adjusted EBITDA due to lower expenses, while the Television segment reported a 13% decrease in revenues. The decrease in TV revenues was mainly due to lower advertising revenues and the absence of major events from the previous year. The SAG and WGA disputes also affected revenues from entertainment production companies. Overall, the TV segment reported an adjusted EBITDA loss of $138 million compared to a contribution of $256 million in the previous year.

The company reported a deficit in free cash flow due to normal seasonality, but has repurchased a significant amount of shares and announced a dividend. They have a strong balance sheet and recently launched a sports joint venture product in the United States, which has a large potential market. There may be some risk to Fox News, but the opportunity outweighs it.

The sports focused platform is targeted towards households that are not within the traditional bundled cable ecosystem, which is roughly 60 million households in America. The product is said to be innovative and unique, and the risks for Fox News are low because the focus is on cord nevers. The top rating cable network, Fox News, is highly valued by distributors and partners. The decision to move forward with the deal was likely influenced by the benefits of a sports led skinny bundle and any flexibility built into recent affiliate fee renewals.

Lachlan Murdoch discusses the impact of the Netflix, WWE deal on future sports rights negotiations and the launch of a new streaming service. He also mentions that Fox will continue to aggressively compete for sports rights and that the streaming service will access a new market. The next question is about the cash contribution required from Fox for sports TV and the impact of various factors on advertising numbers this quarter.

Lachlan Murdoch and Steve Tomsic discuss the positive outlook for the next quarter, including the impact of political advertising and improving ratings on the TV side. They also mention the potential for the JV to be accretive to Fox's net-net perspective and the nuanced advertising outlook, with a strong regular NFL season but smaller revenue line.

The author discusses the success of the recent College Football season and the positive impact it had on advertisers. They also mention upcoming events such as the DAYTONA 500 and the start of the Major League Baseball season, which are expected to bring in more revenue. Fox News has seen positive trends in VR pricing and improving ratings, while local stations have a mixed performance due to tough comparisons from last year's Super Bowl revenue. However, the author remains confident in a record political cycle and the growth of Tubi.

Lachlan Murdoch, CEO of a streaming company, is pleased with the growth of the company in the streaming environment and the positive impact on advertising and cable affiliate fees. He also expresses confidence that the company's sports platform will not negatively affect the traditional Pay TV bundle and that they have done extensive analysis to ensure this. They remain strong supporters of the traditional Pay TV bundle.

In the paragraph, the speaker discusses the value of the Pay TV bundle and how it will not significantly affect the traditional bundle. They also mention that they are not considering adding partners to the bundle at this time. In terms of advertising revenues, they believe it will be a net positive. The speaker also addresses two areas of strength in the quarter: sports sublicensing and affiliate acceleration. They provide some details on the impact of the sublicensing on profitability and mention that it may be a recurring revenue and profit source. They also discuss the positive growth in affiliate revenue.

Lachlan Murdoch and Steve Tomsic address questions about the impact of cord cutting on revenue and the sustainability of recent pricing growth. Tomsic explains the one-time nature of sports sublicensing income and Murdoch discusses the completion of distribution renewals for the fiscal year. They also mention a slight improvement in affiliate revenue decline in September and October.

The speaker discusses the impact of football and sports viewing on the decline in rates in October, but notes that the decline returned to its baseline in November and December. They expect the 8% decline to continue in the future, but believe they can make up for it through rate increases due to the strength of their brands and programming. The speaker also mentions their success in renewing distribution contracts and their focused strategy on core brands. The call ends and participants are encouraged to contact the speakers for further questions.

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