Q1 2025 Fox Corp Earnings Call
[music].
[music].
[music].
Ladies and gentlemen, thank you for standing by welcome to the Fox Corporation first quarter fiscal year 'twenty to 'twenty five earnings conference call.
At this time, all participants are in listen only mode.
Later, we will conduct a question and answer session not we'd like to emphasize the functionality for the question and that's a cute 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 now turn the conference either to Chief Investor Relations Officer, Ms. Gabrielle Brown. Please go ahead Ms Brown.
Gabrielle Brown: Thank you operator, and we apologize for the technical difficulties, but good morning, and welcome to our fiscal 2025 first quarter earnings call. Joining me on the call today are Lachlan Murdoch Executive Chair and Chief Executive Officer, John Nolan, Chief operating Officer, and Steve <unk>, our chief.
Natural 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. 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 company's 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 in the Investor Relations section of our website.
Speaker Change: That I'm pleased to turn the call over to Lachlan.
Lachlan Murdoch: Thank you Gary and thank you all for joining US this morning to discuss our fiscal first quarter earnings.
Today, we again reported strong operating and financial results, we've had a great quarter and a great start to our fiscal year.
Our EBITDA of over $1 billion was up 21% on the back of sustained revenue growth, which this quarter reached 11% demonstrating the power of our content and brands and the ability of our strategy to consistently deliver outstanding results.
In the month of October alone Fox networks reached over 145 million people.
During this election cycle Americans are turning to Fox news more than any other service to cover the key issues and events, leading up to tomorrows election.
Lachlan Murdoch: Among those events were Fox news hosted programming that in and of themselves made news and clearly resonated with viewers.
Lachlan Murdoch: For example, gutfeld delivered its highest rated telecast in history with almost 5 million viewers tuning in on September 18th episode with President Trump joining the studio.
This was followed by the top town Hall hosted by Harris, Falconer, which also garnered exceptionally strong ratings.
Lachlan Murdoch: Not as notable as these were it was break their interview with Vice President Harris.
A new bar for political interviews generating over 9 million viewers on October 16th.
And while the election that was top of mind today, our new stores have done a brilliant job continuously reporting on events across the world for our audience.
Gabrielle Brown: Our dedication to news fair and balanced delivered almost 4 billion hours of Fox News media content consumed across linear and digital platforms during Q1.
During the quarter, new total audience grew more than 40% year over year and more than 60% in the key 25 to 54 year old demo.
Gabrielle Brown: With engagement like this it's no surprise that the Fox News channel was the second most watched networks in all of television this past quarter trailing only the summer Olympics enhanced NBC.
Once again Fox news ended the quarter at the most watched cable network in total day and in primetime while maintaining a fleet over peers as the most watched cable news network.
Additionally, <unk>.
During the quarter Fox News was the number one cable news channel.
Number one among all major political parties in the demo.
Speaker Change: That's right the number one news channel with Republicans.
The number one news channel with Democrats and the number one news channel with independents.
Gabrielle Brown: We are number one in all the key swing states.
We are number one with Asian and Hispanic viewers.
Gabrielle Brown: Our audience is as diverse as it is valuable.
Gabrielle Brown: It is as engaged as it is remarkably loyal.
Laurel through news and election cycles.
Ratings momentum at Fox News continued through October with second quarter to date total debut room totally ratings up 20% and prime ratings up over 30% over prior year.
Gabrielle Brown: Obviously this election is not limited to the presidential race. We have also seen highly contested down ballot and issue propositions across our strategic local station footprint.
From a revenue perspective, it's a local stations that are our election heroes.
Like it's not just our stations that are benefiting from strong political spend.
This cycle, we have seemed to be okay.
From a material recipient of political advertising.
Gabrielle Brown: Two of these large or hard to reach audience, coupled with its with its advanced targeting and geo targeting capabilities have clearly differentiated truly as campaigns look to maximize reach and efficiency.
Gabrielle Brown: Now I'm happy to report that companywide, we have achieved record political revenue for both the first quarter and the full fiscal year inclusive of the very substantial and dramatic impact of the 2020, Georgia Senate runoff.
Strong engagement, coupled with healthy direct response growth resulted in 19% revenue growth at <unk> during the quarter, which has accelerated in Q2, thus far.
Based on the current revenue run rate.
Gabrielle Brown: And for <unk> to cross the $1 billion revenue Mark this fiscal year.
Turning to Fox sports, we're having a strong fall season across a renowned portfolio of rights.
For example, just last week, our sports roster featured Greenbay, Detroit and America game of the week, Ohio State and Penn State and our Big New College football window, and a Yankees Dodgers' World series.
The MLB postseason has been both impressive and dramatic.
<unk> had the highest rated divisional series ever on Fox Sports one the most watched league championship series in the past five years.
And the best Major League Baseball post season on Fox since 2017.
And of course, the World series Dream matchup of the Yankees versus the Dodgers featuring two iconic franchises at some of our major League Baseball's biggest sars.
We saw an average of 16 million viewers tuned in each line of the five <unk> series across our networks with almost 19 million viewers watching game five making it the most watched world series in game five and seven years.
Moving on to football and the NFL on Fox is off to its best start in five years with American game of the week. The number one program on all television, averaging almost 26 million viewers, including a strong 28% increase in viewership and younger demos versus last season.
Additionally, we successfully launched our new Fox College football Fridays in September, which is averaging nearly 3 million viewers each week handily outpacing our prior Friday night programming by over 40% in its first month.
Gabrielle Brown: And we still have a pretty robust football calendar, yet to come culminating with our broadcast of Super Bowl 59.
I'm, sorry to say, we are already sold out and at record pricing.
The excitement continues at Fox Entertainment default premiere of Universal basic guys with Tvs, Most watch animation the debut of the past decade, and mosquitoes number one comedy among adults 18 to 49.
Rescue high surf with TV Tv's highest rated for drama debut in four years.
Back to your first quarter results once again highlight the strength of our leadership brands and demonstrate the merits of our differentiated strategy.
Our momentum is supported by outstanding content across our platforms and advertising market that it's healthy for us across the board.
This operating effectiveness, coupled with the strength of our balance sheet to support our commitment to delivering long term shareholder value whether that be through growing our existing business thoughtful M&A or returning capital to our shareholders.
With that let me now turn it over to Steve for some further details.
Steve: Thanks, a lot Glenn and good morning, everyone.
Steve: As Lachlan just described Fox is off to a strong start to fiscal 2025.
Steve: Financially. This is highlighted by broad based top line growth with total company revenues grew 11% to $356 billion.
This revenue growth converted to a 21% increase in EBITDA, which reached $185 billion.
Total company advertising revenues were up 11% year over year boosted by political.
Advertising at the station continued momentum at TV and strong audience growth at Fox News media.
Total company affiliate fee revenue grew 6% over the prior year quarter with 10% growth at our television segment and 3% growth at cable.
Industry, leading affiliate revenue growth underscores the strength of our brands and focused portfolio of content.
Total company other revenues grew 47% a result of high sports sub licensing revenues at our cable segment.
This growth in revenue was largely offset by a corresponding increase in rights cost with no material impact on year over year overall EBITDA growth.
As I mentioned quarterly EBITDA was $1 5 billion up 21% over the prior year with a revenue growth, partially offset by an 8% increase in expenses due to high school as programming rights amortization and increased cost of TV.
Net income attributable to stockholders of $827 million or $1 78 per share compared to the $407 million or <unk> 82 per share reported in the prior year period.
This increase was underpinned by our EBITDA growth coupled with the change in fair value of the company's investment in Fletcher recognizing non operating other net.
Excluding noncore items.
Net income was $672 million and adjusted EPS was $1 45, equating to a year over year increase of 33%.
Now turning to our operating segments were in our cable networks revenue grew 15% year over year.
This was led by advertising revenue growth, which was up 11% predominantly driven by Fox News media, where we saw high ratings direct response pricing and digital advertising revenue, partially offset by higher preemption associated with breaking news coverage.
Cable affiliate fee revenues grew 3% in the quarter with growth in pricing from area of affiliate renewals outpacing the impact from industry subscriber declines running at a touch under 8% a slight improvement from last quarter.
Cable other revenues increased $147 million due to the high splits have licensing revenues I mentioned earlier.
Steve: Total expenses increased 9%, primarily due to high sports programming rights amortization and increased news gathering costs at Fox News media, including coverage in the U S presidential election cycles.
All in EBITDA at our cable segment grew 23% over the prior year quarter to reach $748 million.
Turning now to our television segment, where we delivered 10% growth in revenues.
Television advertising revenues were up 11% led.
Led by the strong political cycle at our local stations continued growth at <unk> and the benefit of higher NFL ratings and NFL scheduling with weak for the season sliding back into into the September quarter.
Steve: The benefit of the UEFA euros, and Copa America, and the current year quarter were more than offset by the absence of the FIFA Women's World Cup.
Television affiliate fee revenues grew 10% year over year as healthy growth in fees across Fox owned and affiliated stations more than offset the impact from industry subscriber declines.
TV and other revenues increased 3%, primarily a result of higher third party content revenues tied to our entertainment production Studios.
Expenses at the television segment grew 11% over the prior year quarter, driven by high programming rights amortization at Fox sports and increased cost of TV.
Collectively these revenue and expense movements resulted in quarterly EBITDA at our television segment, increasing 6% to $372 million.
Now turning to cash flow.
Steve: Free cash flow, which we define as net cash provided by operating activities less capex was positive $94 million in the quarter.
Steve: This is consistent with the seasonality of our working capital cycle with the first half of our 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 our fiscal year.
Steve: We remained active with our share buyback program, where we have repurchased a further $300 million satisfy this fiscal year we.
We have now cumulatively repurchased five 9 billion.
Representing approximately 29% of our total shares outstanding since the launch of the buyback program in 2019.
And we remain committed to utilizing our full buyback authorization of $7 billion.
Steve: This is supported by the strength of our balance sheet, where we ended the quarter with approximately $4 $1 billion in cash and $7 2 billion in debt and with that I'll turn the call over to Gary.
Gary: And now we would be happy to take questions from the investment community.
Gary: Ladies and gentlemen, I'd like to emphasize the functionality for the question and Max Q.
Speaker Change: If you wish to ask a question. Please press Star then one on your touch time funding.
Speaker Change: You will hear an announcement, indicating your hand is being raised you may remove yourself from the queue at any time by once again pressing star one.
If you are using a speakerphone please pick up the handset before pressing the numbers. It has being requested that you limit yourself to one question.
Once again, if you have a question. Please press star one now.
And we have a question from Michael Morris from Guggenheim Partners. Please go ahead.
Michael Morris: Thank you excuse me good morning, guys.
Michael Morris: Comcast said last week that they are considering separating their cable network business from the rest of the company and so broadly would be great to get your thoughts on how that may impact you or the industry at large Fox clearly has been a consistent supporter of the video bundle. So I'm curious if this seems like one of your major partners as maybe a little less committed.
Michael Morris: Good.
Michael Morris: And if I could just one other topic do you have seen this modest acceleration in affiliate revenue growth cable and television for two quarters in a row now Steve you mentioned the slight improvement in the underlying subscriber trends do you feel any more comfortable maybe that we are getting closer to a bottom in the rate of bundled subscriber declines. Thank you.
Speaker Change: Thanks, Michael So I don't want to comment.
Speaker Change: Specifically on what Comcast plans may or may not be on the only read in the press and heard what they said on their call.
Michael Morris: But.
Michael Morris: I don't I don't think it affects us in any way at all.
Michael Morris: I think what.
Michael Morris: From our perspective at Fox and we can drive tremendous amount of synergy across all of our platforms. So between.
Michael Morris: The Entertainment network, obviously, Fox Sports Fox Sports, one or two share rights with the entertainment network.
Michael Morris: The football for instance in baseball that's on that's on broadcast their local television stations that underpin that.
Michael Morris: They are our relationship.
Michael Morris: Our promotional capabilities and synergies with Fox news.
Michael Morris: And now obviously with the incredible growth opportunity, which is really.
Michael Morris: Yeah.
Michael Morris: Assistant and driven by <unk>.
Michael Morris: The strength and the reach of our kind of marketing platform across across.
Michael Morris: Broadcast cable and and sports and so from my perspective.
Michael Morris: I don't see how we could ever do that I think breaking apart part of the business would be would be very difficult. Both from a cost point of view on from a revenue and a promotional synergy point of view.
Speaker Change: In terms of the sub declines on a per order Steve wants to add.
Michael Morris: Add to this but.
Michael Morris: Obviously, you sometimes have declined the rate has declined somewhat in this quarter. It is pleasing to see.
Michael Morris: And we do believe.
Michael Morris: That there is a sub floor, we just don't know where it is but we do believe that there is a sub floor and there will always be.
Michael Morris: Consumers and subscribers who will want.
Michael Morris: Core package and a core package that includes all of our brands one of your number one in news.
Michael Morris: Want to sports.
Michael Morris: You have.
Michael Morris: An incredible base of local.
Michael Morris: TV stations re transmitted in that core package.
Michael Morris: Package that people will always I'm always wanted and it's very valuable to that to that that consumer base and market listen I think very pleased with where the revenue growth up two in the quarter luck.
Michael Morris: Cable ticking up to plus 3% and TV plus Canada excellent results for US most of that I think really driven by the pricing increases with golf and as Lachlan said, the moderation and subscribe declines is is obviously helpful. Theres most seasonality obviously injured injury Ian Nowadays.
Michael Morris: We're very pleased with the train starts revenue et cetera.
Speaker Change: Operator next question please.
Speaker Change: Have a question from Ben Swinburne from Morgan Stanley. Please go ahead.
Ben Swinburne: Thank you. Good morning wanted to ask you guys about political advertising and or if you would.
Ben Swinburne: Would agree it feels like the sort of connected TV streaming market is really participating this cycle in a way at least I haven't noticed in the past and to be clearly is.
Speaker Change: Is gaining share in the political advertising market. So what are you guys seeing in terms of advertiser demand like how do they look at local station buys versus to be are there. Other are you solving sort of different equations for.
Speaker Change: Campaigns and candidates and is it do you think there's any cannibalization in other words just to be taking money out of the station group I don't know, Steve. If you are willing to sort of quantify kind of holistically. The political dollars youre seeing in the quarter or for the cycle that would be helpful. Too. Thanks, so much.
Speaker Change: So.
Speaker Change: Despite good morning benefits by way of background.
Speaker Change: Political spend this cycle.
Michael Morris: Different.
Michael Morris: In some significant ways from four years ago four years ago, there was more sort of national.
Michael Morris: Yes.
Michael Morris: A dollar spent.
Michael Morris: There was.
Michael Morris: Somewhat of a shift the majority of it.
Michael Morris: Some shift for years ago towards national from local.
Michael Morris: First I think we've talked about and those quarterly calls back then for.
Michael Morris: For the first time seeing national political dollar spend was was unique four years ago. This year, the cycle sort of reverted to form and their campaigns.
Michael Morris: <unk>.
Michael Morris: Size of all hydro politics have shifted back to being more local and targeted spends.
Michael Morris: That has.
Michael Morris: As discussed both in the station group, which will have a record political revenues, but also in as I mentioned in my in my.
Michael Morris: Earlier comments also on TUI that can target them very efficiently and specifically geo target its advertisers as well so.
Michael Morris: In fact, we haven't seen any evidence of a cannibalization.
Michael Morris: From stations are into India into digital of our <unk> and fastest quite the reverse soobee was able to capture money that frankly, we couldnt take entire mistakes and there is such there.
Michael Morris: Tidal wave of political dollars to have.
Michael Morris: To have.
Michael Morris: Much of that cost are captured.
Michael Morris: Captured by.
Michael Morris: Activity as well as really pleasing to see I think it also shows the obviously the strength of TB. It's obviously, it's not just the <unk>.
Michael Morris: Geo targeting those valuable but this is a very hard.
Michael Morris: Demographic to reach.
Michael Morris: Most of them are cord nevers, they're younger and they are very diverse.
Michael Morris: And as a very valuable are very valuable audience and it shows now that <unk> has the scale and has the the.
Michael Morris: Some awareness to be faster or graduated into.
Michael Morris: To your advertisers, that's a must buy for people who wanted to reach some reach this audience. So it's very very pleasing to see.
Michael Morris: And then just just to put some numbers around it if I look at just the quarter local like it really is more and more intensive it's not cannibalistic at all between TV and the stations the.
Michael Morris: The stations were up in Q1 by sort of tens of millions of dollars and then if I look at the half remember the stations benefit from the Georgia right now post the election.
Michael Morris: They have already done more than what they did that last half in Q, sorry, Q1, and Q2 of fiscal 'twenty. One. So we sort of we did just north of $260 million in that half in four years ago, and we know who that already in <unk>.
Michael Morris: This current fiscal year. So the stations have had an unbelievable first half in terms of political and then as Lachlan mentioned TV went from virtually nothing four years ago to a meaningful number for us what do you call that sort of absolutely local or national is sort of a yieldco.
Speaker Change: And then just finally, if this works right.
Speaker Change: <unk> of our sports.
Speaker Change: Programming over the last few weeks.
Michael Morris: As we have driven that's where the national political dollars have come in.
Michael Morris: Apologize to anyone who is enjoying their football over the weekend.
Michael Morris: Armada by political ads, but but but sports has really been the.
Michael Morris: Beneficiary of national political advertising.
Michael Morris: Later next question please.
Speaker Change: We have a question from Robert Fishman of Moffett Nathanson. Please go ahead.
Robert Fishman: Hi, Good morning, everyone, maybe just a follow up on to be more broadly.
Robert Fishman: It's on track to reach $1 billion in revenue can you just help investors think about like what the future of that that that really look like and how big it can get with its current momentum and then maybe just secondly, any updates you can provide on the future of that.
Robert Fishman: If it doesn't launch do you have a willingness to license Fox sports content to other potential partners. Thank you.
Speaker Change: Thanks, Robert first of all.
Michael Morris: On <unk>.
Michael Morris: Look the growth as it continues to be.
Michael Morris: So very impressive we were very pleased with the growth.
Michael Morris: I won't give you the October revenue number because.
Michael Morris: Gaby will.
Michael Morris: Kick me under the table, obviously is the beneficiary of a tremendous amount of political money. So it would be must have been misleading misleading.
Michael Morris: A misleading.
Michael Morris: Staggering statistic.
Michael Morris: Sure.
Michael Morris: And yet and yet ex political.
Speaker Change: We continue to see growth in the second quarter and we think beyond this has driven I think that we're announcing a very sustainable model.
Michael Morris: Largest.
Michael Morris: Avon.
Michael Morris: Our library.
Michael Morris: At 95% of the library is revenue share, although only 65% of the viewing is revenue share of the 5% that we spend in our sort of direct.
Michael Morris: Content.
Michael Morris: Purchase content is.
Michael Morris: You drive about 30% of that.
Michael Morris: <unk>. So the business continues to grow as a fantastic platform and then when we see it growing from a consensus and really will.
Michael Morris: Increasingly be the way Americans wash off Recalibration.
Michael Morris: That's absolutely the case.
Michael Morris: And of course, the fact that it's <unk>.
Michael Morris: Video on demand.
Michael Morris: Not a vast vast channel platform.
Michael Morris: Also adds to that.
Michael Morris: The value of that audience.
Michael Morris: Yes.
Michael Morris: Choosing <unk>.
Michael Morris: Proactively choosing to watch to watch our content.
Michael Morris: At increasingly high levels.
Michael Morris: Hi.
Michael Morris: On venue. Obviously, we are we are awaiting our appeal of the injunction and we'll see.
Michael Morris: Where we go from there if we continue to believe venue is a tremendous pro consumer pro competition our platform we're very.
Michael Morris: Very excited to launch it.
Michael Morris: When we have the ability to do so.
Michael Morris: And then on licensing content.
Michael Morris: And we are in the business of building brands.
Michael Morris: Are producing.
Michael Morris: Programming.
Michael Morris: <unk>.
Michael Morris: We're not a sublicense sub licensee or licensor license or.
Michael Morris: I'll sort of sports rights, and any sort of substantial or significant way.
Michael Morris: Great.
Speaker Change: Operator next question please.
Speaker Change: We have a question from John Hodulik from UBS. Please go ahead.
John Hodulik: Great. Thanks, two if I could first.
John Hodulik: Can you guys comment on sort of how you see the AD environment shaping up post election, and maybe what Youre seeing now in terms of pricing from a from a direct response standpoint, and then obviously ratings and very strong it looks like you guys have some.
Speaker Change: Easier, maybe not quite as easy, but easier comps over the next couple of quarters.
Michael Morris: News.
Michael Morris: How should we think about the outcome of the election and maybe historically do you expect to keep the same momentum we have.
Michael Morris: We have seen recently, regardless of the outcome just any perspective, you have there would be great.
Michael Morris: Okay.
Michael Morris: Thanks, a lot for the question John is that helpful.
Michael Morris: What's going to happen, what's going to happen Tomorrow I don't know.
Speaker Change: So for Mike.
Speaker Change: Our advertising revenues.
Speaker Change: The advertising marketplace that we participate in is very healthy right.
Speaker Change: It helps the work that we're not.
Michael Morris: Overly exposed to general entertainment, Okay General Entertainment attainment cable inventory and programming.
Michael Morris: So all of the markets that we participate in.
Michael Morris: We're seeing very healthy growth and we're seeing healthy growth obviously not in the quarter that we've just reported.
Michael Morris: But going forward.
Speaker Change: And if you look at sports we had a.
Speaker Change: Just a tremendous a world series I think it's probably.
Michael Morris: Our.
Michael Morris: I haven't checked this but I'm pretty sure.
Michael Morris: Five game World series is probably a record amount of revenue within five games.
Michael Morris: It outperformed our budget and our expectations.
Michael Morris: We have the Super Bowl coming up.
Michael Morris: Football has sold very well regular season and of course, we're sold out.
Michael Morris: For the Super Bowl.
Michael Morris: We had record what we believe our record pricing.
Michael Morris: News ratings, we've talked about how strong news ratings are particularly in the key 25 54 by demographics.
Michael Morris: That's also.
Michael Morris: Health care.
Michael Morris: At a significant sort of multiplier effect by direct pricing being up.
Michael Morris: Very significantly significantly in the first quarter and almost double significantly in the second quarter. So.
Michael Morris: Very strong for R. R.
Michael Morris: Our pricing for direct response.
Michael Morris: Entertainment scatter is strong and we've talked about the local political spend already obviously one thing that happens there. If you if you will.
Speaker Change: Can you point anything up local political pushes out some local based market advertising.
Michael Morris: Only have so much inventory and so if you look at the local base markets.
Michael Morris: You have auto is soft retail is soft bedding that one is the one category that's pretty strong so betting has sort of returned to.
Michael Morris: To grow and I think we've talked about to you already being up 19% and an accelerating in the second quarter. So.
Speaker Change: What happens this week with the election.
Michael Morris: And how that would impact I don't think it would impact us I think.
Michael Morris: Again in the markets that we're seeing we're seeing tremendous amount of growth in health.
Speaker Change: Okay. Operator next question please.
Speaker Change: We have a question from Jessica Reif Ehrlich with Bank of America Securities. Please go ahead.
Speaker Change: Alright, Thank you and good morning, everyone, maybe switching gears a little bit.
Speaker Change: To flutter intangible can you talk about how long it will take you to get through the approval process and once you too, but what would make you exercise earlier or later.
Michael Morris: And ultimately what do you think you'd do with this asset and then one last thing if we could just go back to be which is phenomenal.
Michael Morris: And you said its accelerating.
Michael Morris: Can you walk through all the characteristics.
Speaker Change: But you had that before so why is it accelerating are you selling differently youre using different advertising tools.
Michael Morris: So.
Michael Morris: On <unk>.
Michael Morris: Flutter and tangible so we have.
Michael Morris: Six years, I think and in our in.
Michael Morris: Our options so.
Michael Morris: Although there is no.
Michael Morris: There is no immediate knee.
Michael Morris: Need to rush the process, what we have now engaged on this decade, so all I can 26.
Michael Morris: Dates we have to get licensed in every state that <unk> operates in and so it is a in depth process. It will take some time I don't think it will take our exorbitant amount of time, but.
Michael Morris: But we expect that process to go.
Michael Morris: Relatively smooth smoothly.
Michael Morris: And.
Michael Morris: We'd be able to.
Michael Morris: A complete the process within a year.
Speaker Change: And Jessica sorry, what was the second question to the <unk>.
Speaker Change: Why is it yet.
Michael Morris: So this year this quarter that we've ever seen Jessica.
Michael Morris: We've talked before about the fill rate in <unk>.
Michael Morris: <unk> and what we're really being able to do is actually.
Michael Morris: Reduce our forever.
Michael Morris: Great.
Michael Morris: Improve the fill rate.
Michael Morris: Very significantly.
Michael Morris: So we are in a very competitive market, we've been able to hold pricing above we've really been able to drive our fill rate.
Michael Morris: Two.
Michael Morris: Accelerate that revenue growth.
Speaker Change: Operator, we have time for one more question.
Operator: Your final question comes from the line of Michael <unk> from Goldman Sachs. Please go ahead.
Speaker Change: Hi, good morning, Thanks for the question.
Speaker Change: Just was wondering if you could talk about some of the EBITDA bridge components at TV for fiscal 'twenty five.
Operator: <unk>.
Michael Morris: Specifically I know you talked about digital losses.
Michael Morris: <unk> to the high $200 million this year, given the <unk> outperformance.
Michael Morris: Is that does that number better and then anything else that you would flag for us as we think about the build for television. Thank you.
Speaker Change: Yes, so if I look at Mark Thanks for the question if I look at the balance of the year.
Michael Morris: For the company and a lot of these TV, but if you look at we've obviously got an enormous cyclical tailwind with political.
Michael Morris: Those fts number then including the TB revenue plus the sport political revenue that Lachlan mentioned is all going to open.
Michael Morris: We're going to be beneficial to the TV segment.
Michael Morris: From a trading momentum perspective, obviously Fox uses benefiting in the cable segment from top line growth.
Michael Morris: The underlying momentum and then you've had an amazing MLB post season, which is going to be in at least first both from a revenue and margin perspective.
Michael Morris: If I look at Q3, specifically.
Michael Morris: From an from a football perspective, NFL scheduling will be a headwind from an advertising revenue perspective, because we were.
Michael Morris: We're down in the Christmas game, which we had last year in college as a whole sort of the reorder or Reorientate sports rights is a big shift for us in Q2, particularly in Q2, <unk> 10 expansion, which will be cost up for us in the quarter.
Michael Morris: You've got increased right space across the board, but then with that.
Michael Morris: To partially offset that.
Michael Morris: WWE in for the remainder of the year and then with US also obviously discontinued with cash flow.
Michael Morris: Further out.
Michael Morris: We've got Super Bowl.
Michael Morris: In Q3, which will be a big driver be very very cash flow accretive for the company, but will not be from an EBITDA perspective for US and then we also have the impact of the Q3 entertainment schedule coming back. This is where we were last year generally speaking we feel very.
Michael Morris: <unk> TV is going to have a really really strong sort of second third and fourth quarter.
Michael Morris: And obviously in Q4, when we look at it from a software perspective, which can knock us around we don't have the UEFA copper or FIFA. So that it can be helpful. In that final quarter. So hopefully that gives you enough break comes to truck.
Michael Morris: But now there's a really nice tailwind.
Michael Morris: Television segment across all of those.
Speaker Change: Okay. At this point, we are out of time, but if you have any further questions. Please give me a or Charlie can stanzel. Thanks.
Speaker Change: Thanks, so much for joining us on today's call.
Speaker Change: Thank you.
Speaker Change: Ladies and gentlemen that does conclude your conference call for today. Thank you for joining US you may now disconnect.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: [music].
Michael Morris: Okay.
Michael Morris: [music].
Michael Morris: Yes.
Michael Morris: [music].
Michael Morris: Yes.
Michael Morris: Okay.
Michael Morris: Yes.
Michael Morris: [music].
Michael Morris: Okay.
Michael Morris: Okay.
Michael Morris: [music].
Michael Morris: Thank you.
Michael Morris: Thank you.
Michael Morris: Yes.
Michael Morris: Good morning.
Michael Morris: Okay.
Michael Morris: Okay.
Michael Morris: Yes.
Michael Morris: [music].
Michael Morris: Yes.
Michael Morris: Okay.
Michael Morris: [music].
Michael Morris: Okay.
Michael Morris: [music] mix.
Michael Morris: Thank you.
Michael Morris: [music] Lady.
Speaker Change: Ladies and gentlemen, thank you for standing by welcome to the Fox Corporation first quarter fiscal year 2025 earnings Conference call.
Speaker Change: At this time all participants are in listen only mode. Later, we will conduct a question and answer session.
Speaker Change: I'd like to emphasize that functionality for the question and answer queue will be given at that time.
Speaker Change: If you should require assistance during the call. Please press Star then zero.
Michael Morris: As a reminder, this conference is being recorded.
Speaker Change: Now turn the conference over to Chief Investor Relations Officer, Ms. Gabrielle Brown. Please go ahead Ms Brown.
Gabrielle Brown: Thank you operator, and we apologize for the technical difficulty.
Speaker Change: And welcome to our fiscal 2025 first quarter earnings call.
Michael Morris: 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 will take questions from the investment community. Please note that.
Michael Morris: This call May include forward looking statements regarding Fox Corporation's financial performance and operating results.
Michael Morris: 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.
Michael Morris: 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 in the Investor Relations section of our website.
Michael Morris: That I am pleased to turn the call over to Lachlan.
Lachlan Murdoch: Thank you Gabby and thank you all for joining US this morning to discuss our fiscal first quarter earnings.
Lachlan Murdoch: Today, we again reported strong operating and financial results, we have had a great quarter and a great start to our fiscal year.
Michael Morris: Our EBITDA of over $1 billion was up 21% on the back of sustained revenue growth, which this quarter reached 11% demonstrating the power of our content and brands and the ability of our strategy to consistently deliver outstanding results.
Michael Morris: In the month of October alone Fox networks reached over 145 million people.
Michael Morris: During this election cycle Americans are turning to Fox news more than any other service to cover the key issues and events, leading up to tomorrows election.
Michael Morris: Among those events were Fox news hosted programming that in and of themselves made news and clearly resonated with viewers.
Michael Morris: For example, gutfeld delivered its highest rated telecast in history with almost 5 million viewers tuning in on September 18th episode with President Trump joining the studio.
Michael Morris: This was followed by the Trump town Hall hosted by Harris, Falconer, which also garnered exceptionally strong ratings.
Michael Morris: But as notable as these were it was break Theres interview with Vice President Harris.
Michael Morris: A new bar for political interviews generating over 9 million viewers on October 16th.
Michael Morris: And while the election is top of mind today, our new teams have done a brilliant job continuously reporting on events across the world for our audience.
Michael Morris: Our dedication to news fair and balanced delivered almost 4 billion hours of Fox News media content consumed across linear and digital platforms during Q1.
Michael Morris: During the quarter news total audience grew more than 40% year over year and more than 60% in the key 25 to 54 year old demo.
Michael Morris: With engagement like this it's no surprise that the Fox News channel was the second most watched networks in all of the pay TV. This past quarter trailing only the summer Olympics enhanced NBC.
Michael Morris: Once again Fox news ended the quarter as the most watched cable network in total day and in primetime while maintaining its lead over our peers as the most watched cable news network.
Michael Morris: Additionally, John.
Michael Morris: During the quarter Fox News was the number one cable news channel.
Michael Morris: Number one among all major political parties in the demo.
That's right the number one news channel with Republicans.
Michael Morris: The number one news channel with Democrats and the number one news channel with independents.
Michael Morris: We are number one in all the key swing states and we are number one with Asian and Hispanic viewers.
Michael Morris: Our audience is as diverse as it is valuable.
Michael Morris: It is as engaged as it is remarkably loyal.
Michael Morris: Laura through news and election cycles.
Michael Morris: Ratings momentum at Fox News continued through October with second quarter to date total, Dave given totally ratings up 20% and prime ratings up over 30% over prior year.
Michael Morris: Obviously this election is not limited to the presidential race. We have also seen highly contested down ballot and issue propositions across our strategic local station footprint.
Michael Morris: From a revenue perspective, it's a local stations that are our election heroes.
Michael Morris: But it's not just our stations that are benefiting from strong political spend.
Michael Morris: This cycle, we have seen to be a material recipient of political advertising.
Michael Morris: To be as large or hard to reach audience, coupled with its with its advanced targeting and geo targeting capabilities have clearly differentiated to be as campaigns look to maximize reach and efficiency.
Michael Morris: Now I'm happy to report that company wide, we have achieved record political revenue for both the first quarter and the full fiscal year inclusive of the very substantial and dramatic impact of the 2020, Georgia Senate runoff.
Michael Morris: Strong engagement, coupled with healthy direct response growth resulted in 19% revenue growth at <unk> during the quarter, which has accelerated in Q2, thus far.
Michael Morris: Based on the current revenue run rate.
Michael Morris: For <unk> to cross the $1 billion revenue Mark this fiscal year.
Michael Morris: Turning to Fox sports, we're having a strong fall season across our renowned portfolio of rights.
Michael Morris: For example, just last week, our sports roster feature Greenbay, Detroit and Americas game of the week, Ohio State and Penn State and our Big Noon College football window, and a Yankees Dodgers' World series.
Michael Morris: The MLB postseason had been both impressive and dramatic.
Michael Morris: Box at the highest rated divisional series ever on Fox Sports one the most watched league championship series in the past five years.
Michael Morris: And the vast major league baseball post season on Fox in 2017.
Michael Morris: And of course, the World series Dream match up of the Yankees versus the Dodgers, featuring two iconic franchises and some of our major League Baseball's biggest stars.
Michael Morris: We saw an average of 16 million viewers tuned in each line of the five game series across our networks with almost 19 million viewers watching game five making this the most watched world series in game five and seven years.
Michael Morris: Okay.
Michael Morris: Moving on to football and the NFL on Fox is off to its best start in five years with American game of the week. The number one program on all television, averaging almost 26 million viewers, including a strong 28% increase in viewership and younger demos versus last season.
Michael Morris: Additionally, we successfully launched our new Fox College football Friday in September, which is averaging nearly 3 million viewers each week handily outpacing our prior Friday night programming by over 40% in its first month.
Michael Morris: And we still have a pretty robust football calendar, yet become culminating with our broadcast of Super Bowl 59, where I'm sorry to say, we are already sold out and at record pricing.
Michael Morris: The excitement continues at Fox Entertainment default Premier of Universal basic guys with Tvs, Most watch animation the debut of the past decade, and the season's number one comedy among adults 18 to 49.
Michael Morris: Rescue high surf with TV Tv's highest rated fall drama debut in four years.
Michael Morris: <unk> first quarter results once again highlight the strength of our leadership brands and demonstrate the merits of our differentiated strategy.
Michael Morris: Our momentum is supported by outstanding content across our platforms and advertising market that it's healthy for us across the board.
Michael Morris: This operating effectiveness, coupled with the strength of our balance sheet support our commitment to delivering long term shareholder value whether that be through growing our existing business thoughtful M&A or returning capital to our shareholders.
Speaker Change: With that let me now turn it over to Steve for some further details.
Speaker Change: Thanks, a lot Glenn and good morning, everyone.
Speaker Change: As Lachlan just described Fox is off to a strong start to fiscal 2025.
Speaker Change: Financially. This is highlighted by broad based top line growth with total company revenues grew 11% to 356 billion.
Speaker Change: This revenue growth converted to a 21% increase in EBITDA, which reached 185 billion.
Speaker Change: Total company advertising revenues were up 11% year over year boosted by political advertising at the stations continued momentum at TB and strong audience growth at Fox News media.
Michael Morris: Total company affiliate fee revenues grew 6% over the prior year quarter with 10% growth at our television segment and 3% growth at cable <unk>.
Michael Morris: This industry, leading affiliate revenue growth underscores the strength of our brands and focused portfolio of content.
Michael Morris: Total company other revenues grew 47% a result of higher splits sub licensing revenues at our cable segment.
Michael Morris: This growth in revenue was largely offset by a corresponding increase in rights cost with no material impact on year over year overall EBITDA growth.
Michael Morris: As I mentioned quarterly EBITDA was $1 5 billion.
Michael Morris: Up 21% over the prior year with a revenue growth, partially offset by an 8% increase in expenses due to high school as programming rights amortization and increased cost of TV <unk>.
Michael Morris: Net income attributable to stockholders of $827 million or $1 78 per share compares to the $407 million.
Michael Morris: Or <unk> 82 per share reported in the prior year period.
Michael Morris: This increase was underpinned by our EBITDA growth coupled with the change in fair value of the company's investment in Fletcher recognizing non operating other net.
Michael Morris: Excluding noncore items adjusted net income was $672 million and adjusted EPS was $1 45, equating to a year over year increase of 33%.
Michael Morris: Now turning to our operating segments were at our cable networks revenue grew 15% year over year.
Michael Morris: This was led by advertising revenue growth, which was up 11% predominantly driven by Fox News media, where we saw high ratings direct response pricing and digital advertising revenue, partially offset by higher preemption associated with breaking news coverage.
Michael Morris: Cable affiliate fee revenues grew 3% in the quarter with growth in pricing from area of affiliate renewals.
Michael Morris: Facing the impact from industry subscriber declines running at a touch under 8% a slight improvement from last quarter.
Michael Morris: Cable other revenues increased $147 million due to the high splits have licensing revenues I mentioned earlier.
Michael Morris: Total expenses increased 9%, primarily due to higher sports programming rights amortization and increased news gathering costs at Fox News media, including coverage in the U S presidential election cycles.
Michael Morris: All in EBITDA at our cable segment grew 23% over the prior year quarter to reach $748 million.
Michael Morris: Turning now to our television segment, where we delivered 10% growth in revenues.
Michael Morris: Television advertising revenues were up 11%.
Michael Morris: Led by the strong political cycle at our local stations continued growth at <unk> and the benefit of higher NFL ratings and NFL scheduling with weak for the season sliding back into into the September quarter.
Michael Morris: The benefit of the UEFA euros, and Copa America, and the current year quarter were more than offset by the absence of the FIFA Women's World Cup.
Michael Morris: Television affiliate fee revenues grew 10% year over year as healthy growth in fees across Fox owned and affiliated stations more than offset the impact from industry subscriber declines.
Michael Morris: TV and other revenues increased 3%, primarily a result of higher third party content revenues tied to our entertainment production Studios.
Michael Morris: Expenses at the television segment grew 11% over the prior year quarter.
Michael Morris: Driven by higher programming rights amortization at Fox sports and increased cost of TV.
Michael Morris: Collectively these revenue and expense movements resulted in quarterly EBITDA at our television segment, increasing 6% to $372 million.
Michael Morris: Now turning to cash flow.
Michael Morris: Free cash flow, which we define as net cash provided by operating activities less capex was positive $94 million in the quarter.
Michael Morris: This 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 our fiscal year.
Michael Morris: We remained active with our share buyback program, where we have repurchased a further $300 million so far this fiscal year.
Michael Morris: We have now cumulatively repurchased $5 9 billion.
Michael Morris: Representing approximately 29% of our total shares outstanding since the launch of the buyback program in 2019.
Michael Morris: And we remain committed to utilizing our full buyback authorization of $7 billion.
Michael Morris: This is supported by the strength of our balance sheet, where we ended the quarter with approximately $4 $1 billion in cash and $7 2 billion in debt and with that I'll turn the call over there again.
Michael Morris: And now we would be happy to take questions from the investment community.
Speaker Change: Ladies and gentlemen, I would like to emphasize the functionality for the question to Max Q.
Speaker Change: If you wish to ask a question. Please press Star then one on your touch time funding.
Michael Morris: You will hear an announcement, indicating your hand is being raised you may remove yourself from the queue at any time by once again pressing star one.
Michael Morris: If you are using a speakerphone please pick up the handset before pressing the numbers. It has being requested that you limit yourself to one question.
Michael Morris: Once again, if you have a question. Please press star one now.
Speaker Change: And we have a question from Michael Morris from Guggenheim Partners. Please go ahead.
Michael Morris: Thank you excuse me good morning, guys.
Michael Morris: Comcast said last week that they are considering separating their cable network business from the rest of the company and so broadly it would be great to get your thoughts on how that may impact you or the industry at large have Fox clearly has been a consistent supporter of the video bundle. So I'm curious if this seems like one of your major partners as maybe a little less committed.
Michael Morris: Good.
Michael Morris: And if I could just one other topic you have seen this modest acceleration in affiliate revenue growth cable and television for two quarters in a row now Steve you mentioned the slight improvement in the underlying subscriber trends do you feel any more comfortable maybe that we are getting closer to a bottom in the rate of bundled subscriber declines. Thank you.
Michael Morris: Thanks, Michael.
Michael Morris: Look I don't want to comment.
Michael Morris: Specifically on Comcast plans may or may not be on the.
Michael Morris: Only read in the press and heard what they said on their call.
Michael Morris: But I.
Michael Morris: No I don't think it affects us.
Michael Morris: In any way at all.
Michael Morris: I think what.
Speaker Change: From our perspective at Fox and we can drive tremendous amount of synergy across all of our platforms. So between.
Speaker Change: The Entertainment network, obviously, Fox Sports Fox Sports, one or two share rights with the entertainment network.
Speaker Change: The football for instance in baseball bats on that's on broadcast their local television stations that underpin that.
Michael Morris: They are our relationship.
Michael Morris: Our promotional capabilities and synergies with Fox news.
Michael Morris: And now obviously with the incredible growth opportunity, which is really.
Michael Morris: Yeah.
Michael Morris: Assistant and driven by <unk>.
Michael Morris: The strength and the reach of our kind of marketing platform across across.
Michael Morris: Broadcast cable and and sports and so from my perspective.
Michael Morris: I don't see how we could ever do that I think breaking apart part of the business would be would be very difficult. Both from a cost point of view and from a revenue and a promotional synergy point of view.
Michael Morris: In terms of the sub declines on a per auto Steve wants to.
Michael Morris: Add to this but.
Michael Morris: Obviously, you sometimes have decline the rate has declined somewhat in this quarter. It is pleasing to see.
Michael Morris: We do believe.
Michael Morris: That there is a sub floor, we just don't know where it is but we do believe there is a there is a sub floor and there will always be.
Michael Morris: Consumers and subscribers who will want.
Michael Morris: Core package and a core package that includes all of our brands when Youre number one.
Michael Morris: News.
Michael Morris: On a sports.
Michael Morris: You have.
Michael Morris: An incredible base of local.
Michael Morris: TV stations re transmitted in that core package.
Michael Morris: Packers that people will always on always wanted and it's very valuable to that to that.
Michael Morris: That consumer base and market listen I think very pleased with where the revenue growth up two in the quarter luck.
Michael Morris: Cable ticking up to plus 3% and TV plus Canada excellent results for US most of that I think really driven by the pricing increases with golf and as Lachlan said the motivation and subscribe declines is is obviously helpful. Theres most seasonality obviously injured injury Ian Nowadays.
Michael Morris: We're very pleased with the trains both revenue and costs.
Speaker Change: Operator next question please.
We have a question from Ben Swinburne from Morgan Stanley. Please go ahead.
Speaker Change: Okay.
Ben Swinburne: Good morning wanted to ask you guys about political advertising.
Ben Swinburne: Would agree it feels like the sort of connected TV streaming market is really participating this cycle in a way at least that I haven't noticed in the past and to be clearly is.
Ben Swinburne: Is gaining share in the political advertising market. So what are you guys seeing in terms of advertiser demand like how do they look at local station buys versus to be are there other you're solving sort of different equations for.
Michael Morris: Campaigns and candidates and is do you think there is any cannibalization in other words just to be taking money out of the station group I don't know, Steve if you'd be willing to sort of quantify kind of holistically. The political dollars youre seeing in the quarter or for the cycle that would be helpful. Too. Thanks, so much.
Michael Morris: So.
Michael Morris: Despite good mooring vanquished by way of background.
Michael Morris: Political spend this cycle is different.
Michael Morris: In some significant ways from four years ago four years ago, there was more of a national.
Michael Morris: Sure.
Michael Morris: Dollar spent.
Michael Morris: Somewhat of a shift the majority of it.
Michael Morris: Some shift for years ago towards national from local.
Michael Morris: First of all I think we talked about and those quarterly calls back then for the first time seeing national political dollar spent was was unique four years ago. This year, the cycle sort of reverted to form and their campaigns.
Michael Morris: Both.
Michael Morris: Size of all type of politics have shifted back to being more local and targeted spend.
Michael Morris: That has.
Michael Morris: As discussed both in the station group, which will have a record political revenues, but also in as I mentioned in my in my.
Michael Morris: Earlier comments also on TUI that can target them very efficiently and specifically geo target as advertisers as well so.
Michael Morris: In fact, we haven't seen any evidence of a cannibalization.
Michael Morris: From stations are into into interdigital, Orange <unk> and fastest.
Michael Morris: The reverse soobee was able to capture money frankly, we couldnt take entire on the statement there is such there.
Michael Morris: Tidal wave of political dollars to have.
Michael Morris: To have.
Michael Morris: Much of that cost caps.
Michael Morris: Captured by.
Michael Morris: Activity as well as really pleasing to see I think it also shows the obviously the strength of <unk>. It's obviously, it's not just the <unk>.
Michael Morris: So youre targeting those valuable but this is a very hard.
Michael Morris: Demographic to reach.
Michael Morris: Most of them are cord nevers, they're younger they're very diverse.
Michael Morris: And as a very valuable are very valuable audience and it shows now that <unk> has the scale and has the the.
Michael Morris: Marketplace.
Michael Morris: Awareness to be SaaS or graduated into.
Michael Morris: To your advertisers that a must buy for people who wanted to reach some reach this audience. So it's very very pleasing to see.
Michael Morris: And then just just to put some numbers around that if I look at just the quarter local like it really is more and more in terms of it's not cannibalistic at all between TV and the stations with.
Michael Morris: The stations were up in Q1 by sort of tens of millions of dollars and then if I look at the half remember that the stations benefit from the Georgia right now post the election.
Michael Morris: We have already done more than what they did that last half in Q, sorry, Q1, and Q2 of fiscal 'twenty, one so we sort of.
Michael Morris: Just north of $260 million in that half in four years ago and north of that already in in this current fiscal year. So the stations have had an unbelievable first half in terms of political and then as Lachlan mentioned TV went from virtually nothing four years ago to a meaningful number for us what do you call that sort of.
Absolutely local nationals sort of Yieldco.
Michael Morris: And then just finally, it's a sports right.
Michael Morris: Strength of our sports.
Michael Morris: Programming over the last few weeks.
Michael Morris: As we have driven that's where the national political dollars that have come in.
Michael Morris: Apologize to anyone who is enjoying their football over the weekend.
Michael Morris: Omar to by political ads, but but but sports has really been the.
Michael Morris: Beneficiary of national political advertising.
Speaker Change: Operator next question please.
Speaker Change: We have a question from Robert Fishman of Moffett Nathanson. Please go ahead.
Robert Fishman: Hey, good morning, everyone, maybe just a follow up on to be more broadly now that.
Michael Morris: It's on track to reach $1 billion in revenue can you just help investors think about like what the future of this asset really look like and how big it can get with its current momentum and then maybe just secondly, any updates you can provide on the future of that.
Speaker Change: If it doesn't launch do you have a willingness to license Fox sports content to other potential partners. Thank you.
Michael Morris: Thanks, Robert first on.
Michael Morris: On <unk>.
Michael Morris: Look the growth as it continues to be.
Michael Morris: So very impressive we were very pleased with the growth.
Michael Morris: I won't give you the October revenue number because.
Michael Morris: Gary will.
Michael Morris: Kick me under the Halo, obviously is the beneficiary of a tremendous amount of political money. So it would be miss or BMS, leading misleading.
Michael Morris: A misleading.
Michael Morris: Staggering statistic.
Michael Morris: Yes.
Michael Morris: And yet and yet ex political.
Speaker Change: We continue to see growth in the second quarter and we think beyond this has driven I think and we're announcing a very sustainable model.
Michael Morris: Largest.
Michael Morris: Avon.
Michael Morris: Our library.
Michael Morris: At 95% of the library is revenue share, although only 65% of the viewing is revenue share of the 5% that we spend in our sort of direct.
Michael Morris: Content.
Michael Morris: Purchase content is.
Michael Morris: It drives about 30% of the.
Michael Morris: So the business continues to grow as a fantastic platform and then when we see a growing from a from strength to strength and really will.
Michael Morris: Increasingly be the way Americans wash off retailers, that's absolutely the case.
Michael Morris: And of course, the fact that it's <unk>.
Speaker Change: Video on demand.
Michael Morris: And not a vast vast channel.
Michael Morris: Platform.
Michael Morris: So as to the <unk>.
Michael Morris: The value of that audience.
Michael Morris: Susan.
Michael Morris: Proactively choosing to watch to watch our content.
Michael Morris: At increasingly high levels.
Michael Morris: Sure.
Michael Morris: On venue. Obviously, we are we are awaiting our appeal of the injunction and we will see.
Michael Morris: Where we go from there we continue to believe venue is a tremendous pro consumer pro competition. Our platform, we're very excited to launch it.
Michael Morris: When we have the ability to do so.
Michael Morris: And then licensing content.
We are in the business of building brands.
Michael Morris: Our <unk>.
Michael Morris: Producing.
Michael Morris: Programming and.
Michael Morris: We're not a sublicense sub licensee or licensor license or.
Michael Morris: I'll sort of sports rights, and any sort of substantial or significant okay great.
Michael Morris: Great.
Speaker Change: Operator next question please.
Speaker Change: We have a question from John Hodulik from UBS. Please go ahead.
John Hodulik: Great. Thanks, two if I could first.
John Hodulik: Can you guys comment on sort of how you see the AD environment shaping up post election, and maybe what Youre seeing now in terms of pricing from a from a direct response standpoint, and then obviously ratings and very strong it looks like you guys have some.
John Hodulik: Easier, maybe not quite as easy, but easier comps over the next couple of quarters at Fox News.
John Hodulik: How should we think about the outcome of the election and maybe historically do you expect to keep the same momentum we have.
John Hodulik: We've seen recently, regardless of the outcome just just any perspective, you have there would be great.
Michael Morris: Okay.
Speaker Change: Thanks, a lot for the question. So all of this is helpful.
Speaker Change: What's going to happen, what's going to happen Tomorrow I don't know.
Speaker Change: So for Mike.
Speaker Change: Our advertising revenues on the.
Speaker Change: The advertising marketplace that we participate in is very healthy right.
Speaker Change: It helps the work that we're not.
Speaker Change: Overly exposed to general Entertainment, particularly general entertainment attainment cable inventory and programming.
Speaker Change: So all of the markets that we participate in.
Speaker Change: We're seeing very healthy growth and we are seeing healthy growth obviously not in the quarter that we've just reported.
Speaker Change: But going forward.
Speaker Change: And if you look at sports we had a.
Speaker Change: Just a tremendous our world series I think it's probably.
Speaker Change: Our.
Speaker Change: I haven't checked this but I'm pretty sure.
Speaker Change: Five game World series is probably a record amount of revenue within five games.
Speaker Change: It outperformed our budget and our expectations.
Speaker Change: We have the Super Bowl coming up.
Speaker Change: Paul has sold very well regular season and of course, we're sold out.
Speaker Change: For the Super Bowl at.
Speaker Change: We had record where we believe our record on pricing.
Speaker Change: News ratings, we've talked about how strong news ratings are particularly in the key 25 54 by demographics.
Speaker Change: That's also.
Speaker Change: Health care.
Speaker Change: At our significant sort of multiplier effect by direct pricing being up.
Speaker Change: Very significantly significantly in the first quarter and almost double significantly in the second quarter. So it's a <unk>.
Speaker Change: Very strong for R. R.
Speaker Change: Our pricing for direct response.
Speaker Change: Entertainment scatter is strong and we've talked about the local political spend already obviously, one thing that happens if they're if you if you want.
Speaker Change: Point anything up local political pushes out some local based market advertising.
Speaker Change: Only have so much inventory and so if you look at the local base markets.
Speaker Change: You have auto is soft retail is soft bedding that one is the one category that's pretty strong so betting has sort of returned.
Speaker Change: Two to grow and I think we've talked about to you already being up 19% and an accelerating in the second quarter. So.
Speaker Change: What happens this week with the election.
Speaker Change: And how that would impact I don't think it would impact us I think.
Speaker Change: Again in the markets that we're seeing we're seeing tremendous amount of growth in health.
Speaker Change: Okay. Operator next question please.
Speaker Change: We have a question from Jessica Reif Ehrlich with Bank of America Securities. Please go ahead.
Speaker Change: Alright, Thank you and good morning, everyone, maybe switching gears a little bit.
Speaker Change: Two flutter intangible can you talk about how long it will take you to get through the approval process and once you too, but what would make you exercise earlier or later and ultimately what do you think you'd do with this asset and then.
Speaker Change: One last thing if we could just go back to be which is phenomenal.
Speaker Change: And you said its accelerating Lachlan you walked through all the characteristics.
Speaker Change: But you had that before so why is it accelerating are you selling differently youre using different advertising tools.
Speaker Change: Okay.
Speaker Change: So.
Speaker Change: On <unk>.
Speaker Change: Flutter and <unk>, So we have six years and thanks again.
Speaker Change: Our options so.
Speaker Change: Although there is no.
Speaker Change: There is no immediate.
Speaker Change: Neither to rush the process, what we have now engaged on this generated till August 26.
Speaker Change: States, we have to get licensed in every state that <unk> operates in and so it is a in depth process.
Speaker Change: We'll take some time I don't think it will take.
The amount of time, but.
Speaker Change: But we expect that process to go.
Speaker Change: Relatively smooth smoothly.
Speaker Change: And.
Speaker Change: We'd be able to.
Speaker Change: A complete that process within a year.
Speaker Change: And Jessica sorry, what was the second question <unk>.
Speaker Change: Why is it yet.
Speaker Change: So this year this quarter, we've ever seen Jessica.
Speaker Change: We've talked before about the fill rate.
Speaker Change: <unk> and what we're really being able to do is actually.
Speaker Change: Reduce our forever.
Speaker Change: Great.
Speaker Change: Improve the fill rate very very significantly.
Speaker Change: So we've been in are in a very competitive market, we've been able to hold pricing above we've really been able to drive our fill rate.
Speaker Change: Two.
Speaker Change: Accelerate that revenue growth.
Speaker Change: Operator, we have time for one more question.
Speaker Change: Your final question comes from the line of Michael <unk> from Goldman Sachs. Please go ahead.
Speaker Change: Hi, good morning, Thanks for the question.
Speaker Change: Just was wondering if you could talk about some of the EBITDA bridge components at TV for fiscal 'twenty five Steve.
Speaker Change: Specifically I know you talked about digital losses.
Speaker Change: Going to the high $200 million this year, given the <unk> outperformance.
Speaker Change: Is that does that number better and then anything else that you would flag for us as we think about the build for television. Thank you.
Speaker Change: Yes, so if I look at Mike. Thanks for the question if I look at the balance of the year.
Speaker Change: For the company and a lot of it is TV, but if you look at we've obviously got an enormous cyclical tailwind with political.
Speaker Change: Those fts number then including the TV revenue plus the sport political revenue that Lachlan mentioned in his opening.
Speaker Change: We're going to be beneficial to the TV segment.
Speaker Change: From a trading momentum perspective, obviously Fox uses benefiting in the cable segment from topline growth you got TV underlying momentum and then you've had an amazing MLB post season, which is going to be an uplift for us both from a revenue and margin perspective.
Speaker Change: If I look at Q3, specifically.
Speaker Change: From an from a football perspective, NFL scheduling will be a headwind from an advertising revenue perspective, because we.
Speaker Change: We're down in the Christmas game, which we had last year in college as a whole sort of the reorder or re orientation of sports rights is a big shift for us in Q2, particularly in Q2, <unk> 10 expansion, which will be cost up for us in the quarter.
Speaker Change: You've got increased right space across the board, but then with.
Speaker Change: To partially offset that.
Speaker Change: WWE in for the remainder of the year and with US also obviously discontinued with Pac 12.
Speaker Change: I look further out.
Speaker Change: The ball.
Speaker Change: In Q3, which will be a big driver be very very cash flow accretive for the company.
Speaker Change: <unk> will not be from an EBITDA perspective for US and then we also have the impact of the Q3 entertainment schedule coming back versus where we were last year generally speaking we feel very.
Speaker Change: Think television is going to have a really really strong sort of second third and fourth quarter.
Speaker Change: And obviously in Q4, when we look at it from a software perspective, which can knock us around we don't have the UEFA Copa or FIFA. So that can be helpful. In that final quarter. So hopefully that gives you enough break comes to truck.
Speaker Change: But now there's a really nice tailwind.
Speaker Change: Television segment across all of those.
Speaker Change: Okay. At this point, we are out of time, but if you have any further questions. Please give me a or Charlie can stanzel. Thanks.
Speaker Change: Thanks, so much for joining us on today's call.
Speaker Change: Thank you.
Speaker Change: Ladies and gentlemen that does conclude your conference call for today. Thank you for joining US you may now disconnect.