Q4 2020 Fox Corp Earnings Call
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Gentlemen, thank you for standing by welcome to the Fox Corporation fourth quarter 2020 earnings Conference call. At this time all participants are in listen only mode. Later, we will conduct a question and answer session I would like to emphasize the functionality. It for the question and answer Q has recently changed instructions will be given at that time, if you should require assistance during the call. Please.
To start then zero and as a reminder, this conference is being recorded I'll now turn the conference over to Chief Investor Relations Officer, and Executive Vice President of corporate initiatives Mr., Joe Durango. Please go ahead Sir.
Thank you know Hello, and welcome to our fiscal 2020 yearend earnings call.
Joining me on the call today are Lockwood Murdoch executive Chairman and Chief Executive Officer, John Allen, Chief Operating Officer, and Steve Tomsic, Our Chief Financial Officer.
First laclede and Steve will give some prepared remarks on the fiscal year. Most recent quarter and then we'll take a couple of questions from the investment community.
Please note that this call may include forward looking statements regarding Foxs financial performance in operating results.
These statements on.
Based on management's current expectations and actual results could differ from understated as result of certain factors identified on today's call and in the Companys SEC filings.
Additionally, this call will include certain non-GAAP financial measures, including adjusted EBITDA or EBITDA as we referred to it on this call.
Reconciliations of non-GAAP financial measures are included in our earnings release, and our SEC filings, which are both available in the Investor Relations section of the web site.
And with that I'm pleased to turn the call over to Laughlin.
Thanks, Joe.
Good afternoon, and thank everyone for joining us today to discuss our fourth quarter result, Andrew reflect on our first full fiscal year as new cost.
I know a lot of view on the phone have had a long day and have just come from another earnings call. So we will try to keep this as tight and as brief as possible.
I'd now any investment Cedar 2020, a great calendar year, it's been extraordinarily difficult on our businesses on our health and on our families.
I'm sure to year, we would all I could be through and downward.
And we will be soon.
But looking back on Fox is Twentytwenty fiscal year is another story.
Our fiscal year has been extraordinary.
Not because of covert 19, but in spite of it.
Our 2020 fiscal year as shown on the strength of Paul.
The logic of our strategy and the resilience of our business model and of our teams.
To that last point I would like to acknowledge the outstanding work and dedication of my thoughts colleagues across the country.
They too are extraordinary.
Without then they would be no sport no news and no entertainment on our platforms and stations.
What together, we achieved last year was remarkable.
I'd like to first gift box fourth a shout out for an incredible year, which saw the brilliant broadcast of both the historic seven game World series, and an exciting Super Bowl 54 walks by over 100 million people.
Of course, not long after the Super Bowl and Miami Sport were shut down but the team at Fox Sports never stop working to bring NASCAR baseball and eventually football back into Americas living rooms.
On our last earnings call I said like the rest of America, we can't wait for the first gets thrown the first of all hike and the sound of engine starting again.
Thankfully the weight was not long.
Our Fox sports production team loss, no time preparing to reduce Americas biggest event in ways. We didnt think possible just a few months before.
The sports team has invented new technologies to not only produce but enhance the games being played today.
NASCAR was the first major American sport the return from its pandemic hiatus, and Americas pent up demand for sport was palpable.
Working closely with NASCAR Foxsports design in production that involve minimum cruise minimum travel and maximum health protocols to ensure a safe and enduring race season.
We brought NASCAR bat using only one third of the people we would normally have trackside.
Our director and camera operators and audio we're onsite, while graphics replays producers and talent were spread out between Charlotte and Los Angeles.
With very few or no fans of the track it allowed us to break new ground with miniature drones flying overhead to get never before seen aerial footage.
As a season progress even our in our audio production and feature editing were produced live in technicians homes.
We then turned our attention to baseball win on July 23rd the Fox Baseball season open with a tripleheader highlighted by 2.8 million viewers for the Yankees Nationals game.
The opening was up almost 20% over Foxs Primetime Major League baseball average last year and was sold out due to heavy advertising demand.
We produced for baseball games on our first weekend and none of the seven talent. We're in the same place as we connected 10 different facilities in real time with our producers and directors in Los Angeles.
In addition to our enhanced crowd audio we have now introduce computer generated virtual fans to the stated.
This innovation was created by mixing our first Downline technology and real time theatrical visual effects.
And now we can't wait till a stark a football.
We love sport for the Adrenalin provides us for the passion it inspires in us and for the narrative and drama of watching the classic underdog wind from behind.
Team USA feeding the Soviet ice hockey team have been 1980 Winter Olympics.
Or Buster Douglas knocking out Hisun.
Or the Fox Entertainment network, finishing the broadcast season in first place from for the year prior.
The network staged a dramatic come back this past year and leapfrog our competitors to regain the number one broadcast network title for the first time in eight years.
Fox with the only network to deliver a year over year ratings gains among adults 18 to 49 and total viewers.
We outperformed the number two network by 31% in the demo driven by the mass singer Lego Masters and 911 Lonestar the season number one new scripted show.
And the network will also have a robust and stable entertainment lineup in the fall. We will give you two new series that were shot and ready to air before the pandemic.
The psychological thriller next and the southern soap opera Filthy rich.
We remain hopeful that amassing or fourth season will also be on air for the fall.
Of course animation has always been a stretch our strength of Fox and earlier in the fiscal year Fox Entertainment brought the Bento box animation studio ended a Fox family.
Bento box with a natural addition to enhance the capabilities of Fox Entertainment and has already proven to be an impactful investment.
It's important to note that animation production has not been significantly impacted by the Corona virus pandemic.
Not only did we renewed better boxes Emmy winning show Bob's burgers for an 11th season on Fox.
Ben to boxes also reducing 11, new animated shows.
Including for third party customers, such as Netflix and ATRIO maps.
These new shows follow the May launch of Central Park, better boxes, Apple TV plus comedy series.
More recently in April we completed our acquisition of the advertising video on demand platform to be.
To be has seen phenomenal growth since a joint Hawks.
In June it surpassed 200 million hours streamed per month, representing more than 100% growth year over year.
During the fourth quarter several Fox hit shows were added to Dubai.
With the mass senior quickly, becoming too is number one stream Sears.
To be John and diverse audience gives it a unique appeal with advertisers seeking to connect with consumers that are traditionally more challenging to reach.
To be compliments box portfolio and underscores our long term strategic initiative to broaden and enhance direct to consumer digital reach and engagement, while providing advertising partners with more opportunities to engage audiences at scale.
During this year's upfront season, we have begun selling to be advertising alongside broadcast significantly expanding our plans to reach.
According to one research company, 87% of the to the audience cannot be reached by cable television.
They are young and diverse with a median age of only 34.
It's a great business and a great fit with Fox.
Another business that's had an extraordinary year is Fox news, which ended fiscal year 2020, with a record breaking viewership.
In June 2020, Fox News was the leading primetime network in all of television among total viewers, making it the first cable network to ever lead all broadcast networks in ratings for an entire month.
For the fiscal year, we were again the number one channel in all of cable for total viewers across crime and total day.
Now I could say that's another extraordinary achievement.
But the entomologists in me won't allow.
That's because Fox news has been the number one channel in all cable for four years running and the number one channel in cable news for 18 years.
We have a long track record of succeeding through multiple economic and political cycles and drawing administrations of both political parties.
We are pacing calendar 2020 to have our highest rated primetime year in network history with total viewers up 39% over 29 team.
Our content programs on average keenly notching around 4 million viewers a night.
So not a head to head comparison, the Fox News channel is eclipsing broadcast news stalwarts like today. Good morning America CBS This morning, and meet the press and viewership.
And viewers are coming to us not just for news and opinion, but increasingly for documentary and lifestyle programming on platform, such as Fox Nation, and Fox News Dot com.
In fact, Fox nation more than doubled its a subscriber base this fiscal year sustaining a trial to pay conversion rate of over 80% and the monthly churn rate of under 10%.
Momentum built as the year progressed with content start up over 120% and hours washed up over 170% in the second half that fiscal year compared to the first half.
Within Fox News, we have also organically cultivated one of the most impactful digital platforms in the country.
Fox News media target its highest digital traffic in fiscal year 2020 with record total digital page views and a record time spent.
Users viewed over 40 billion pages and spent 98 billion minutes on our Fox News digital platforms. We expect this trend to accelerate as we head into election season in November.
The fall will be busy parties organizations at Fox News added our stations later this month Fox news will bring viewers coverage of the Democratic and Republican National conventions.
In whatever form 8-K.
And as we closed on November we expect to continue to achieve a record amount of political revenue across both our national channels and local stations.
It's important to note that according to a study by Nielsen MRI Fusen Fox news has more than doubled the number of independent viewers than CNN.
119% more to be that and we have 62% more independent viewers and MSNBC.
This point clearly through our highly trusted balanced news report and is a key differentiator between us and our competitors for political advertising.
In the political cycle today inclusive of the impact of Cobot 19, our political advertising revenue is pacing more than 50% ahead of the equivalent period four years ago.
We are encouraged by recent trends in our local markets and expect healthy political demand up and down the ballot in the coming quarters.
Nine of our agent stations are presidential Battleground States. These led by Arizona, Florida, Pennsylvania, and Wisconsin, but also include Georgia, Michigan and Minnesota.
We have Senate races, and 10 markets and lower house races. In all a number which are expected to be close and hotly contested.
Record political revenue has already offset some of the impact from cobot 19 in local markets.
While our top seven markets were businesses have not yet fully reopened we are now patient overall down 29% at the start of Q1.
Our next 11 markets are together pacing down just 4%.
Thats a tremendous recovery from what we were seeing just a couple of months ago.
And three of our markets are now pacing well ahead of last year.
These are Atlanta, Tampa and Phoenix.
Not coincidentally these are all strong political markets.
The fourth quarter. So our saw affiliate revenues grow by 8% were healthy rate increases were offset by decline in subscriber volumes of around 6.5% for the full fiscal year. Our total company affiliate revenues increased 7% and important illustration of our brands prominence and.
Strength with audiences and distribution partners alike.
This past year, we've completed significant distribution agreements, including an early renewal with Comcast as well as new deals with Verizon Cox charter and you to TV among others each with rate increases that underscore the importance of our channels.
As we articulated more than a year ago during our Investor day, and as we've demonstrated with our disciplined and intentional acquisitions. Today, we are taking a deliberate and selective approach to M&A and strong businesses fit within our vision are well executed and properly integrated with the rest of the company.
We continually assess opportunities to deepen our strengths back spanning lines of business and the types of operations at which we excel.
Our goal remains to expand the ways, our audiences and draft with and connect to our brands while simultaneously diversifying each brand sources of revenue.
But before turning things over to Steve Let me reinforce one key point as we marked the end of our first fiscal year.
The assets and businesses a Fox, we're deliberately composed for efficient growth and success in the current media environment.
The stability and trajectory of the company our underscored by the revenue structure, an unrivaled viewer engagement.
Foxs demonstrated consistent clarity of vision by assembling the portfolio, we have and by evolving to embrace opportunities in order to meet the challenges of our comp.
We entered the cobot 19 crisis on from putting financially strategically and operationally.
Our innovative thinking in combination with the Tailwinds of the upcoming fall sports and entertainment season, and ongoing need for live news analysis and opinion will see Fox emerge from this pandemic pocs year more competitive more focused and even more strongly positioned to deliver for our viewers.
First our partners and our shareholders.
And now Steve will take us through the detail. Thanks.
Thanks Lynn good afternoon.
Despite the broader macroeconomic factors affecting our businesses as Loveland, just highlighted our first fiscal year as a standalone public company demonstrates that we have delivering on the strategies that we outlined at the time of the speed and the truly differentiate folks.
Let me now take you through our financial results for the fiscal year as well as the fourth quarter.
I will also take a few minutes to review the key investments we've made since the spin before concluding with some financial markets for the months ahead.
Our full year results will total revenues increased 8% to $12.3 billion. This revenue growth was broad based and led by affiliate revenue growth of 7% on the back of retransmission revenue increases at the television segment.
We delivered this industry, leading affiliate revenue growth despite an uptick in the rate of net subscriber declines.
Using fiscal 19 as a base, we renewed 70% of total affiliate revenue in fiscal twinning.
Looking forward the renewal profile in the immediate future significantly lighter with around 5% of total fiscal 20 affiliate revenue due for renewal in each of fiscal 21 and 22.
Full year advertising revenues increased 5% led by a broadcast the Super Bowl 50 full.
Actually offsetting this growth was the impact of Cosan 19 in recent months.
As we foreshadowed in May the impact was most pronounced in their local television stations as well as folks will skew to the postponement of live events and it flips into payment as new scripted programs were held back for a full schedule.
We also increased other revenues nearly 30% primarily through the consolidation of anti books of the television segment beginning in August and the consolidation of credible in our other segments beginning in October.
Total full year adjusted EBITDA was $2.8 billion, an increase of 4% over the prior year. This growth was delivered despite the negative comparison to the accounting benefit from certain shared services in the overhead costs being presented on a carve out basis in the first three quarters as the prior year.
So in net income attributable to stockholders was $1 billion or $1.62 a share while adjusted EPS was $2 48. This is to 63 last year again the year on year comparison is impacted by the treatment of certain shared services and overhead costs in the prior year in accordance with SCC guidelines.
Turning to the fourth quarter total company revenues were $2.4 billion down 4% versus last year as cobot 19 related declines in our advertising revenues overwhelmingly influenced by declines in our local television stations and to a lesser extent of folks network more than offset.
Affiliate revenue growth of 8%.
We indicated on a make whole that we expected because of related advertising headwinds across our business in the June quarter, excluding sports to be in the $200 million to $240 million range with the local market being down approximately 50%.
We ended the quarter ahead of these expectations with our advertising revenues down approximately $160 million across these businesses with the local market down closer to 35% and Fox news advertising revenues actually posting a year on year again.
Adjusted EBITDA was $742 million, a 5% increase over the $709 million generated last year led by higher contributions from the cable segment.
This growth was partially offset in hotel is television segment due to the coated 19 related advertising weakness.
From a bottom line perspective, net income attributable to stockholders is $122 million or 20 cents per share was low as in the 73 cents per share in the prior year quarter, most notably due to the higher impairment and restructuring charges, including the negotiated settlement to exit rights agreement with the U.S.G.
Controlling for these and other non core items in both fees adjusted EPS of 62 cents was consistent with the prior year quarter.
Now turning to the operating performance of our segments for the fourth quarter, we cable networks EBITDA of $674 million was up 12% despite revenue being down 2%.
The lower cable segment revenues were most notably due to a $22 million were 8% decline in their advertising revenues, including the impact of the postponement of lives of into that sports networks and the absence of the feeds the win women's World Cup compared to the fourth quarter last year.
Meanwhile, high ratings and pricing helped to grow advertising revenues at Fox News media in the quarter.
Cable affiliate Rick cable affiliate revenues increased 1% supported by higher average rates, partially offset by net decrease in pay TV subscribers.
Other revenues within 31%, primarily due to the impact of Coven 19 on in sports business, partially offset by higher folks nation in radio revenues at Fox News media.
EBITDA cable segment increased 12% over the prior period, most notably reflect the lowest sports programming rights amortization and production costs due to the postponement of live events and the absence of the seasonal women's World Cup compared to the fourth quarter of last year.
At television segment reported EBITDA of $169 million down from the $214 million reported in the prior year quarter as revenue declined 6% were partially offset by expenses decreased nearly 3%.
Television affiliate revenues grew 22% consistent with the overall trajectory we outlined at our Investor day in May of 2019.
Television advertising revenues declined 29% primarily from the impact of the pandemic on the local advertising market at the Fox television stations.
And the postponement of live events at Fox Sports.
Furthermore, in response to covert 19, we deferred the planned spring premiers of certain scripted programs that folks entertainment in 12 full schedule.
These coated led declines more than offset the growth in affiliate revenues along with revenue growth from a new businesses to be and Bento books.
The decreasing expenses, primarily reflects lower programming amortization across book sports and folks entertainment from not airing sports events will first run programming, partially offset by the consolidation of tube and Bento books.
We expect the majority of the amortization related savings to be timing related with costs expected to shift into our fiscal 2001 financials. The more on that in a moment.
In aggregate, we estimated that coated 19 created an EBITDA headwind of approximately $15 million in the quarter across our entire business.
Finally from a piano perspective, the net EBITDA loss in our other segment amounted to $101 million, a slight improvement from the comparable quarter in the prior.
Meanwhile, PNM techs right ended the year, 27%.
A strong overall TNL results generated free cash flow, which we calculate as net cash provided by operating activities less cash invested in property plant and equipment of over $850 million in the quarter and $2 billion for the year.
This equates to over 70% EBITDA free cash flow conversion in the demonstrating the robust free cash flow profile, we outlined at our Investor day.
And from an overall balance sheet perspectives, we ended the quarter with over 4.6 billion those in cash and just under $8 billion in day, which includes the $1.2 billion in five continued senior notes that we rights this past quarter.
In the 16 months seamless since the steam we've invested approximately one in the quarter billion dollars into our businesses through organic investments in core operations, including the recent relaunch of them from sports digital properties.
And through strategic M&A.
This latter group and a minority investments and acquisitions, the with highlighting given their inherent value to folks that is not reflected in simple EBITDA multiple based valuations.
And as 2019. This today, we announced strategic partnership with discuss group at the time, we invested approximately $240 million in the publicly traded TSG and licensed brands. The Flexfit suite of paid a play in free to play games.
As part of the partnership we have an option over 50% of up to 50% of the equity TSG us businesses.
Subsequent to TSG merger, with Florida, and our incremental equity investment of approximately $100 million, we now and roughly 3% of parent company, Florida at current market valuation of more than $600 million.
We retain our up to 50% call option of a TSG with businesses that in addition have also secured the rights to buy an approximately 18.5% equity stake in Fanjul was an exercise period of 10 needs.
Last October we completed the acquisition of the 67% stake incredible labs, and emerging Fintech marketplace, which was a key part of the Fox business brand refresh and is now in the early stages and integrating alongside a national and local news assets.
Since announcement credible since announcement critical trailing 12 month revenue has grown from approximately $40 million that are reported as a standalone public company to approximately $70 million through the June quarter.
With this momentum supporting our confidence to continue to invest cross promotional resources in growing the platform.
In April we closed on the acquisition of tubing, which we now report net television segment.
Notwithstanding the challenges who coded 19, we expect the boom in usage Loveland outlined earlier, along with more effective monetization to make to the a key source of revenue growth for many years to come.
These recently acquired businesses, coupled with the renowned production capabilities and real estate as the FLC studio law, and our Texas. It collectively represented significant pools of below the line value hiding implying side of folks Corporation.
Before we open the call up to Q Eni, let me provide a few markets to help you navigate the financial swings across our businesses in fiscal 2021.
Beginning with a reminder of the events the credit comparability issues between inflight 20 in slide 21.
With fiscal 2020 included the Super Bowl seven game World series, the culmination of the sequel Women's World Cup, along with Foxs Emmy Awards rotation, while fiscal 2021 will include what shapes to be a strong politically the alternating NFC divisional playoff game and a full year consolidating our recent index.
Units, including two the incredible.
Looking specifically at Q1, the combined effects of comparability encoded is expected to reduce advertising revenue by roughly $250 million as compared to Q1 in fiscal 2020.
While we will enjoy the benefits from political advertising a great a greater volume has been as a regular season games and NASCAR races, along with the acquisition of to the these will be more than offset by lower base advertising at our local stations a reduced slate of fresh entertainment programming fewer NFL and college football games in a few on schedule.
And the absence of the World Cup and knees and the MLB All star game.
You will recall that we amortize the costs of our live sports programming when the gains actually air on and it works.
As such the postponement of the sports calendar in the June quarter creates a shift of amortization, primarily across MLB and NASCAR rights into the first quarter fiscal 21.
We anticipate that this will increase up total sports operating expenses in the September quarter for approximately $70 million in the cable segment broadly offsetting other savings.
This whole of course assumes that the covert driven disruptions to major sports are behind us and that we enjoyed full season of NFL a conference early 10 gain college football season, and the MLB season complete.
These assumptions remain valid today, and we have no intention of using these core to run through the least employees.
We're in constant dialogue with esports continents, any circumstances change, we will take appropriate steps to the business.
The same underlying fundamentals hole to folks entertainment, where we amortize the cost. So their programming is the content is on our broadcast network.
What we have now looking at into 2021 broadcast season that includes a number of titles originally intended for spring 2020 scheduled shifted into the full.
Furthermore, we are optimistic that our key returning titles, including the Mohsenian can be made available for mid season returns.
If this outlook holds we could end up seeing a relatively full broadcast season. However, our programming amortization may not follow its normal cadence across quarters.
Rather from an amortized amortizations standpoint at fiscal Q1 in Q2, I will likely to be lighter than the normal units with a heavier concentration of costs being absorbed in Q4 again pending the timing of opportunity to production.
From a cash flow perspective, we are planning for a high level of capital expenditure in fiscal 2001 supporting the final phases of the Buildout of our technical broadcast facility in Arizona and the upgrade to some of that station facilities.
We will also have higher interest payments related to a dead right this past quarter.
Underscoring our financial strength and components from a capital allocation perspective, we have today declared a semi annual 23 cents a share dividend payable on October seven right in line with the pre covered the dividend we declared in February.
While the continued uncertainties make a challenging for us to estimate the future performance of that business. The company entered this crisis in the position of operating and financial strength.
We will continue to manage our business and our balance sheet in a disciplined and conservative manner. So that we emerge is well positioned as possible to take advantage of the opportunities during the recovery at recovery.
And with that I'd like to turn the call back to John.
Thank you Steve.
Now we'd be happy to take a few questions from the investment community.
Ladies and gentlemen, I'd like to again emphasize the functionality and for the question and answer Q has recently changed if you wish to ask your question. Please press one than zero on your Touchtone phone, you'll hear a tone, indicating you have been placed in Q you may remove yourself from Q at any time by once again pressing one than zero, if you're using a speaker.
Now please pick up the handset before pressing the numbers and has been requested that you limit yourself to one question. Once again if you have your question. Please press one zero at this time one moment. Please for the first question.
We have a question from Benjamin Swinburne Byrne with Morgan Stanley. Please go ahead.
Thanks.
I will limit myself to one question I was wondering if you guys could talk little bit more about.
The sports betting you've obviously talked about the stars group investment and we follow that.
But a very successful one.
But this is the appears to be a market thats really booming in the states, even with Covidien and the prospects are quite optimistic. So I'm. Just wondering how you think about taking advantage of that opportunity even more than you already have.
Things, you're doing strategically with your partners or even on the Fox network to sort of really lead into sports betting to make it a bigger part of the business in a part of the story. Thanks guys.
Thanks, Ben So we look when we think we very different from what it sounds like on that and that we we.
A big on.
Fans for the other sports betting opportunity.
Every projection.
There will be.
HM several billion dollar industry in them in the medium to long term.
And everything we've seen today.
Not only reinforces that but I think makes us believe it could be even larger than that.
I think.
We feel today very well positioned both and having the the joint venture in Fox bed, which we as Steve mentioned, we have a via the option to go to 50% ownership out depending on on licensing.
But we also have the 18.5%.
Option to buy into.
The fanduel, so we effectively have.
Two dogs in the rice and when we think efforts as integrate position now moving forward, obviously, we have to see how how.
The.
States open up from a regulatory review and as as we've as we move into into in each market is not necessarily the case that the you'll have fanjul on hotspots.
In all the the same markets for example, and we found an offset the the best markets for US and we're just we're just opened in Colorado, our markets that have both sports betting, but also gaming licenses when you think about the funnel so to monetize.
The dip the the customer the consumer.
We start with.
Fox bet Super six as a free to play game.
Those people some of them, we'll move through the funnel into our sports betting the Fox that App, where the fanduel.
Experience.
And then a subset of those will actually go into am gaming environment. When there is no sports betting being quite so if we think the opportunities fusion and assuming that we'll continue to.
To spend time onto drive to promote to Fox sports and to invest in.
Operator, we can go to the next question.
Yes, good question from Jessica Reif Ehrlich with Bank of America. Please go ahead.
Thank you.
Advertising question on Lachlan mentioned in his opening remarks at that will will be or as an upfront.
And can you talk about the timing and it will.
Expectations any color you can give little bit sales be across all of your platforms sports news broadcast and to be.
And then on Fox news, given the growth in ratings and given the expectations for strong ratings for the next few months, how do you feel like in monetizing your ratings as well as.
Your ratings being monetized the way they should be or is this all upside from here. Thanks.
Thanks Jessica.
I know there's been a lot to talk about the upfront on some some discussion about an on other on other calls I think the thing.
Yes, well the first I'd like say that the sales is very active at the moment, but it's a different sort of upfront this year for for everyone crisis than in past years, I would call it sort of our rolling upfront, it's not it's not a process that has a.
A beginning a middle and an end.
Now we are working as I think I said in the last call.
With all of the on.
The agency groups and each of our clients.
As a.
We engage with their without.
With consumers and customers across our platforms and so some some have been much more heavily impacted by cobot my team than others.
Obviously the categories that are that are affected on retail.
Now theatrical entertainment fast food restaurants, obviously travel all highly impacted by covered 19, so each each of those clients, where engage with and sort of negotiating with as we go forward I think what you'll see as we close as an asset and as we have closed upfront negotiations, you'll see that going right up until.
Really through to the beginning of the the football season.
And we are.
You know incredibly heartened by the strength of scatter in the market I think scatter.
Across the board.
Is in the mid to high teens, and I think that shows the.
The demand for marketers to get back on air and I am.
Mass market and abroad way, we are selling across all of our platforms.
New Sports Entertainment.
And to be tube is now integrated in them.
Most if not all of our upfront conversations.
When we add to be to us to our sale it increases reached by over 20%.
For the client.
I'd also obviously makes that makes the demographic younger and more diverse and Cresca to your question on Fox News Fox News ratings are being.
Asked astronomical we are monetizing them very well one of the benefits of covered my team has been with a larger news audience. The audience has also gotten younger and Nash brought actually new advertisers that hadn't advertise on Fox news on new advertisers onto the platform. So it's a it's a.
Very strong positive store for Fox news.
No can we go to the next question. Please.
We have a question from Michael Nathanson, What's Moffettnathanson. Please go ahead.
As I have two quick ones.
I promised so first question is this what is your thinking about.
Have a turtle films.
Credits.
What's your thinking about Thursday night football re extending it.
Given how much profit you guys made at Fox TV business before Thursday night.
Well, how necessary Thursday reviewer CNL.
Second season is very good job of rolling out the valuation case for your stock and.
That's really cheap on cash flow.
Asset value in a way to look at it but thank you.
Hey, Michael we don't we lost you on a little bit of of the.
Second part of the second question.
So I'll, let Steve answer that one.
[laughter] you came in and out of it but.
Regardless of it and.
I am on Thursday night football, we don't have any update for the market nor nor would we again have sort of the details of our negotiations with the NFL beyond what we've said already which is they are.
Incredible partner with us they have been for 25 years and.
Frankly, we value.
All of their all all of their content.
And we'll update the market as our negotiation on comes to a close with them, but the but there's no updates on Thursday night football or Sunday afternoon, I should say, though obviously football our partnership with the NFL is really that and major League baseball form the foundation of for the brand of Fox Sports.
So it's important content for us and model is on track to answer the question I think you're asking.
I think there's an element of frustration in sort of the value attributed to the company I think the way.
We sort of liquidity you got the traditional business that is in a strong competitive in strategic position highly profitable throws off a lot of cash we don't get sorted benefits from the cash flow generating aspects of the business in NIM would fall into various other investments, which I highlighted in my opening remarks were field.
No, we're not even getting acquisition value for those businesses.
You think that which we can shine torches on both aspects of the business is helpful. We seek to sort of getting shift for us to appropriate place.
Operator, we can go to the next question.
We have a question from Alexia Quadrani with JP Morgan. Please go ahead.
Hi. Thank you my question is really on on football College and antenna Pal.
I totally understand you guys don't want to speculate whether it'll come back or not but but speaking more broadly about your relationship with your distributors I guess, what sort of alternatives are certainly when you have seen several.
R&D sports or outright cancelled and you take out MACOM sort of later on the year, Hi, I'm, just curious about the analysis or any danger, we can play contacts there.
Thanks Alexia.
First I should say, we fully expect both cost football and the NFL.
To come back in the fall.
We expect this year from our college conferences later this week in terms of a.
Schedule for their their seasons.
And I think the NFL has has announced coming back on on September 10th.
So we are full speed ahead on working with.
The call conferences, and with the NFL and ensuring.
Hey, safe and.
Consistent and full seasons.
40, and for the NFL and there's a reduction in the season for college football so that they play within their offices and minimize minimize travel for their our student athletes. So we expect our both to them to come back and we're looking forward to.
Operator, we have time for one more question.
We have a question from John Janedis with Wolfe Research. Please go ahead.
Thank you I was hoping asking expand a little more on your advertising outlook. What are you seeing in terms of underlying demand I guess, I'm, saying I'm trying to better understand what extent, you're seeing improvements in the first quarter given your comments about sports on political.
Relative to the fourth quarter. Thank you.
So.
I think we're seeing strong demand, but you've got to break it down I suppose for us, but not by vertical there is a.
The news ratings are.
So far above.
Last years and as I as I mentioned, we have new new client to new category declines on Fox news so.
New demand is really driven by driven by the audience and by by the ratings. There. So we're seeing tremendous demand in news, obviously is going to be a.
Continued to be of an incredibly strong new cycle I think certainly through through to the ended the year Theres No theres no let up there and our I think advertisers are flocking to the certainty of those ratings and that audience I think sports there is a great pent up demand for sport, which all that in the sell outs.
In major League baseball, we saw that when we brought back on NASCAR. The advertiser, our interest in NASCAR and when we expect to see it with football.
Going forward as well as we as we go through our our.
Upfront process.
We have visibility in terms of what the clients are telling us.
Yeah.
They expect to spend and certainly in news.
And sport, we're seeing a healthy budgets there I think entertainment as is a different.
Kettle of fish as people are waiting to see what happens in the fall season.
As we explained earlier on the call we have relatively fresh scripted season with two shows US that we had we had indicated that we had an air and we do hope to have.
Massing or not for mid season, but but for the fall if possible and that would be.
Woxiu absolutely drive.
Greetings and and revenue there as well I won't when we look to the stations.
The.
We're heartened to see how quickly local advertising is coming back, particularly in those smaller markets. Some of the the bottom half of our on with about half of the smaller half of our of our of our station group where.
There have crap less to the population doesnt density less shutdowns due to covert 19, and those markets are coming back.
Well and as I mentioned before the markets that are that are really board are the ones, where this political revenue.
As has started to our to pour in so.
And then the overlay of all that is obviously scatter.
Being very strong, which I think this goes anecdotally too.
The demand by by advertising clients to get back and sort of mass marketing.
At this point, we are out of time, but if you have any further questions. Please give me or Dan carrier call. Thank you once again for joining today's call.
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