FOX FY2027 Q1 EARNINGS CALL - FOX CORP

Explicit Guidance:

• No specific numerical forward-looking guidance (e.g., revenue, EPS, margin, or capex ranges) for full-year Fiscal 2027 or subsequent periods was provided by management.
• Share Repurchases: Management anticipates resuming share repurchases in the current quarter (Q2 Fiscal 2027) and expects full-year share repurchases to remain "in line with historical range," though the program was temporarily inactive in Q1.
• EBITDA Margins: Expects Tubi to mature into a "20% sort of range" margin business once it reaches further maturity.

Business-Segment Outlook:

• Fox One: Anticipates subscriber growth to remain "somewhat seasonal" driven by sports cycles; acknowledges the service may not consistently offset traditional ecosystem subscriber losses as sports seasons come and go.
• Cable Advertising: Expects continued growth in sports advertising revenue; acknowledges a shift where local station capacity constraints during election cycles "pushes some of the base market aside" for non-political advertisers.
• Broadcast & Digital News: Sees "tremendous upside" in CPMs, aiming to bridge the gap between Fox News and broadcast CPM ranges; expects Fox News Digital to maintain its position as the #1 digital news site in America despite a competitive web traffic environment.
• Tubi: Projects continued revenue growth momentum into the current quarter, driven by political campaign ad investments targeting its "large, mostly cordless audience" for the midterm cycle; notes political advertising across the full portfolio has already surpassed $350 million for the midterm cycle.
• Sports Rights: Plans to evaluate rights for the 2030 and 2034 FIFA World Cups in a "disciplined manner."

Market and Competitive Outlook:

• Political Advertising: Anticipates a "dramatically positive" political revenue cycle continuing, with political revenue expected to remain elevated through the midterm elections.
• CTV/Streaming: Believes the CTV ad market is healthy; Tubi continues to grow strength as a destination for reaching young, diverse, cordless audiences that are difficult for advertisers to reach elsewhere.
• Sports Engagement: Confident in the strength of the sports market following robust per-game revenue from the World Cup and NFL seasons; expects continued high engagement for the NFL Thanksgiving weekend and Week 15 triple-header.
• Subscriber Trends: Observes industry-wide improvement with third-party distributor subscriber decline rates running at "below 6%," alongside a positive net contribution from Fox One.

Macro / Industry Outlook:

• Election Cycle: Views the current political environment as a historic midterm cycle benefiting from high engagement; anticipates viewership will eventually face "viewer fatigue" analogous to the 2006 midterms (compared to record highs in the previous cycle), leading to slight overall TV viewership declines as viewers become fatigued by the news cycle rather than switching competitors.
• Fox News Ratings: Projects viewership to remain resilient with "slightly less television overall" consumption during the fatigue period, maintaining #1 status in cable news with share higher than peers.

Strategic Initiatives:

• Roku Acquisition: Management remains "confident" in the strategy to combine Roku's platform with Fox's content; expects to close the transaction "as soon as we can" after obtaining DOJ HSR clearance and final foreign regulatory approvals.
• Bundling: Fox One will expand bundling strategies with distributors and platforms, though management notes bundling has only had a "modest impact" to date and further development is in its infancy.

Risks and Headwinds to Outlook:

• Fox One Volatility: Subscriber acquisition for Fox One is expected to be seasonal; the service may not fully supplant traditional subscriber losses during off-seasons.
• Content Costs: Higher programming rights and production costs (specifically sports and news) are expected to continue impacting expenses.
• Cyclicality: Heavy reliance on the political advertising cycle (which peaked at $350M) poses a risk if the cycle concludes sooner than anticipated or if advertiser availability at local stations limits non-political growth.
• Regulatory: The closing of the Roku transaction is contingent on final DOJ and foreign regulatory approvals; timing is uncertain pending these clearances.

Management Tone on the Future:

• Confidence: High confidence in the "outstanding start" to Fiscal 2027, citing record EBITDA and revenue; expressed strong conviction in the differentiated strategy and the Roku combination.
• Caveats: Introduced a "modest note of caution" regarding the seasonality of Fox One and the potential for viewer fatigue in the news sector, while maintaining a positive outlook on the health of the broader sports and CTV ad markets.
• Strategic Discipline: Emphasized a "deliberate and disciplined manner" for capital allocation, rights bidding, and M&A execution.

Miscellaneous:

• Roku Transaction Discussions: Management explicitly declined to discuss the Roku transaction details (e.g., timing, financial impact) during the Q&A, referring investors to SEC filings.
• Free Cash Flow: Noted that Q1 free cash flow strength was temporarily impacted by working capital timing (World Cup rights paid in FY26, receivables collected in FY27); expects cash flow dynamics to normalize as payments align.
• Buyback Timing: Clarified that the resumption of share repurchases is a separate decision from the timing of the Roku closing.