The paragraph is an introduction to the Fox Corporation Third Quarter Fiscal Year 2025 Earnings Conference Call. The operator introduces the call, noting it is in a listen-only mode with a question-and-answer session to follow. Gabrielle Brown, the Chief Investor Relations Officer, welcomes participants and states that Lachlan Murdoch, John Nallen, and Steve Tomsic are present to discuss Fox's recent financial results. The call may include forward-looking statements and non-GAAP financial measures, with reconciliations provided online. Lachlan Murdoch thanks participants and notes the significance of Fox's role in informing and entertaining the public.

In the third quarter, Fox demonstrated the strength of its platform, achieving significant financial milestones. The company saw a 65% increase in total advertising revenue, with the Super Bowl generating over $800 million, marking a record for both national and local stations. The Super Bowl LIX broadcast became the most watched telecast in U.S. history with 128 million viewers. Fox also experienced a 3% growth in affiliate revenues and recorded its highest free cash flow ever. Despite concerns about the macro environment, Fox's ratings and engagement remain strong, with advertising scatter pricing exceeding last year's upfront rates. Tubi continues its growth, and the company is poised for a successful fiscal year and upcoming upfront presentation, leveraging its focus on live sports, news programming, AVOD, and entertainment to provide significant value to advertisers.

Fox's leadership is prominently demonstrated at Fox News, which finished the quarter as the most-watched cable network and the second most-watched network in Monday through Friday prime, surpassing all but one broadcast network. The engaged audience and dynamic news cycle have led to record audience shares, with significant growth in total viewership and the demographic, along with over 1,000 top cable news telecasts since the election. This momentum extended into the current quarter with substantial increases in total and primetime ratings. Fox News Digital also saw significant growth, with record page views and YouTube engagement. Similarly, Fox Sports leads in live sports viewership, especially after a successful NFL postseason. Despite a typically quieter sports calendar, Fox maintains strong audience and advertiser interest for its events like NASCAR, IndyCar, and baseball. Additionally, Tubi reported a 35% year-on-year revenue increase.

The paragraph highlights significant growth and success for Tubi and Fox Entertainment. Tubi saw a boost in viewership from the Super Bowl, with a significant number of young, diverse viewers and an increase in total view time, solidifying its position in the streaming industry. Fox leveraged this success to achieve top ratings in primetime, particularly among adults aged 18 to 49, thanks to successful shows and events like the Super Bowl. Overall, Fox's strategic approach resulted in a 34% annual growth in consumption across its portfolio. The paragraph emphasizes Fox's strong position in live events and news.

The paragraph discusses Fox News' strategic initiatives and achievements. It highlights substantial investments in both national and local news reporting and a diverse sports schedule to boost viewer engagement. The text introduces "Fox One," a direct-to-consumer platform aimed at cord-cutters, set to launch before the fall football season. Fox's strong performance is emphasized, with significant revenue increases, notably a 27% rise in total revenues and a 65% increase in advertising revenues, driven by a record-breaking Super Bowl, growth at Tubi, and strong viewer engagement and pricing at News. The company's focus remains on executing strategies to deliver long-term shareholder value.

In the latest quarter, the company's affiliate fee revenues increased by 3%, while other revenues grew by 20%, mainly due to higher sports sub-licensing revenues in the Cable segment. Despite revenue increases, higher expenses, such as sports rights amortization and Super Bowl production costs, resulted in a slight decrease in adjusted EBITDA to $856 million from $891 million compared to the previous year. Net income for shareholders was $346 million or $0.75 per share, down from $666 million or $1.40 per share a year earlier. Adjusted net income was $507 million with adjusted EPS of $1.10, a slight increase from the prior year. The Cable Network Programming segment saw 11% revenue growth and 7% EBITDA growth, with cable advertising revenues rising 26% due to strong Fox News ratings and digital engagement. Growth in the Cable segment was partially offset by a 16% increase in expenses related to sports rights and production costs.

The Television segment experienced significant growth, with a 40% increase in revenue and a 77% rise in advertising revenues, largely driven by the success of Super Bowl LIX, which generated over $800 million. Even excluding the Super Bowl, the segment saw growth, particularly with Tubi. Affiliate fee revenues grew by 4%, and other segment revenues rose by 3% due to higher content revenues. However, expenses increased by 47%, mainly due to Super Bowl broadcasting and Tubi investments, leading to a decrease in EBITDA to $60 million from $145 million in the previous year. The company generated a record free cash flow of $1.9 billion, consistent with their working capital cycle. They repurchased $800 million in shares, totaling $6.4 billion since 2019, with plans to utilize the full $7 billion authorization. The quarter ended with $4.8 billion in cash and $7.2 billion in debt.

The paragraph is a part of a Q&A session where Michael Morris from Guggenheim asks about details regarding Fox One, including pricing, its addressable market, and potential partnerships. Lachlan Murdoch responds, explaining that while specific details will be rolled out closer to the fall and the start of the football season, Fox One's pricing will align with wholesale levels and is not discounted. The service targets the cordless market and aims not to attract existing cable subscribers to avoid losing traditional cable customers to Fox One.

The paragraph discusses strategies and projections for Fox's business in the upcoming fiscal years. Lachlan Murdoch and Steve Tomsic outline plans for expanding Fox One's distribution through partnerships with other distributors and services to reach a wider cordless audience. Tomsic highlights the financial expectations of fiscal year 2026 compared to 2025, noting factors like the absence of political advertising revenue and the financial impact of the Super Bowl. They anticipate positive contributions from events like FIFA and continued revenue growth in advertising at Fox News and Tubi, as well as affiliate revenue. They also mention potential adjustments in investment between Tubi and direct-to-consumer (D2C) initiatives in the upcoming year. Finally, John Hodulik from UBS asks about the demand shift from direct response (Dr.) to brand advertising on Fox News, seeking details on pricing differences between the two.

In the paragraph, Lachlan Murdoch talks about the success Fox News has had in attracting over 200 new advertisers since the election, highlighting that these advertisers are continuing to invest in the network due to its strong audience and programming. He notes significant increases in both direct response advertising and scatter pricing, which reflects the network's strong momentum and revenue growth. Following Lachlan's comments, Jessica Reif Ehrlich from Bank of America asks about the profitability and strategies for Tubi, a streaming service, and the company's strong balance sheet. Lachlan acknowledges her questions, hinting at a discussion about business strategies and financial decisions.

The paragraph discusses the success and growth potential of Tubi, a free media service. The speaker emphasizes Tubi's strong track record, increased viewer engagement, and significant revenue growth of 35% in the quarter. Tubi has become a popular mainstream service in the U.S., serving a significant percentage of the hard-to-reach cordless audience. However, the speaker notes that the business's value is not adequately reflected in the stock evaluation. The speaker is optimistic about Tubi's future prospects and hands over to Steve Tomsic, who acknowledges the company's solid financial position with $4.8 billion in cash.

The paragraph discusses the company's strategy for capital allocation and investment, noting that Q4 is typically strong for free cash flow. The company balances capital use between stock buybacks and investments, such as in Tubi, which has been successful. They plan to continue investing organically and potentially in the Fox One venture. Non-organic investments face high scrutiny to ensure they benefit shareholders. Following this overview, Benjamin Swinburne from Morgan Stanley inquires about the company's strategy concerning direct-to-consumer services and affiliate revenue growth. He notes the company's success despite industry challenges like cord-cutting and questions how the company plans to balance launching direct-to-consumer services without compromising cable network relationships.

In the paragraph, Lachlan Murdoch addresses concerns about FCC discussions on capping reverse retransmission feeds and highlights their company's strategy towards direct-to-consumer (D2C) services. He emphasizes the company's continued support for traditional cable bundles and distribution, noting its historical success. However, he acknowledges the increasing importance of D2C services, particularly for reaching "cord nevers," a significant portion of Tubi's audience. This demographic makes Tubi attractive to advertisers. The company plans to leverage its expertise gained from Tubi to shape its D2C strategy, focusing on audiences not engaged with traditional cable, rather than those opting out of it.

The paragraph discusses Fox's optimistic outlook on the emergence of "skinny bundles," highlighting that their inclusion of Fox's Broadcast, News, and Sports is seen as positive. Although it's early to gauge their full impact, Fox notes a declining trend in subscriber erosion, which they consider healthy. They also discuss the importance of their unique affiliate agreements and minimal network broadcast hours, allowing affiliates to invest more in local programming. The conversation ends with a question from Steven Cahall about the timing of Fox One's launch, indicating it may be earlier than planned, and asks about potential bundling opportunities with Fox One.

In the paragraph, Lachlan Murdoch discusses Fox One's initiative to offer integrated subscription and viewing experiences, especially targeting cord cutters and cord nevers. He mentions the aggressive timeline to launch Fox One, aiming for it to be available by the football season. Murdoch affirms their confidence in meeting this target, supported by existing technology from prior projects. Although specific bundling announcements are not made, he indicates intentions to partner with other streaming services for enhanced offerings. Additionally, he touches upon the consideration of FanDuel licensing options and related capital allocation priorities.

The paragraph discusses Fox's strategy for its new service, Fox One, which will be available to traditional subscribers without competing with distributors. Steve Tomsic mentions the company's right to acquire 18.6% of FanDuel by 2030, which holds significant value. They are in talks with 26 states for licensing and emphasize licensing as a priority over capital deployment. Gabrielle Brown opens the floor to a question from Michael Ng of Goldman Sachs, who inquires about Fox's digital investments, mentioning Tubi and Fox One's launch, and asks about reports of Disney leaving the Fox Lot in Century City.

In the paragraph, Lachlan Murdoch discusses the continued investment in Tubi, highlighting its strong financial trajectory with over a billion dollars in revenue for the past year. He emphasizes that they will continue investing in Tubi until it reaches profitability, which is expected sooner rather than later. Additionally, digital investments will remain consistent, and there is confidence in filling the office space vacated by Disney in the Fox Lot, due to its prime location. Steve Tomsic adds that digital investments are expected to decrease in fiscal '25, and there has been a recent surge in Tubi investment spending.

The paragraph discusses Fox Corporation's marketing and user acquisition strategies, specifically their use of the Super Bowl for promotion. It mentions expectations for a decrease in digital growth investment in the final quarter compared to the full year. The speaker anticipates improvements for Tubi and mentions future considerations regarding the Fox Lot investment. The paragraph concludes with Gabrielle Brown and Lachlan Murdoch wrapping up the Fox Corporation's third-quarter fiscal year 2025 earnings conference call.

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