Q3 2021 Fox Corp Earnings Call

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Ladies and gentlemen, thank you for standing by welcome to the Fox Corporation third quarter 2021 earnings conference call. At this time all participants are in a listen only mode. Later, we will conduct a question and answer session.

And I would like to emphasize the functionality for the question and answer queue will be given at that time. If you should require assistance during the call. Please press Star then zero as a reminder, this conference is being recorded I'll like to turn the conference over to Chief Investor Relations Officer, Mr. Joe Durango plea.

Please go ahead Sir.

Thank you operator, good morning, and welcome to our fiscal 2021 third quarter earnings call. Joining me on the call today are Lachlan Murdoch Executive Chairman and Chief Executive Officer, John Nolan, Chief Operating Officer, and Steve Tomsic, Our Chief Financial Officer for.

First Lachlan and Steve will give some prepared remarks on the most recent quarter and then we'll take questions from the investment community.

Please note that this call may include forward looking statements regarding Fox Corporation's financial performance and operating results. These statements are based on management's current expectations and actual results could differ from what is stated as a 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 refer to it on this call.

Reconciliations of non-GAAP financial measures are included in our earnings release, and our SEC filings, which are available on the Investor Relations section of our website and with that I'm pleased to turn the call over to Watson.

Thanks, Joe.

Afternoon, and thank you all for joining us to discuss our third quarter results.

Once again, we have delivered a quarter of exceptional financial results underscoring our ability to execute on our operating plan, while making great progress on our longer term growth initiatives.

Financially, we generated approximately $900 million of EBITDA nearly as much as we did in the prior year quarter. When we had the benefit of our record breaking Super Bowl on Fox.

This past quarter, our total company affiliate revenues increased by double digits. Once again, highlighting that our set of essential brands, coupled with a focused strategy you have consistent industry leading results.

Our advertising performance was equally notable despite the tough Super Bowl comparison in the prior year as we continue to see robust advertiser demand for not only our national and local linear assets, but for <unk> and our broader digital portfolio as well.

Steve will give further details on these and other financial highlights in a moment.

Over recent quarters market commentary has indicated a focus on ratings trends at Fox news and on the outcome of renewal negotiations with the NFL.

Our achievements in these areas are entirely consistent with the positive expectations that we've long been communicating to you.

Our clear leadership for news, coupled with a long term renewal of the NFL provides a strong foundation to grow our company for years to come.

Let me address each one of them individually.

We have for the last several quarters, it's been exceptionally forthcoming and utterly transparent about our expected outlook for Fox news ratings throughout the election cycle.

Last November immediately prior to the presidential election, we shared our belief that post election, the appetite for news would moderate and net a proportion of their record audiences that we were seeing would migrate back to the comfort of sports and entertainment content.

At that time, but we did not anticipate was the short but heightened news cycle that immediately followed the election and that clearly benefited our competition.

Last quarter, we experienced a post election audience pullback that we anticipated.

We also shared our confidence that the overall news audience would normalize back to pre election levels.

So we are maintaining our dedication to providing America's best news analysis and opinion, we had no doubt that the Fox News channel would regain its cable news ratings lead.

I am pleased to report that what we have shared with you over the last two earnings calls is precisely what has transpired.

Since the second impeachment trial Fox news regain its leadership position and maintain that leading spot ever since averaging a 40% share of total day in primetime cable news audiences.

Over this time Fox news audience levels have held relatively firm when compared to our competition that have seen their audiences dropped significantly with MSNBC, losing approximately one third of its audience and CNN, losing over half over half of it.

Audience.

In fact, the Fox News channel finished this last quarter as the most watched cable network in Primetime and finished March is the most watched cable news network overall.

Calendar year to date, the Fox News channel is again, the top rated cable news network and achievement and reflects a return to the leadership position that we expect not just to maintain.

But to growth.

Fortifying the success or the long thought out programming changes that we started implementing following the election and that have continued have.

Have continued over the past several months.

In April the Fox News Channel debuted the late night program got felt exclamation Mark.

The exclamation Mark is apropos as since its launch the show is average over $1 5 million viewers per night, representing a 25% increase in the 11 PM to midnight time period versus the month prior.

To put this into context gutfeld is drawing an audience that is roughly the same size as Jimmy Kimmel live and larger than the Tonight show, Despite Fox news, reaching fewer households than the broadcast networks.

Our our success at Fox News media over the past quarter is not limited to our cable networks Fox nation, the direct to consumer offering from Fox News Media also had an impressive quarter for the highest number of customer acquisition since launch and this momentum which is carried over into the current quarter.

Since mid February Fox Nation has seen a 40% increase in subscriber growth. The key drivers of this growth other streaming of live events and the premier of exclusive flagship content, including the streaming App <unk> in February and the launch of Tucker Carlson content, including a new video podcast series entitled Tucker.

Carlson today, and long form documentaries entitled Tucker Carlson originals.

Given the success that we have seen with this content you should anticipate us to continue to invest in new programming for Fox nation, and the quarters ahead to further increase engagement with our current subscribers and to attract new customers.

Turning to the other important business development I mentioned, we are immensely pleased with our renewal agreement with the NFL.

Fox will continue as the home of the Sunday NFC package. The most valuable rights package in the NFL portfolio for the next 13 seasons.

As just one reference point of its value to Fox The Sunday NFC package has been the most watched NFL package for the past 15 years.

Our NFC coverage is an important foundation for the Fox network and strategically aligns with our local stations, where we own and operate the Fox affiliate in 14 of the 16 NFC markets.

Maintaining the Sunday NFC package is a significant programming milestone for our own stations and their local business partners and for our National affiliate base as well.

In addition to our NFC package, we also added new and exclusive holiday games and secured rights to broadcast for over the next 12 Super bowls.

Fiscally, we are very comfortable with the scale of the new rights package, coupled with our decision not to renew for Thursday night package.

While we cannot discuss this why we were in negotiations our intent was always to released Thursday night and focus our future NFL investment solely on Sunday afternoon.

Not only will we exit Thursday night, but we also took the opportunity to do so one year in advance of the exploration of our existing deal with Amazon assuming their rights to the 22 and 'twenty three season, our 'twenty two 'twenty three season.

Importantly, our NFL renewal also broadens and enhances our package of digital rights, providing us with the necessary flexibility and optionality to maximize all linear and digital opportunities in the future.

Regardless of the way our businesses May change our rights package provides us the ability to continue to evolve our business model.

For example, we will be increasing our digital programming right away by using our expanded digital rights to launch an NFL branded Vod channel on <unk> This coming season.

Another important element of the new NFL deal relates to Fox bet.

Fox extended its rights to continue supporting America's leading free to play Wagering game Fox bet Super six.

Additionally, Fox bet has been designated an authorized sports book, operator by the NFL and we hope to share more details on the launch of NFL related integrations in the quarters ahead.

Yes.

The opportunity presented by uniting our leading media brand with prominent bedding assets and Influencers is tremendous.

We continue to see substantial growth in revenue upside in this market and are investing to further expand and enhance our presence.

Today I am pleased to announce an agreement to acquire <unk>, leading sports news and opinion platform out kick.

I'll kick is a natural complement to several of our brands and we will deepen our investment in the sports wagering ecosystem.

As a leader in sports opinion, and pop culture content, our tic provides a clear overlap where their businesses and areas of expertise.

Importantly, <unk> also creates content about sports wagering and currently has an exclusive marketing arrangement with <unk> that has proven remarkably successful.

I want to welcome play and a I'll kick team for Fox.

Speaking of successful sports wagering businesses, we highly value our various partnerships with the flutter group.

Currently we are both looking to clarify our ongoing arrangements through a pending arbitration, while the arbitration process is ongoing we do not expect to make any further comment about it.

Turning to a couple of other areas.

The harmonious mix of leading sports and entertainment on the Fox network continues to prove a winning combination.

Season to date Fox is the number one broadcast network for all Prime time programming.

Fox Entertainment programming, such as top unscripted shows like the masked singer and I can see your voice and leading dramas like 911, and 911 Lone star are delivering big audiences.

We are deepening our program development process and are enthusiastic about the new shows coming to the network. This fall.

As we anticipate a return to a normalized fall schedule. We are actively involved in our early upfront process and we are engaged with the leading agencies and brands about our respective plans.

Brands are eagerly anticipating the pent up consumer demand following COVID-19 and Fox offers the best place to invest multi platform multi genre advertising commitments for <unk>.

Cause of this the very healthy current scatter market and the overall improving economic outlook I am optimistic that there will be substantial demand across all of our platforms. During the upfront as we look to deliver solutions for advertisers.

To that end, we are deeply integrating <unk> into this year's upfront discussions.

The unmatched reach of broadcast network TV and the substantial digital audience, our <unk> presents a unique opportunity for <unk> for our advertising partners.

Our decision to acquire TV was prescient.

And we are focused on its growth plan over the near term.

In a short period, we've owned it it is already exceeding all of our expectations and we continue to find innovative ways to expand its product offering and propel its growth.

In terms of operating performance in the month of March <unk> reached increased over 30% as measured by viewers and now reaches 40 million monthly active users.

But as we have shared before we are intently focused on engagement as measured by total view time or TVT because that is what we monetize to that and to be generated over 275 million hours of total view times trimmed in March a monthly record for the platform.

Two we also set a record for total <unk> in the third quarter with nearly 800 million hour streamed up more than 50% year over year.

And this is on top of the of the exponential growth of platform experienced in 2020 were to be streamed more than $2 5 billion hours of content.

We also share at additional demographic and for for <unk> as part of its impressive new front presentation earlier this week.

The median age of the platform's viewers is 37 years, that's 20 years younger than linear TV.

Nearly 40% of <unk> audience identifies as multicultural and over two thirds of its audience does not watch other AD supported streaming services.

To be truly broadens the reach of network television and allows our advertising partners to access to asset excess a substantial incremental digital audience.

And an audience that is not readily consuming other avon services as well.

The increase in viewers total view time, and the unmatched advertising opportunity has translated into significant year over year revenue gains.

<unk> quarterly revenue increased over 150% compared to the same period last year.

The power of Fox had promotional sales and content synergies are accelerating <unk> business, putting it on a path to be $1 billion revenue business in the coming years.

On the content side to be has now expanded this library to over 30000 titles comprising of movies and series from all major Hollywood Studios.

Additionally, we are continuing to make more fox programs available on the platform to be features key Fox titles, including the masked singer I can see your voice and Lego Masters among others.

And while <unk> continues to expand its library. It will also soon be home to its own original content.

This fall to be will introduce approximately 150 hours of original content, including movies and documentaries produced by Fox Alternative Entertainment and animated films produced by Bento box.

Contrary to the strategy of the major asphalt services <unk> goal is to turbocharge certain genres of content that are already make to be successful and they are and thereby allow us to super serve certain segments of <unk> audience again, all to continue to drive engagement and therefore manav.

Foundation to new Heights.

And the good news is given to these best in class Tech stack, we will be able to measure the ROI on the original content investment as we go.

Another important differentiator of television content is live local news.

To be recently closed deals with Scripps and Cox to bring an additional 20 local news stations to the platform later this year. These.

These attestations extend news on television.

<unk> reached 24 of the top 25 markets.

Underpinning the news on TV offering our live local news feeds from 18 owned and operated Fox television stations.

In total <unk> will carry nearly 100 local station feeds in 2021, covering 50, Atms and offering the most robust local news offering of any free streaming service.

Another digital achievement across the company is the growth we are seeing at Fox television stations.

Digital AD sales at our core stations are up nearly 40% compared to the third quarter last year, our multiyear strategic investment to further build our digital capabilities and enhance our digital product and advertising teams at the stations are yielding great results.

Across the entire company, we surpassed $1 billion in digital revenues for the third quarter year to date.

Our owned and operated stations are also benefiting from the ongoing lifting of COVID-19 restrictions for financial services category in the entertainment category, which includes gaming are performing particularly well we're optimistic that this trajectory will continue as restaurants retail and other businesses continue to reopen in the large metro areas.

For our stations are located.

Even despite COVID-19 related disruptions our fiscal year to date has been characterized by an operating and financial performance that has that has exceeded even our own high standards and our initial expectations.

Our core businesses provide a stable foundation for the opportunities that will propel our future growth.

We are optimistic about the current fourth quarter and look forward to milestones in fiscal 2022 that include the return of our full sports and.

And entertainment lineups, the beginning of the midterm election season investments into the growth of <unk> and Fox nation, the launch of Fox weather and the integration of <unk>.

We continue to capitalize on the ongoing momentum of our core brands as well as capturing the added growth from the initiatives I've discussed today.

And now with that Steve will take us through the details of this impressive quarter.

Thanks, Lachlan and good afternoon.

Having delivered another strong quarter, we were encouraged by the robust underlying trends that underpin our distribution and advertising revenues and our strategic investments are exceeding expectations highlighted by the trajectory of television.

Before reviewing our financial performance for the quarter. This worth noting at the assets that our third quarter results are compared against our broadcast of Super Bowl 50 for in the prior corresponding quarter, which accounted for approximately $500 million of net advertising revenue and approximately $100 million of EBITDA across the company last year.

Yes.

Where appropriate I will share both in our reported results and the underlying performance when excluding the impact of Super Bowl 50 for now.

Now turning to our results for the current quarter.

Our leadership brand and focused portfolio of assets delivered double digit growth in total company affiliate revenues and mid single digit growth in underlying total company advertising revenues.

Excluding the benefit of the Super Bowl in the prior year quarter and the consolidation of <unk> in the current year quarter.

Total company affiliate revenues increased 10% with 18% growth for the television segment and healthy 6% growth at the cable segment.

Meanwhile, the rate of subscriber declines continue to moderate in the quarter with trailing 12 month industry sub losses running at approximately four 5%.

Our reported advertising revenues declined 24% in the quarter due to the absence of the prior year broadcast of Super Bowl 54, and a slow and new cycle. Despite the headwinds from comparability. Our brands continued to deliver robust CPM growth across the portfolio led by the Fox Network and Fox News.

Encouragingly, our core local television stations ex Super Bowl political and the impact of the Nexstar transaction returned to growth across the base market in the quarter.

Meanwhile, advertising revenue growth of TV continues to exceed expectations.

Today, we anticipate reaching revenue of $350 million for the current fiscal year, which is up from the $300 million forecast, we shared with you on our last earnings call.

Putting it all together reported total company revenues of $3 2 billion with.

We're down 7% over the comparative period in fiscal 'twenty.

Excluding the impact of Super Bowl and the acquisition of <unk> underlying total company revenues increased mid single digits.

Quarterly adjusted EBITDA was $899 million down 2% over the comparative period in fiscal 'twenty, excluding last year's Superbowl contribution quarterly adjusted EBITDA grew low double digits led by continued growth at the cable networks segment.

Net income attributable attributable to stockholders of 567 million or <unk> 96 per share it was notably higher than the $78 million.

<unk> per share in the prior year quarter.

This was primarily the result of movements recognizing other net including the mark to market adjustments associated with the company's investments.

Excluding this impact and other non core items adjusted EPS of <unk> 88 was up slightly from last year's 93.

Primarily reflecting the comparative items that I've just mentioned.

Turning to the performance of our operating segments for the quarter.

Cable networks reported a 7% increase in EBITDA on essentially stable revenues.

Cable affiliate cable affiliate revenues increased 6% once again led by a double digit pricing gains at Fox News and continued moderation in the rate of industry subscriber erosion.

Cable advertising revenue decreased 7% as continued strength in linear pricing and digital digital commercialization at Fox News media was more than offset by the elevated linear audience levels of the prior year.

Cable other revenues fell 24% primarily due to this low sports sub licensing revenues and the absence of pay per view boxing events in the current year, both due to COVID-19 as well as the disposition of our sports marketing businesses.

EBITDA at our cable segment increased by $58 million over the prior year.

And benefited from low cost at Fox sports, including the absence of price the price Super Bowl week studio shows and production cost efficiencies.

Our television segment reported a 12% decline in revenues and an $89 million decline in EBITDA, both of which principally reflects the absence of the prior year contribution from the broadcast of Super Bowl 50 for.

Television affiliate revenues increased eight 8% in the quarter.

This robust growth reflects double digit increases for both our programming fees from non owned station affiliates.

And for our direct retransmission revenues at our owned and operated stations and reaffirmed we are on track to achieve the TV affiliate revenue growth, we outlined at our Investor day.

Television advertising revenues declined by 28%, primarily due to the absence of the price Super Bowl, partially offset by the benefit this quarter from the timing of the NFL week 17 double hitter in the rotating NFL divisional playoff game.

Meanwhile, on the back of the increasing total view time Lachlan mentioned earlier to be set another advertising record. This time for the March quarter, which seasonally is its slowest quarter.

Other revenues at TV increased 21% led by higher co production revenues and Fox Entertainment and higher content revenues at Bento box.

Turning now to cash flow.

In the quarter, we generated strong free cash flow of 154 billion, reflecting our normal seasonal cycle of collecting advertising revenues for manifold programming.

And the result of our sports rights payments being concentrated in the first half of our fiscal year.

Year to date, we have deployed $825 million of capital to repurchase approximately 19 million class a shares and nearly 8 million class B shares and are on track to complete the $1 billion of share repurchases. This fiscal year that we announced on our last call.

Against our buyback authorization of $2 billion we.

We have net cumulative fleet repurchased over one for $2 billion.

Representing approximately 7% of our total shares outstanding since the launch of the buyback program in November 2019.

From a balance sheet perspective, we ended the quarter with $5 $77 billion in cash and $7 95 billion in debt.

As we look to the final quarter of our fiscal year. We expect continued progress in affiliate revenue growth and further advertising revenues to strongly outpaced price.

Driven in large part by the strong rebound in local advertising sales as well as the acquisition of <unk>.

While this topline growth in the quarter will be more than offset by our investments in the TV and Fox News media digital platforms.

As well as higher programming costs due to the return of normal sports and entertainment schedules.

We expect to deliver full year revenues and EBITDA comfortably ahead of fiscal 2020, despite the challenges of COVID-19 and the comparison to a Super Bowl.

And with that I'll now hand, the call back to Jud.

Thank you Steve.

Now we'd be happy to take questions from the investment community.

Ladies and gentlemen, I would like to emphasize the functionality for the question and answer queue. If you wish to ask a question. Please press. One then zero on your Touchtone phone you will hear a tone Andy Ken you've been placed in Q you may remove yourself from queue at any time.

But once again present, the one day zero if for you going to speaker phone. Please pick up your headset before price in the numbers.

It has been requested that you limit yourself to one question. Once again, if you have a question. Please press one zero at this time.

One moment please for the first question.

We have a question from the line of Alexa quit Ronny with J P. Morgan. Please go ahead.

Yes.

Is really circling back to the decision to get out of Thursday football a year earlier I'm curious what kind of programming you plan to replace it with other than and then more generally speaking you know what other sports rights would make sense for you guys in terms of potentially adding to that portfolio.

Thanks Alexia.

I hope you're doing well so we are there.

There is not a football.

Yeah.

Entered into that agreement some years ago.

We are focused on building on that brand for.

For the.

For the NFL.

And I'm really sort of increasing its ratings and it's our production quality.

Bring it back to <unk> home. If you remember was split amongst a couple of different networks and I think we achieved all of those goals, but having said that it was expensive and.

Sunday afternoon football is really the home of football.

Frankly for America and for Fox, So, having the securing the NFC package.

At an appropriate price for US was our was our absolute focus.

Bye bye, releasing Thursday night football or early a year early.

Then we have to we're going to achieve roughly a 350 to 400 million dollar EBITDA.

Positive impact in that in that fiscal year.

Which are which we think is important to them.

Sure.

Invest in the actual Rex going forward so financially it was.

Absolutely the right decision and we're proud of how we've been.

And custodians of our placement for Paul over the last of last few years.

And in terms of other sports rights you might make sense for you guys to look at or you have hedged at very happy with the NFL in NGL and the other sports you already have and there's nothing else.

But no we look we're always keeping.

An open eye on sports rights in sports rights become available I think.

We look at everything.

But we're very sort of financially disciplined with.

With what we believe.

They're worth on our survey on our platforms.

And.

Paying appropriate prices that are going to drive either our growth whether it's from a subscription a retransmission point of view or an advertising point of view, but we continue to look at any.

Any significant sports rights become available.

Thank you.

Operator can we go to the next question. Please.

We have a question from the line of Ben Swinburne with Morgan Stanley. Please go ahead.

Thanks, Good afternoon.

I wanted to ask a couple of questions on to the sort of the longer term strategy. I know you guys have owned it I think for about a year, maybe a little less.

On the programming side. It will work with how are you thinking about programming to be as it relates to content that Fox <unk>.

And produces sort of the way you've run the broadcast network over the years versus just trying to build a big audience that you can monetize through advertising and.

And using third party content.

You have a view on that yet it would be interested in.

And then as you go to market in the upfront and think about even the $350 million guidance you've given.

Do we think about how incremental that is in other words I guess there is an argument that maybe some of that money is coming out of Fox broadcast that's out of one pocket into the other can you just talk a little bit about your conviction in driving incremental revenue.

And to the company from Tobey over the course of the next year or so.

Sure. So thanks, Ben Thanks for the question.

So.

Yeah.

First of all on <unk>.

The programming strategy at <unk>.

Is entirely as we've as we've discussed in this business. This is a critical difference between <unk> and.

And certainly the other.

Subscription video on demand services and the hybrid advertising into our subscription video on demand services that we see.

Our competitors operating in the <unk> is entirely focused on total viewing time and the reason we're entirely focused on total viewing time is because that translates directly into revenue. So the more we can grow total viewing time and this isn't as opposed to purely.

<unk> users.

Users or an asphalt service subscribers. The more we can grow total viewing time, we can we can translate that.

Directly into into enter increased advertising, our revenues and so when.

When we look at our programming strategy.

Got interested in spending.

Billions of dollars as the other.

Those are on on sort of driving.

Our subscriber bases with with <unk>.

Very expensive programming, while we're interested in doing is very efficiently.

Scaling our <unk>.

Programming.

To drive our total viewing time and we can do this because of the technology, we can really target specific genres and specific cohorts of our of our viewers.

To drive their total viewing time, and hence drive revenue so.

It directly correlates to the so we've had a record.

Total viewing time in the last months.

Total are completely correlates, where having driving record record revenue. So that's the that's our business model and that fits into the.

Thanks for the efficiency of our of our programming.

Strategy due to the second question in terms of where we're moving money from one pocket to the other absolutely not.

I'm sure you did have the opportunity to watch for the for to be a presentation at the new fronts, just a few days ago.

The what were to be allows for us and frankly for any advertising. That's also advertising in broadcast it allows them to increase their reach dramatically.

The advertisers are trying to reach new viewers and viewers that don't traditionally watch broadcast they're younger they're more diverse.

They really need to go to to be to reach those audiences that can't reach them anywhere else. So.

What that allows us to do is really expand both the amount of AR.

<unk>.

The partnership with scale of partnership with our current advertisers, but also find new advertisers that we havent enjoyed a relationship with before.

Operator, you can go to the next question. Please.

Our next question comes from the line of Jessica Reif Ehrlich with Bofa Securities. Please go ahead.

Thank you.

I have a question on sports betting, but just two small follow ups for this from the previous questions.

If you could say on to be like what the incremental investment will be in the coming year and on Thursday night football will that affect jewelry trends do you think over the next couple of years.

For my question.

On sports betting can you talk about the impact net.

Now on I guess, the Illinois are benefiting from advertising are you seeing any impact on ratings in markets, where it's legal and what are the expectations down the road.

There's a direct investment, but what other ripple effects of sports betting and if you can include your new acquisition.

Yeah.

You haven't said, what you're paying or how big it is an integrated thanks.

Access Guy I lost track of how many questions I want so.

Yes.

If I forget any please remind me it's good to hear your voice.

So.

First on <unk>.

On <unk>.

And I think it was the.

Further investment in <unk> and we're really.

Focused on being very efficient and being very disciplined around.

And investment in <unk>, while at the same time, not losing sight of the immense opportunity that <unk>.

I think we've designed our programming strategy in our marketing strategy.

Around that so a lot of the investment you will see will be a combination of continuing to.

Assign the.

Revenue in what would have been sort of profitability or Toby back back into growing the business and.

And adding some some mod modest for capital in addition to that so it's not a tremendous.

Sized investment when it comes to us of the scale of our Fox, but we think it's appropriate given the opportunity.

<unk> presents us on Thursday night football I think you asked what the effect on retransmission I would be.

The.

The logic.

Behind being able to release Theres not football NAFTA NAFTA.

I'll follow it in the new deal and indeed to release it.

Early is that we don't think it gives us.

Incremental.

Sure.

Retransmission revenue above what we already get for the premium.

NFL package in the country, which is which is a Sunday afternoon NFC package. So.

So due to that we can release.

Save the cost of the Thursday night football package.

And invest further in Sunday, retaining all of our potential our retransmission revenue through Sunday football.

On sports betting.

There was a couple of questions, but I think the impact of sports betting in the on the ecosystem sports betting and <unk>.

In every market where there is.

Sure.

Licensed operators.

Our spending.

Heavily.

<unk>.

Which is a terrific benefit to them to our station or station groups.

We think this will continue.

Very.

Competitive.

Market.

And.

This won't ameliorate anytime soon.

And all the more reason why.

We consider further investment in other I'll kick is a great example is.

Sort of a leading operator in both.

Sports news and critically in sports opinion, you haven't.

I'll kick or listen to our neighbors podcast for radio shows are being gross website, you should it's really a unique and.

And special voice and I think the one that that aligns with the Fox audience are incredibly well.

So we're very excited.

To bring that team.

Part of ours.

Next question please.

The next question is for Robert Fishman with Moffitt met Nathan. Please go ahead.

Hi, good afternoon.

I have an NFL related follow up question, So with Sunday NFL rights locked up do you expect your relative negotiating position to actually improving your next set of deals with both the distributors and your TV station affiliate, especially if some of your peers make their lives NFL games available on their streaming platforms.

Yes so.

Look we.

We are very.

Mindful of the.

Exclusive value of live NFL on broadcast television and we're very mindful of the value that that.

Attributes to both our <unk> and also to all of our highly highly valued affiliate. So so we don't have a.

On streaming service behind the behind the Paywall, where we would currently put.

A simulcast of arm of our NFL games, and we have no plans currently to do so.

Go to the next question please.

We have a question from the line of Doug Mitchelson with Credit Suisse. Please go ahead.

Oh, thanks, so much so I just wanted to continue on the NFL vein Lachlan. Thank you for taking the question Theres been a lot of discussion about the digital flexibility. The NFL broadcast rights holders have earned under these new NFL contracts and Comcast already indicated it will simulcast of Sunday night football games on Peacock.

Do you have any concerns regarding the impact more NFL streaming by your competitors if not for you might have on pay TV subscriber levels. As a result of more NFL games being streamed and you noted the ability to be flexible in your business model given the rights that you have so what's the sales safe if you start to see more erosion.

Uh huh.

You might have liked in the pay TV subscriber base, what does Fox due to monetize.

Those rights and earn a return on that contract that'd be helpful. Thank you so much.

Thanks, Doug Yeah.

A huge part for us and I can't speak for anyone else but of our.

Negotiations.

With the NFL in particular, because this is such a long term deal was making sure we have the flexibility going forward to monetize these rights.

In different ways.

<unk>.

Yes.

It's hard enough to think.

To predict you know five years or six years out rather than sort of 12 years or 13 years out and so we made sure we had every.

Ounce of flexibility within our rights package to be able to evolve our business model and monetize. These these rights going forward, having said that today clearly.

The best.

Monetization and best opportunity to monetize the rights are through broadcast television, both with our own hours and our affiliate and Thats really where our focus is.

Operator, we have time for one more question.

We have a question from the line of cane in Venkat with Barclays. Please go ahead.

Thank you.

Lachlan I guess.

For you just step back and look at some of the strategic decisions you guys have made recently, which is walking away from Thursday night football.

And you know investing in <unk> and.

Sports betting.

Broadly it almost seems like affiliate and the business model, where you guys, where the loss leaders and football.

In the mid nineties.

One slice of football and investing in other areas.

Is that how we should think about.

The investment priorities going forward, which is potentially new areas become bigger price.

The other needs for investment and legacy TV broadly becomes a cash source the liberty of business model.

And then broadly when you think about.

The broadcast business football is of course important but.

<unk>.

What role does it have in the broader ecosystem I mean, it is structurally in decline with respect to pay TV subscribers.

And the kind of roll it used to play in the past with respect to reach is very different where it says what it plays for today. So if you could just expand on the portfolio and the legacy TV side.

And what are the strategic priorities are across your portfolio. Thanks.

Thank you very much look I think.

Or.

So called out legacy TV businesses are all.

Very healthy.

And we expect it to grow them significantly, but when you look at them from a.

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Point of view in terms of how we how we grow and how I think you used the word.

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Our business model going forward you have to look at what they what they can offer and a broader.

With broader opportunities to monetize their existing content right and their existing genre of content. So if you look in the sports business.

The sports business is really what's driving our wagering business right on our on our bedding business youre going to see us be really one of the major.

Players certainly from a media point of view in the sports Wagering business in America going forward, we're going to continue to them.

Two to exploit that marketplace and to grow in that marketplace, and thats really driven off the.

Our engagement with our audiences through through our sports broadcasting business.

We wouldn't have nearly the opportunity I believe in in in wagering, a standalone without coupling it.

With the Fox sports.

And for an overall, a Fox Fox brand in Fox audience, and this can be seen very clearly through our success with our Fox bet Super six Fox about Super six in the last year, we grew.

We are very aggressively through marketing it.

Across all of our platforms Fox.

Fox Sports Fox Entertainment Fox News, and we drove to over 5 million users. There is no other free to play a game like that and at that scale.

In the United States, and what that allows us to do with Fox for Superstorm. Conversely is in the markets where we're licensed.

Drive that traffic or drive that sort of the why.

Wireless part of that that funnel into into sports.

Sports Wagering and also.

The poker and casino businesses, where theyre licensed so theres, a tremendous opportunity there, but it's really because of our strength.

In our traditional.

Sports Broadcasting business. The same thing by the way is true at Fox News.

We rebranded the Fox news business as Fox News media.

I think.

Couple of years ago, and that's really because.

You can look at Fox news anymore, as just linear cable channel the opportunities of Fox news or to grow revenue beyond the impressive growth within within cable is really through its powerful website. Its podcast ing a fox nation new.

New channels like Fox weather.

We're seeing tremendous opportunities too.

To expand its reach.

The power of its brands.

At this point, we are out of time, but if you have any further questions. Please give me or Dan Carey a call. Thank you once again for joining today's call.

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