Q1 2022 Fox Corp Earnings Call

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Ladies and gentlemen, thank you for standing by welcome to the Fox Corporation first quarter 2022 earnings Conference call. At this time all participants are in a listen only mode. Later, we'll conduct a question answer session I would like to emphasize that functionality for the question and answer queue will be given at that time, if you should require assistance during the <unk>.

Call. Please press Star then zero as a reminder, this conference is being recorded now I'll turn the conference over to Chief Investor Relations Officer, Mr. Joe <unk>. Please go ahead.

Thank you operator, good afternoon, and welcome to our fiscal 2022 first 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.

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

Note that this call may include forward looking statements regarding Fox Corporation's financial performance and operating results. These.

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 company's 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 available on the Investor Relations section of our website.

And with that I'm pleased to turn the call over to Lachlan.

Thanks, Joe Good afternoon, and thank you all for joining us to discuss our first quarter results.

We started off the 2022 fiscal year strongly supported by industry, leading affiliate revenue growth in the healthiest AD market. We have seen in some time. This momentum is clearly seen across our operating businesses, which includes the return to a full slate of live events at Fox sports and the expansion of ratings leadership at Fox.

News and continued exceptional growth from <unk>.

Audiences are migrating to live news sports and streaming underscoring the operational and financial pillars that have defined our short history as Fox Corporation.

This quarter continued to demonstrate the strength of our businesses, where we delivered 12% growth in topline revenues led by a 17% increase in advertising and near double digit growth in affiliate revenues.

On the advertising front Fox is uniquely benefiting from a healthy national AD market, where brands are increasingly seeking out engaged real time audiences at scale that only live news and sports platforms deliver.

This strong market is also benefiting <unk> and our Fox news digital assets, which provide targeted audiences to advertisers across many platforms.

And despite comparisons to a heavy political AD cycle last year, our local markets are also performing well.

On the affiliate revenue side, we again have best in class growth reflective of the power that our core brands hold in the pay television universe.

Our commitment to keeping our highest profile content like the NFL exclusive to our distribution partners gives us confidence that the healthy annual price escalators, we've commanded for our brands over the past renewal cycles will carry over into the next.

While Steve will walk you through our financial performance in more detail. Shortly I will now turn to the operating highlights across our businesses.

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Sure.

You've heard it from me before.

And all of our advertisers know well that Fox owns the fall through our football and baseball coverage at Fox Sports.

And this fall is once again proof of that fact.

NFL viewership is up across the industry College football is back in full force and we have just concluded a highly competitive major league baseball postseason.

And throughout it all Fox sports has been expanding its live coverage to deliver viewers.

More of the content that they want.

The NFL is off to a great start seeing solid growth in overall viewership through the first eight weeks of the season.

Excluding a rather complicated week one comparison.

Fox is NFL viewership is up 8% over last year and our schedule only gets better from here.

College football has also seen solid growth by all measures it's off to its best start in recent memory.

Season to date average viewership of our college football games on Fox is up nearly 20% over 2019, the most appropriate comparison, given the postponements and cancellations that characterized last year's COVID-19 impacted schedule.

This is mark key big noon window is averaging more than 5 million viewers, while our Saturday morning, Pregame show Big noon kickoff is also seeing viewership up nearly 20% over 2019 levels.

Moving from the football field to the baseball Diamond Major League baseball has been a bright spot this year.

Overall field of Dreams games. The game. This summer was a great success, clocking nearly 6 million viewers and delivering the most watched regular season baseball game and 16 years at.

That drove a dru viewers en masse, notably women and teams and from a business standpoint was the highest revenue generating regular season game of all time.

This game was something that only the Fox sports team could envision and produce definitely tapping into the nation's desire for an uplifting event underpinned by nostalgia and optimism.

We all look forward to returning to Iowa and August 22 for next seasons field of dreams gain.

The momentum from the major League baseball regular season has translated into the post season, and what has been a superb world series for Fox.

In fact, the World series is the only content. This season outside of the NFL to average over 11 million viewers and will easily outright the NBA finals to rank as the number two championship event and professional sports this year.

And today, we are happy to announce the expansion of our international soccer portfolio with a landmark rights agreement for the UEFA European Championship.

We will have access to more than 1500 matches highlighted by the 2024 and 2028 euros along with the UEFA Nations League World Cup, and Euro qualifiers and international friendlies and this is on top of our existing international soccer portfolio, which as you know already.

The FIFA men's and women's World Cups.

Importantly, we have also acquired sports betting rights.

Alongside our coverage of these UEFA competitions, including integration opportunities with Fox bet, and Fox bet Super six which are already benefiting from our existing sports rights portfolio.

At the end of the quarter the user base for Fox bet Super six exceeded 5 million players, making it the biggest free to play sports betting game in the country.

Beyond our direct investments and options in the wagering Air area, our national networks and local stations are benefited benefiting from the legalization of gambling across the country.

Take the Fox television stations as an example sports betting is only legalized in six of our 18 Fox markets and.

And yet we have already written approximately 20% more sports betting revenue at this early point of the fiscal year than we did across all of fiscal 'twenty one combined.

This implies that this new category will end the year as one of the largest and local advertising.

Staying with local advertising the overall market trends for us are quite positive with travel entertainment and pharmaceutical categories, proving particularly robust.

While we continue to observe some softness in automotive this is being more than offset by growth in other areas, including sports betting.

Excluding political spending our core local advertising was up again this quarter.

At Fox News media linear and digital segments are performing very well.

Fox News channel has further solidified its leadership position in cable news, we can market share levels that are now multi year highs.

And both total day in Primetime the Fox News channel accounted for over 50% of cable news viewership during the first quarter more than CNN and MSNBC combined this.

This momentum has accelerated into the current quarter with Fox News channel accounted for 55% of total day and Primetime cable New news viewership in the month of October.

And I should just say here as an aside last night.

So our a viewership share of the Fox News channel of 65% of all of cable news will be around 65%.

The first quarter also marked the seventh straight quarter that the Fox News channel was number one in all of basic cable for primetime.

This ratings leadership continues even into the late night hours Gutfeld regularly outpaces nearly all late night programs on cable and broadcast television even besting the CBS late show with Stephen Colbert on select nights.

At Fox Nation, the complementary streaming service to Fox News, our total subscriber count was up nearly 25% compared to last quarter and up over 130% compared to the same quarter last year.

Not only are new subscribers seeking out Fox nation. They are also staying with the platform longer that first quarter was fox nation's highest quarter for engagement and the best quarter for subscriber retention.

The momentum at Fox Nation has continued into the current quarter with the addition of the iconic series comps. This show, which was a staple of the Fox network for so many years launched on October one and has quickly become one of the most popular titles on the platform.

And we recently launched another digital products under the Fox News media umbrella Fox.

Fox weather.

The Fox weather App and at 24, seven free AD supported streaming service debuted last week as the most downloaded free app in the App store.

Ahead of tick Tock, Youtube and other social media platforms.

Since launch the Fox, whether it happens been downloaded over 1 million times.

In just its first week of existence users generated over 28 million page views and spent over 42 million minutes engaging with the product.

Using the strength of our national and local news operations. We are excited about the prospects for Fox weather and our ability to be a leading player in this space delivering compelling live content to viewers and serving as a desirable platform for advertisers to reach our valuable audiences.

The Fox whether streaming service is currently available for free on all Fox News media digital properties as well as on Fox now.

The distribution and availability of Fox weather will expand in the near term with a launch later this month on <unk>, followed by Youtube TV and the major streaming platforms, Megan Fox weather Ubiquitously available well before the end of our fiscal year.

Our digital.

Strategy is focused assets Fox apart from its media peers.

Our strategy is deliberately less capital intensive than what others in the industry are currently pursuing.

Our approach to investment is to develop businesses that are extensions of rather than replacement for our existing lines of business, thereby creating revenue streams that are truly incremental to fox.

<unk> is a prime example of our unique approach to streaming compared to others in the media landscape, we program and monetize <unk> in distinct contrast to the asphalt approach of many other media companies and we're more than pleased with the results.

While others compete aggressively in the asphalt space investing heavily in content and promotion, we identified the opportunity to be a leader in Avon, a strategy, which aligns with our advertiser and audience.

Focused approach companywide.

As as Bob platforms face the challenges of subscriber acquisition and retention and ever increasing programming costs Fox has carved out a differentiated and unique pack.

<unk> measured investment in its content library and original programming is delivering solid returns.

In addition to serving viewers, where the content library of more than 35000 titles, which is more than five times the size of Netflix library to be unique original content strategy is already seeing early signs of success.

Out of the first four original films to be released this year.

Two of which have performed so well in the quarter that they have already generated advertising revenue well above the local production costs, meaning they are already generating a positive return on investment.

<unk> deep understanding of its audience is a key asset as to be original movies outperformed blockbuster movies available on the platform.

The growth at <unk> continues to exceed even our best expectations for the business when we acquired it to.

<unk> will generate significantly more revenue revenue. This fiscal year, then our cost to purchase the platform in early 2020.

In the first quarter of the fiscal year to be more than doubled its revenues year over year and total view time on the platform TVT tubing key metrics continues to climb with 30% growth compared to last year.

Fox is content and reach have supercharged <unk> revenue and audience.

<unk> a collection of 70, new channels is anchored by live news from the Fox television stations and is drawing viewers for increasingly long periods of time.

Since launching last fall news on to be viewership has grown over 130% and to be continues to expand its linear offerings with our recent launch of sports on television, which further leverages Fox's content expertise with premium sports channels, including Fox Sports the NFL network.

The MLB network.

Also Fox Entertainment recently acquired TMZ.

The acquisition of <unk> fits perfectly with our focus on live programming and gives us gives us an array of possibilities to rapidly expand our brand and platform that have long been one of the cornerstones of our local television stations.

Fox Entertainment is focusing on bringing that bringing the TMC brand to all parts of the Fox portfolio, including further monetizing the TMZ brand across the Fox television stations developing TMZ branded content for <unk> and amplifying Tmz's digital presence.

Finally.

And this is just a lot of fun. We are very pleased with the early results of our investment in blockchain creative labs.

Through this investment we own a share of the underpinning marketplace and wallet technologies that power of these next generation experiences.

We recently launched the mask versus alongside the current season of the masked singer and which fans of the show have downloaded over 120000, NFC packs and created over 100000 wallets on the platform.

We look forward to the expansion of this business through our NFC partnership with WWE. This further highlights the marketing power of the Fox broadcast network to drive new businesses and the creative and entrepreneurial spirit of all of US here at Fox.

Clearly the fiscal year is off to an excellent start and we are encouraged by the outlook for the rest of the year our strategy to focus on the broadcast of live event programming that audiences crave like sports and news, which coupled with the addition of <unk>.

Puts us in an enviable competitive position.

This intentionally differentiated portfolio and approach will further propel our growth and drive exceptional value for our shareholders.

Now Steve will take us through the financial details of the first quarter.

Lachlan and good afternoon.

Our strong operational execution across our businesses has led to another quarter of impressive financial results.

Let me walk you through our start to the fiscal year before providing some math because it will be helpful. As we think through the quarters ahead.

In the first quarter of fiscal 'twenty two the company reported total revenues of $3 5 billion.

Up 12% over the first quarter of fiscal 'twenty, one reflecting revenue growth across all operating segments.

Company affiliate revenues increased 9% with 14% growth at the television segment and five 5% growth as the cable segment.

The rate of subscriber declines held steady in the quarter with trailing 12 month industry sub losses again running at approximately four 5%.

Total company advertising revenues increased 17%, reflecting strength in the national and local marketplaces. The return of normalized programming schedules. Following the COVID-19 related postponements and cancellations last year and continued strong growth at <unk>.

It is worth noting that these total company growth was achieved despite the comparison to the prior year quarter, when we generated nearly $100 million in net political advertising revenues leading into the presidential election.

Total company other revenues increased 15% in the quarter, primarily due to the return of sports sub licensing revenues.

Our revenues and pay per view boxing at the cable segment.

Quarterly adjusted EBITDA was $1 6 billion down 9% against the comparative period in fiscal 'twenty one.

Reflecting higher operating expenses associated with the return of normalized sports and entertainment programming and as we signaled on our fiscal 'twenty. One year end coal increased digital investments at Fox News media and television.

Net income attributable to stockholders of $701 million or $1 21 per share was down <unk>.

Down versus the $1 1 billion or $1 83 per share in the prior year quarter.

This variance reflects the EBITDA movement I, just described along with the onetime gain recognized in other net in the prior year quarter. This was associated with the reinvestment of the cash tax prepayments from Disney in relation to its acquisition of 20 <unk> century Fox.

Yeah.

Excluding the impact of noncore items adjusted EPS of $1 11 in the current year quarter was down modestly when compared to the $1 eight eight reported in the prior year quarter.

Turning to the performance of our operating segments in the quarter with cable networks reported a 7% increase in revenues.

Affiliate revenues increased five 5% once again led by double digit pricing gains at Fox News.

Cable advertising revenues increased 4% supported by the return of the full slate of college football games at the National Sports networks, selling the Covid related disruptions that occurred last year as well as the addition of international soccer matches, including the Gold Cup.

Cable advertising growth was also helped by double digit digital revenue growth at Fox News media that partially offset by lower linear advertising revenues at the Fox News channel due to the absence of the political cycle that we experienced in the prior year.

Cable other revenues increased by $26 million <unk>.

Primarily due to the return of sports sub licensing revenues and type of the boxing, although the following the Covid disruptions last year as well as continued subscription momentum at Fox nation.

EBITDA at our cable segment was down $7 million versus the prior year period. As these healthy revenue growth was offset by higher programming costs at the National Sports networks.

<unk> due to the sports scheduling changes I, just mentioned and the anticipated increase in digital investments at Fox News media, including costs associated with last week's launch of talks with them.

Now turning to television, where we reported a 17% increase in revenues in the quarter.

Television affiliate revenues increased 14%, reflecting double digit increases for both our programming fees from <unk> station affiliates and tried to direct retransmission revenues at our owned and operated stations.

This once again reaffirm we are well on track to achieve the television affiliate revenue growth, we outlined at our Investor day.

Television advertising revenues increased 22% supported by a strong AD marketplace normalized schedules on the Fox network and sustained momentum at <unk>.

At Fox Sports, we benefited from a full slate of college football the return of the MLB All star game and the inaugural broadcast of the field of Dreams game, all of which were disrupted by Covid last year.

At Fox Entertainment, we resumed a more traditional full schedule anchored by our primary scripted and unscripted hits as compared to a schedule last year that was hampered by COVID-19 related production delays, which compromise the quality of the programming slate.

At the Fox television stations, we continue to observe a meaningful rebound in the base market with our core AD revenues up high single digits, which partially offset the absence of historic political advertising revenues that we experienced last year.

Rounding out the television segment as Lachlan mentioned to be more than doubled its revenues against the prior year. The fact that growth in monetization is pacing the significant growth in total view time is testament to the revenue synergies delivered from bringing <unk> into the <unk> portfolio.

Finally, EBITDA <unk> television segment was down $98 million against the prior year period. As these healthy revenue growth was offset by higher programming costs, primarily associated with the normalized sports and entertainment schedules at the Fox network and increased digital investments at <unk>.

Turning now to cash flow, where our free cash flow deficit of $24 million.

Is consistent with the seasonality of our working capital cycle with the first half of the fiscal year is characterized by a concentration of payments for sports rights.

And the buildup of advertising related receivables, both of which reversed in the second half of last fiscal year.

So far this fiscal year, we have returned $440 million of capital to shareholders comprising approximately $140 million in the form of SME annual dividend payment and a further $300 million directed towards our ongoing share repurchase program.

Against our enhanced buyback authorization of $4 billion, we have now cumulatively repurchased approximately one 9 billion.

Representing over 9% 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 4 billion in cash and $7 95 billion in debt.

As we look out over the remainder of fiscal year, we'd like to remind you of a handful of markets.

Firstly as fiscal Q2, we will comp against the heightened news cycle and record political revenues of nearly $250 million that we delivered across the company in the December quarter of last year, most of which was earned in our television segment.

On our last call, we discussed our plans to invest $200 million to $300 million on a net EBITDA basis into the into the expansion and acceleration of our digital assets.

With a relatively modest amount deployed today the phasing of these investments will be skewed towards the final three quarters of the fiscal year.

From an affiliate revenue perspective, there are at least two things worth calling out, especially you will recall that last year's college football season, with shortened and included a number of gain cancellations.

As such we will have the tailwind of comparing against an accrual for potential distribution credits booked at the National Sports networks in the December quarter of last year.

And secondly, as I mentioned on our last call. We have a light affiliate renewal cycle with only 5% of that total company distribution revenues up for renewal this year.

As a result, we expect the growth in affiliate revenues to moderate over the course of this fiscal year before we see the progress from a meaningful rate increases from the 70% of total company affiliate revenues that come to you across our fiscal 'twenty three 'twenty four.

And the start of our affiliate revenues cycle next year is just one piece of what should be an exceptional fiscal 'twenty three for folks as we look ahead to Super Bowl 57, the FIFA World Cup. The early exit of our Thursday night football deal and November's midterm elections, and with that I will now turn the call back to Joe.

Thank you Steve.

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

Ladies and gentlemen, I would like to emphasize the functionality of the question and answer queue do you wish to ask a question. Please press. One then zero on your Touchtone phone Youll hear a tone, indicating you've been placed in Q you may remove yourself from queue at any time by pressing 100, if youre using a speakerphone please pick up the handset.

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

Our first question comes from line of Alexia odd Ronnie from J P. Morgan. Please go ahead.

Thank you Mike one question is and maybe on the sports side can you talk a bit about how you can E mail your ability to sort of leverage more your incredible brand you Havent sports and other rights that you havent points longer term is there a consideration of a greater greater sort of digital strategy beyond what you're already doing with which to be.

Okay and for the.

<unk> said that the partner with us with retransmission fees so by really.

Keeping our content exclusive with our partners, we think we drive a tremendous amount of value not just for us but for the whole ecosystem.

Operator, we can go to the next question.

Our next question comes from one of Jessica Rife Elrich from bank of them extra security. Please go ahead.

Hi, I have that one multipart question of course.

And [laughter] and Jessica putting five hi, So I mean this is this is a news question. So it's 65% share last night is pretty astounding, but even before that D. It's been a record amount of money raised from both parties.

Before the election and after yesterday is probably a lot more to come. So I guess the question is you know can you talk about monetization of quest.

Your various assets <unk> Fox news and T V. Just a second part of that is just measurements been a real issue for everybody does that affect your news like hanging monetize news.

Uhm and then I was just you know since you brought up you know news on to be interest on content in general I guess can you just talk about your outlook for how to be content profile will change in the coming yeah. Thank you.

Thanks, Jessica so.

Let me start with news of modernization and and and I think you're connected us what are some of the political revenues that that that we've seen oh this past.

Last 12 months and and what we're we're continuing to see and and and we believe you know the midterm elections and contests next year bowed to be truly uhm staggering. So you know news.

Uhm monetization there as as as you as you mentioned may be our our share of audience is is about 55% of cable news viewers is you know incredibly impressive there's a lot of hard work to you know to build assure them and maintain it.

One of the interesting things is a byproduct of that uhm of that sure is really the the breath of our audience as as well now we have you know more independence watching Fox news than than anyone else.

And interestingly, we have just about an equal amount of Democrats watching Fox news as watch CNN uhm According to Nielsen So.

The breath of the audience. In fact, they are honest is also you know demographically demographically, becoming broader is actually bringing in a new advertisers and new categories of advertisers on onto the news. The news platform. So it's incredibly pleasing to see you know what we're seeing them scattered pricing for <unk>.

News, you know well above upfronts, and and and and you know the the market is strong obviously local news is a big part of our our news business as well, we now produce over 1100 hours of local news per week. Many of our stations are now.

And if they weren't battleground states before they're they're now after last night, there now battleground states and we'd see a tremendous opportunity for them you know going forward and there's some in in in in the next political cycle approaches as far as Nielsen goes.

Nielsen I think Nielsen's all we we like others are.

Believe that and then Nielsen Uhm Hater is is imperfect, we'd like to see Nielsen invest further in their in their data gathering capabilities. It I think it affects Ah lower rated I'm more fragmented sections of the market more than more than us more than the particularly.

And this was a mass scale of of our news audiences in sports audiences lastly to be when we get to your third question desk.

I can't remember the specifics my question. It was building at the two become spilling out the T V content. It's there's two elements of it. It's obviously the the original content on to be these as you know are very inexpensive made.

Made for television movies, you mentioned they are all designed to be profitable in the very short term two of them were profitable within months.

Months, which was tremendous to see and the second element of the strategy is streaming kind of fast channels right linear channels, such as we have now with sports on television and with with news on television.

Which are you know very low cost, but better help them not drive the television too.

Operator, we can go to the next question.

Our next question will come from mine have been Swinburne for Morgan Stanley. Please go ahead.

Thank you good afternoon.

For any of you there's been obviously a lot of focus on sort of the AD market and the potential supply chain issues for some vertical <unk> you guys didn't mention any of that so I'm just wondering if you're seeing any softness in in the television market sitting here as we head into the holidays and I was just curious on two V. If you had international plans that you'd <unk>.

Want to share with us on taken that platform you know overseas in a in a substantial way over the next couple of years.

Thanks Man I hope, you're well so in terms of categories.

We've seen softness in auto until you specifically to talk about with the supply chain supply chain issues. I think if you look across a couple of categories at both supply chain and I think in some it's.

Shortage of Ah staffing and unemployment, but where an auto auto being the.

The key one one in the largest Ah those were there continues to be some softness but these are more than made up for new categories and grown categories that are coming into certainly are under our platforms.

On the local the local side clearly are wagering is mentioned in my in my prepared comments is is is booming across across the local markets travel is also coming back in restaurants are locally. So these categories are more than make.

I'm up for for this office in in a couple of categories that are seeing some supply chain supply chain issues from a from a national point of view.

Continue to benefit from a very strong upfront and.

And scatter pricing is averaging around.

20% up above above upfront pricing.

Entertainment's, a little higher than 20% news of lower than 20 per cent sports is about 25%. So it's averaging about about 20.

And nationally there's some wagering money not as much local but but the crypto category, which is a brand new category, particularly in sports is is booming as well as as well as finance some and then to be international to be currently or other than domestically and.

The U S as in Mexico, Australia, New Zealand and Canada.

And.

But the our our focus has been driving the U S business, but we do see international as a big opportunity.

We can go to the next question.

Our next question will come from the line of Robert Fishman from Moffett Nathan. Please go ahead.

Hi, good afternoon, if I could follow up on sports with your you a fair deal can you discuss how you see the arrow I for incremental sports rights and whether you plan to monetize on television and if not how does your focus on keeping their rights exclusive to the pay television because there's some help with you know either these negotiations or a <unk>.

Teacher negotiation.

Thanks, Robert So.

Whereas with all our sports rights when we.

Started in very carefully to make sure we have a positive.

Turn on them in return on on our our capital with with UEFA.

It's 1500 matches that we have available to US you know the.

Practically all of them will will be on on Fox sports, one and will there be the.

The backbone of Fox sports one through through those those summers where the.

With a euros are held and so you'll have the euros and some summers.

Really being the backbone of our soccer upset stomach soccer and you'll have FIFA work ups. The other summers. So we think it's a tremendous additional per Fox sports. One we will have some games on Fox Broadcasting, we'll have about four times as many games.

As as were previously on on a B C, but that's only.

20 games versus versus the fiber showed up on a b C. When that when they had those when that those rights.

And we don't visit putting.

Bureau games logging on to be at this stage alone we could.

Operator, we can go to the next question.

Our next question comes from line of Doug Mitchelson from Credit Suisse. Please go ahead.

I would think so much in in good afternoon, everyone. So I guess my question and and and my follow up told US right away Laughlin I'll stop a funnel doing for for two rivers about 30% growth in usage I know, you're always highlight that its growth and usage that really matters, but the measure the health you know, we still need to understand whether you're attracting new users.

<unk> and what marketing and distribution levers are left to pull to continue to scale that business and then you know for John we've talked to the past about visibility for court costs for the company and you know we've had obviously this huge pandemic swings.

But I'm curious if you exclude investment spending an unusual it's like superbowl and Thursday night football exit you know can you help us understand what the core opex growth looks like for your living in network businesses cause I think we sort of all have views as to what advertising and affiliate revenue on a core basis will look like going forward and then lastly for Steve could you monetize these higher end if all ratings or is or is that also.

Sold upfront thank you.

I'll go easy on.

No I looked it up to to be is a is growing both in users and and and and engagement in in the in TVT. One of the things that you do you should you juggle or or balance probably better, whereas enjoyable, but that that your balance is when you.

Market you you.

For new users right you can through digital acquisition tools, and they're very quickly again, new users and depending on how much you want to spend you can toggle that up and down but that's a a losing strategy if those user.

Are not engaged in and spend only a short period of time on the platform and then you have to every market to them for instance.

So.

Farhad and the team are very scientific and very experienced and just balancing.

The the the new users that they that they acquire versus you know <unk>.

The quality of those users and how engaged they are and it is really why.

The total viewing time, which includes new new viewers coming onto the platform really remains the.

The best metric because it because it includes all viewers as well as as a measure of the engagement that they have.

Hey, Doug.

[noise], Doug I'll just comment on that.

Close to rule, Steve take some of the details but the.

Probably at the heart of your question is visibility, we have over our cost profile or close to envelope and.

If you look at what we've done over the last year or two particularly securing unit bills in the next 12 years, having baseball contract that goes well into the next decade.

Today's announcement about where we're going to be with you later.

It just gives us great confidence about too.

Rest of the year in the future for us because we've got such great visibility over the cost envelope.

So it's not like.

We're expecting great surprises coming out of any one of any one of the areas. We at the stations and use the vision.

Sports or entertainment. So again, it just brings confidence to us as to the the business, yeah, and just and that'd be obvious to state the obvious obviously within that sort of overall cost envelope with sane when you can pay and lots of like schedules on the time, So I will look to moderate that costs there.

And make sure that that business delivers R Y but also in that same segment, we got to the which were really leading into from an investment and a cost space and say you will say that come through and the numbers, particularly as it were pretty light in terms of the amount of money that we put against to be from a net investment perspective over this quarter and you'll see.

Say that ramp with them subscribe wreck will user acquisition.

Cause marketing costs over the next couple of quarters.

From and NFL ready suspected will absolutely look to monetize it was with still selling scatter there is laughlin mentioned <unk>.

That has been incredibly robust for a sports with sort of 20.

25% ahead of upfront or pricing premium to upfront so.

We'll definitely look to monetize that over the course of the remainder of the season.

Operator, we have time for one more question.

Thank you our final question will come from the line of Stephen tile from Wells Fargo. Please go ahead.

Thanks, I just wanted to ask about Fox bed and Super sick. Thanks for that data point on Super six with the 5 million I was wondering if you could give us any metrics around Fox Bath and are you seeing Super Six act has a strong funnel for conversion from from free to pay and I know you are a passive I guess, what a participant in Fox that.

How should we think about you you may be using your sports rights to make that more of a differentiated platform or also taking more of an operational so that it might start to show up and the financials at some point. Thank you.

Thank you Steven so I'm.

Sure I I appreciate the question I was surprised that it took.

Six question, so I got to get us to talk spurt.

Super six and that's obviously a business that is.

Is very meaningful for us. So first of all first of all I'm not sure how much data I can give on on Fox bed itself I understand the flutter reported to that last night and and as the operator of this business I don't want to give any.

Information that that is mark market sensitive or or.

That they want to hold closer to their chests, but if you remember the the structure of our of our our joint venture we have a fox, but super six with over 5 million users as a as a number one national free to play a game.

That dropped <unk> spent it's critical to realize though that Fox bed includes in the joint venture and Fox that includes Pokerstars and Icasino and so over time as we monetize sports wagering. We also have the benefit of monetizing Pokerstars and Icasino.

In Fox bed.

And what that means as we go through to really sort of take full value and take a full grasp the opportunity fully we are beginning to explore the the process of getting a license wagering license in order to up to fully.

To fully cap.

Capture the value of these these tremendous assets for all of our of our shareholders. So that's a process that we're just beginning it's a complicated process because it's it's go state by state in terms of where where we would operate with our joint venture partner these assets and so so there's probably a.

A process that will take some time of course, we're also an arbitration with flutter under some of the elements of our of our our options are 50% option that talks about and are 18.6% option in <unk>.

And we expect that arbitration to be complete by June of next year.

That's probably as much as I can say on on Fox, but.

At this point, we're out of time, but if you have any further questions. Please give me your damned carry a call. Thank you once again for joining today's call.

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