Q3 2025 Fox Corp Earnings Call
Speaker Change: Ladies and gentlemen, thank you for standing by welcome to the Fox Corporation third quarter fiscal year 2025 earnings Conference call. At this time all participants are in a listen only mode. Later, we will conduct a question and answer session and I would like to emphasize that functionality for the question and answer queue will be given at that time.
Speaker Change: If you require assistance during the call. Please press Star then zero on your Touchtone keypad.
Speaker Change: As a reminder, this conference is being recorded.
Speaker Change: Now I'll turn the conference over to Chief Investor Relations Officer, Ms. Gabrielle Brown. Please go ahead Ms Brown.
Gabrielle Brown: Thank you Polly and good morning, and welcome to our fiscal 'twenty 'twenty five third quarter earnings call. Joining me on the call today are Lachlan Murdoch Executive Chairman and Chief Executive Officer, John Nolan Chief operating Officer.
Tom: Tom <unk>, our Chief Financial Officer.
Tom: First Lachlan and Steve will give some prepared remarks on the most recent quarter and then we'll take questions from the investment community.
Tom: Please note that this call may include forward looking statements regarding Fox Corporation's financial performance and operating results.
Tom: 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 S E SEC filings.
Tom: Additionally, this call will include certain non-GAAP financial measures, including adjusted EBITDA or EBITDA as we refer to it on this call.
Tom: Reconciliations of non-GAAP financial measures are included in our earnings release, and our S. E T SEC filings, which are available in the Investor Relations section of our website and with that I'm pleased to turn the call over to Lachlan.
Lachlan Murdoch: Thank you Debbie and thank you all for joining us this morning.
Lachlan Murdoch: It's a particularly beautiful spring morning in New York. This morning, I hope everyone's had a chance to enjoy it.
Lachlan Murdoch: Our fiscal third quarter underscored the central role Fox plays in informing and entertaining America and our financial performance once again illustrates the strength of the Fox platform.
Lachlan Murdoch: Whether it be our market leading coverage what has been a sustained active new cycle or a record breaking broadcast of the Super Bowl, we delivered across the board milestones during the third quarter.
Lachlan Murdoch: Total company advertising revenue grew 65% in the quarter, including the Super Bowl, which generated over $800 million of gross advertising revenue across our businesses a record for both our national broadcast network and our local television stations.
Lachlan Murdoch: This year's matchup between Kansas City, and Philadelphia delivered 128 million viewers across Fox platforms, making Super Bowl 59, the most watched telecast in U S history.
Lachlan Murdoch: Our affiliate revenues also had a notable quarter with total revenue growth of 3% on the back of higher rates and improved subscriber declines for the third consecutive quarter.
Lachlan Murdoch: These robust results continued to build upon Fox's noteworthy first half and put us on track to complete a strong fiscal year <unk>.
Lachlan Murdoch: Notably these third quarter results reflected the highest free cash flow in Fox is history.
Lachlan Murdoch: While we recognize the commentary around the macro environment, we have seen no impact to our business our ratings and engagement are strong national advertising scatter pricing is outpacing last year's upfront rates with solid demand and Toby continues its top line.
Lachlan Murdoch: Yes.
Lachlan Murdoch: We remain confident that our best in class assets disciplined approach and fortress like balance sheet will continue to set us apart.
Lachlan Murdoch: In fact in just a few hours, we will host Americas top advertisers at this year's upfront presentation here in New York.
Lachlan Murdoch: We approach this upfront cycle on uniquely strong foot here, knowing that our focus on live sports and news programming combined with two B's commanding position in the Avon segments, and our exceptional entertainment offering will continue to offer rare value to our advertising partners.
Lachlan Murdoch: Nowhere is Fox is leadership more evident than Fox news there once again, the Fox News channel finished the quarter as the most watched cable network.
Lachlan Murdoch: But even more remarkable is the journey in a quarter of Fox News was the second most watched network in Monday through Friday Prime in all of television, surpassing all but one broadcast network.
Lachlan Murdoch: This combination of an engaged audience and a dynamic new cycle led to a record audience share in the quarter.
Lachlan Murdoch: Fox News channel had one of the highest rated quarters in cable news history.
Lachlan Murdoch: In total day audience, 48% in total viewers and 58% in the demo and reaching our highest quarterly share of cable news audience ever.
Lachlan Murdoch: In fact since the election Fox News has delivered the top 1013 cable news telecasts.
Lachlan Murdoch: This ratings and share momentum has carried into the current quarter with April total ratings up nearly 30% prime time ratings up over 30% and primetime cable news audience share in the 60% range.
Lachlan Murdoch: I should also highlight our digital consumption trends, which demonstrate our news content is resonating with an expanded audience beyond the linear world.
Fox News digital group page views, 18% year on year to a record 11 billion views and closed the quarter with the highest number of Youtube views in its history.
Lachlan Murdoch: Engagement at Fox Sports is also unmatched in the industry, especially after a solid the NFL post season.
Lachlan Murdoch: So the 'twenty 'twenty four 2025, TV season to date Fox sports ranks as the industry leader in live sports event viewership.
Lachlan Murdoch: <unk> three 3 billion hours of sports event viewer.
Lachlan Murdoch: 17% better than our closest competitor.
Speaker Change: While the sports calendar in our fiscal fourth quarter trends tend to be quieter, we see strong audience and advertiser demand for our schedule, including NASCAR. The inaugural season of Indy car on Fox and the start of the baseball season.
Speaker Change: Turning to digital to be delivered another outstanding quarter with revenue growth of 35% year on year.
Speaker Change: This marked an acceleration compared to the 31% growth we posted in the December quarter, which is even more impressive when considering the last quarter benefited from political revenue.
Speaker Change: As you know to be played an essential role in extending the reach of the Super Bowl, bringing in over 24 million unique viewers on game day, and 16 million peak concurrent viewers during the game.
Speaker Change: Of those unique viewers, 40% were in the 18 to 34 demo and half of those were female.
Speaker Change: Specifically, the superbowl provided a unique promotional opportunity for <unk>, which attracted over 8 million new registered viewers.
While engagement on the platform are certainly helped by the Super Bowl retention and consumption trends at <unk> post the Super Bowl are also very encouraging with total view time up 24% year over year in April.
Speaker Change: <unk> has established itself as a leading player in the streaming world offering premium on demand entertainment and original content that is 100% free for consumers.
Speaker Change: We think this combined with Tvs large young and diverse highly engaged audience of most of the cordless viewers offers advertising advertisers and unrivaled value proposition.
Speaker Change: Also well positioned for the upfront is Fox Entertainment, which had a strong broadcast season levering the Super Bowl leading to launch the third season of the floor.
Speaker Change: This along with other operators shows like Doc and Universal basic ours helped propel Fox to the top spot in primetime season to date among adults 18 to 49.
Speaker Change: As we wrap up another successful quarter. It is clear that Fox is differentiated and focused strategy continues to outperform.
Speaker Change: The reach of our brands and our compelling programming led to impressive annual consumption growth.
Speaker Change: A 34% across the entire Fox portfolio during the third quarter.
Speaker Change: When it comes to live events and news Fox his leadership has never been clear.
Speaker Change: There's a lot to be excited about as we look ahead.
The work of our dedicated team of journalists and staff at Fox News and our local stations are cross, which we make substantial investments in news reporting nationally and locally.
Compelling spring sports schedule pick the viewers from the race track to the ballpark and the leverage the elevated brand awareness of <unk> has to drive increased engagement and homes across America.
Speaker Change: We're also excited about our direct to consumer plans.
Speaker Change: Since the formation of Fox, we have created a unique platform of America's best known media brands across the key verticals of news sports and entertainment.
Speaker Change: Use of the brands that resonate with our audiences and advertisers value so highly.
Speaker Change: Whether it's the Super Bowl the election cycle or the upfront our company is at its best when we work together as one.
Speaker Change: That key attribute is the basis of our upcoming DTC offering.
Speaker Change: Aimed fox, one where targeted consumers the cordless market outside of pay TV you can find all of the Fox brands.
Speaker Change: Love.
Fox one is on track to launch before the football season. This fall and we look forward to sharing further detail about the service in the coming months.
Speaker Change: With the brisk tailwind from both our strong operating momentum and financial results. We will continue to focus on execution and remain committed to delivering long term value for our shareholders.
Speaker Change: A thoughtful and disciplined manner.
Speaker Change: And with that I will turn the call over to the thoughtful and disciplined.
Speaker Change: To take you through the details of the quarter.
Speaker Change: Good morning, everyone.
Speaker Change: Okay. That's left let's say flex delivered another quarter of impressive results highlighted by a 27% increase in total revenues and record free cash flow.
Speaker Change: Alright. This housing revenues increased 65% led by the combination of our record breaking Super Bowl accelerating growth at <unk> and strong engagement and pricing at us.
Total company affiliate fee revenues grew 3% over the prior year quarter.
Speaker Change: Once again, demonstrating the strength of our brands and focused portfolio of channels.
Speaker Change: Other revenues grew 20% year over year, driven by high sports sub licensing revenues at our cable segment symbol.
Speaker Change: Similar to prior quarters. This growth in revenue was largely offset by a corresponding increase in rights costs with no material impact on year over year overall EBITDA growth.
Speaker Change: Quarterly adjusted EBITDA was $856 million.
Speaker Change: As compared to the $891 million reported in the prior year quarter. As these revenue increases were offset by higher expenses. This was primarily due to higher sports rights amortization and production costs associated with that broadcast of the Super Bowl.
Speaker Change: Net income attributable to Fox stockholders was $346 million was <unk> 75 per share as compared to the $666 million or $1 40 per share reported in the prior year's period.
Speaker Change: Excluding noncore items.
Speaker Change: Just in net income was $507 million.
Speaker Change: And adjusted EPS was $1 10 up slightly compared to the $1 90 per share recorded in the prior year.
Speaker Change: Now turning to our operating segments, starting with the cable network programming segment, which delivered 11% revenue growth and 7% EBITDA growth.
Speaker Change: Cable advertising revenues grew 26% over the prior year driven by the strength in Fox news linear ratings and digital engagement and supported by healthy National and direct response pricing.
Speaker Change: Cable affiliate fee revenues grew 3% over the prior year quarter as pricing gains from our affiliate renewals outpace the impact from net subscriber declines, which continued to improve to under 7%.
Speaker Change: Cable other revenues grew 17, 9% due to the high sports that licensing revenues I mentioned earlier.
Speaker Change: Revenue growth at the cable segments was partially offset by a 16% increase in expenses, primarily attributable to an increase in sports rights amortization and production costs, including amortization corresponding to the Incrementals sports sub licensing revenues.
Speaker Change: Turning to our television segment, which delivered 40% revenue growth.
Speaker Change: Advertising revenues at our television segment grew 77% over the prior year led by Super Bowl 59, which generated over 800 million in gross revenues.
Speaker Change: If we exclude the tremendous revenue contribution from the Super Bowl, we still saw solid on denied underlying growth in our TV segment advertising revenues led by accelerating growth at <unk>.
Speaker Change: Television affiliate fee revenues increased 4% in the quarter with healthy growth in fees across both Fox owned and affiliated stations more than offset the impact from industry subscriber declines.
Speaker Change: TV and other revenues were up 3% year over year, primarily due to higher content revenues tied to our entertainment production Studios.
Speaker Change: Expenses at the television segment increased 47% driven by our broadcast of Super Bowl 59, as well as continued investment in <unk>.
Speaker Change: Holding EBITDA at our television segment was $60 million as compared to the $145 million reported in the prior year quarter.
Speaker Change: Turning to cash flow, where we generated record quarterly free cash flow of over $1 $9 billion.
Speaker Change: Strong quarterly free cash flow delivery.
Speaker Change: Consistent with the seasonality of our working capital cycle with the first half of our fiscal year reflects the concentration of payments for sports rights and buildup with advertising related receivables both of which reversed in the second half of the fiscal year.
Speaker Change: In terms of capital allocation fiscal year to date, we have repurchased an additional $800 million through our share buyback program.
Speaker Change: This brings the total cumulative and that repurchase to $6 $4 billion.
Speaker Change: Or approximately 13% of our total shares outstanding since the launch of the buyback program in 2019.
Speaker Change: We remain committed to utilizing our full buyback authorization of $7 billion.
Speaker Change: This is supported by the strength of our balance sheet, where we ended the quarter with approximately $4 $8 billion in cash and $7 $2 billion in debt.
Speaker Change: Since quarter end, we repaid our $600 million debt maturity, which came to you in April.
Speaker Change: And with that I'll turn the call back over to Gary Thanks, Steve and now we would be happy to take questions from the investment community.
Speaker Change: Thanks, Gabby, ladies and gentlemen, I would like to emphasize the new functionality for the question and answer queue.
Speaker Change: If you wish to ask a question. Please press Star then one on your Touchtone keypad.
Speaker Change: You will hear a tone, indicating you are being placed in Q.
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It has been requested that you limit yourself to one question.
Speaker Change: Once again, if you have a question. Please press Star then one at this time.
Speaker Change: And we have a question from Michael Morris at Guggenheim. Please go ahead.
Michael Morris: Thank you good morning.
Speaker Change: Wanted to ask about Fox one.
Speaker Change: I know you said details will follow but love to try to get some details on your view of <unk>.
Speaker Change: Pricing of the product the addressable market and whether you expect to take on any partnerships or bundle or things like that.
Speaker Change: If I could squeeze in one more I know, it's a little early but Steve could you give us any.
Speaker Change: On looking into fiscal 2006, and how we should think about any of the puts and takes after the the.
Our strong fiscal 'twenty five to date. Thank you.
Mike: Thanks, Mike.
Speaker Change: No.
Speaker Change: I'll answer the Fox one questions.
Speaker Change: I can't give you a great amount of detail, but we will be rolling these things out obviously as we get closer to the fall into the start of the football season, which we will be launching beforehand.
Speaker Change: The pricing will be in line with our wholesale it makes our wholesale pricing so.
Speaker Change: We think that's what are the appropriate level of the most fair to our distributors. So the pricing will be will be healthy it will not be a discounted price and very much targeted to the which goes to your addressable market question, where it's harder to service entirely to the cordless.
Speaker Change: Our community.
Speaker Change: Cordless market out there it would be a.
Speaker Change: Sure.
Speaker Change: Failure of us if we attract a.
Speaker Change: More <unk>.
Speaker Change: Connected subscribers, we don't we do not want to lose a traditional cable subscriber are two Fox one and we're doing everything we can do.
Speaker Change: Make sure as much as humanly possible and that's the way we market and that's the way we plan.
Speaker Change: Their business.
Speaker Change: But yes, we will be entering partnerships with other.
Distributors and services to offer our Fox one.
Speaker Change: As you see other other streaming.
Speaker Change: Streaming services, so we will be working with them.
Speaker Change: With partners.
Speaker Change: <unk>.
Speaker Change: Broader possible distribution within the within the focus of that cordless viewer Steve.
Speaker Change: Steve.
Speaker Change: Thanks, a lot Glenn Hi, Mike sorry.
Speaker Change: I look at fiscal 'twenty six versus fiscal 'twenty five obviously.
Speaker Change: You look at sort of the big sort of seasonal cyclical drivers of our business. The big one from a sort of net margin perspective for us this year as political which obviously is not there in and I'll see you next year.
Speaker Change: But then sort of Super Bowl from it from a purely advertising revenue. This is Ryan cost perspective.
Speaker Change: <unk> was a deficit for us this year that's enough data in fiscal 'twenty six but then we have FIFA coming through in the very very back end, which crossovers fiscal 'twenty six versus fiscal 'twenty seven.
Speaker Change: Against all of that with a really really nice tailwind with our advertising business, but particularly both at Fox news and to the.
Speaker Change: And then we're also continuing to see solid wins with our affiliate revenue growth and so I think some of the swing factor with fiscal 2006, which is probably a little bit too early to call. It the extent to which we moderate the investment into the versus the D to C investment, particularly that launch cost investment going into the early part of next fiscal year.
Speaker Change: So hopefully that gives you a few bread crumbs.
Speaker Change: Operator can we go to the next question. Please.
Speaker Change: We have a question from John Hodulik from UBS. Please go ahead.
Speaker Change: Great. Thank you.
Speaker Change: In the past you guys have talked about increasing demand from brand advertisers on the on Fox News.
Speaker Change: Update us on that are you seeing any sort of quantifiable shifts from Dr to brand advertising and I know, it's sold differently, but can you can you comment on the sort of difference in sort of price between what youre getting from from Dr and what youre getting from brand advertising.
Speaker Change: Thanks, Sean.
Speaker Change: So I think we're now up to over 200, new.
Speaker Change: Advertisers since the election.
Speaker Change: I think when Steve about the Canada bag or with over 100, 100 hires having by far the best grown to over 200, new advertisers and I think these are really positive and important.
Speaker Change: Data point to to know here is that they are continuing to advertise. So this is this is not a knee jerk or one off.
Speaker Change: Reaction to the election, but these advertisers have.
Speaker Change: Found our audience.
Speaker Change: Yes.
Speaker Change: Our creative work and the positioning is working for them and they are sticking on our air and continue to advertise so we see that as a very positive.
Speaker Change: <unk>.
Speaker Change: Our recognition of the power of Fox news, the power of our ratings and our programming and that it's working for these new 200 advertisers and they are sticking sticking with us.
Speaker Change: In terms of Ah.
Speaker Change: Direct response.
Speaker Change: I don't think its directly answers your question I don't want to give a specific sort of pricing out but just so you know a direct response during the quarter.
Speaker Change: On Fox News was up over 30% direct response, and our scatter pricing was up over 50%.
Speaker Change: Upfront pricing.
Speaker Change: So the momentum that we're seeing within Fox news, obviously, driven first by are really sort of record setting our audience and share that's flowing through nicely to the revenue line and that momentum.
Speaker Change: It seems to be continuing great next question. Please.
Speaker Change: We have a question from Jessica Reif Ehrlich with Bank of America. Please go ahead.
Speaker Change: Thank you.
Speaker Change: Couple of things one all parts of the business.
Speaker Change: Price on the upside.
Speaker Change: I dunno awhile, but maybe nothing more surprising than to be can you talk about the path to profitability and the drivers whether it's programmatic and celebrates our content like what youre doing or what your plans are and then the balance sheet.
Speaker Change: <unk> so <unk>.
Speaker Change: Clearly have lots of options can you give us some color on how youre thinking about that.
Jessica: Sure Hi, Jessica.
Yeah.
Steve: I'll start and then hand, it over to Steve for <unk>.
Jessica: Part of that question.
Jessica: So no.
Speaker Change: Thank you for acknowledging the strengths of <unk> and the continued growth in <unk>.
Jessica: It's certainly not a surprise to us we've had a great.
Speaker Change: Facing this business and.
Speaker Change: And in his management over the long term and we believe not only hasn't had a great track record to date, but we will continue to have a great great prospects and has huge opportunity going into the into the future the.
Speaker Change: Growth in this quarter.
Speaker Change: Fundamentally on TV, but any of them.
Speaker Change: Free media.
Speaker Change: Service or it comes back to engagement and to be grew 18%.
Speaker Change: In total viewing time are drawing the quarter, but this flow through to a 35%.
Speaker Change: Revenue.
Speaker Change: Yeah.
Speaker Change: Movement in the quarters are directly from TVT, then you run into your obviously your pricing and your on your fill rates, but this translated into a 35% revenue.
Speaker Change: <unk> in the quarter I think it's important to know and without gas.
Gabby kicking me under the table in April that that rate has accelerated in April and so we are we are really pleased as we see the.
Speaker Change: The progress of our <unk>.
Speaker Change: If there is a solid advertising base our people continue.
Speaker Change: To.
Speaker Change: And I'll continue to advertise.
Speaker Change: Advertise on our platform and at a very healthy both direct response and.
Speaker Change: And partner revenue streams to be really is becoming a mainstream service across America. That's what we've seen that difference over the last.
Speaker Change: Year or two is to be becoming something that's a very.
Speaker Change: Very good business. It serves 65% of its audience is hard to reach cord less the cord less audience, but as more and more becoming something that mainstream everyday Americans are using as they're free entertainment service.
Speaker Change: The only frustrating.
Speaker Change: Mark.
Speaker Change: The business is that we don't get the appropriate valuation within our stock. We think is a tremendously valuable business and we're looking forward to.
Speaker Change: Performing <unk> for years to come.
Speaker Change: Yeah, Thanks, Jason and thanks for noticing the balance sheet.
Speaker Change: So listen yes, we're at $4 8 billion of cash and the debt position is comfortable.
Speaker Change: And this is necessarily going to improve through the back half of the year. Because Q4 is typically a strong free cash flow quarter for us So obviously.
Speaker Change: As we think about.
Speaker Change: Usage of that capital, obviously, we look at that on a balanced basis across buybacks and kind of running out of our authorization. So you should expect that to be topped up as part of normal course board.
Speaker Change: Over the course of the remainder of the year.
Speaker Change: And then if we look at it sort of the other options with respect to that capital. We've obviously invested organically in that business.
Speaker Change: <unk>, two dee, which Lachlan just described has been a key beneficiary of that investment over the last couple of years and that has paid dividends for US. We'll continue to do that and then I guess the next cab off the rank there will be a fox one venture and then we look at everything from a nonorganic basis, but the buyer is incredibly high and so ultimately we will deploy capital.
Speaker Change: Where it's best for the shareholders.
Speaker Change: Next question please.
Speaker Change: We have a question from Ben Swinburne Morgan Stanley. Please go ahead.
Ben Swinburne: Thanks, Good morning, everyone everyone's doing well.
Ben Swinburne: I wanted to ask about your strategy around direct to consumer and sort of the broader affiliate revenue growth at the company.
Ben Swinburne: <unk> are growing nicely, even with cord cutting which is not true for your competitors.
Ben Swinburne: And a lot of them have gone down this path that you talked about lachlan or sort of bundling the streaming service and with their linear networks.
Ben Swinburne: And while it's hard to tell from outside in some cases, it looks like one plus one is less than two.
Speaker Change: For those competitors and I'm, just wondering how you're thinking about.
Speaker Change: What you can get out of launching DTC versus any risk you see in your MVP relate.
Speaker Change: Relationships, because youre now going to be essentially competing with your networks through those bundles.
Speaker Change: And just to finish up the risk conversation theres been some FCC noise around capping reverse retrans and I would love to hear your thoughts on that if you see that as a real risk. Thanks, so much.
Speaker Change: Ah Thanks, Brian So first.
On DTC, and how we view that with them and how the balances with our affiliate.
Speaker Change: Relationships.
Speaker Change: There are obviously ongoing.
Speaker Change: Growth in affiliate revenue line for us.
Speaker Change: So I should start with saying that we remain.
Speaker Change: Incredibly supportive and positive about.
Speaker Change: Are the traditional.
Speaker Change: Cable bundle and the traditional.
Speaker Change: Cable distribution.
And as that applies to both our our cable.
Speaker Change: Channels and also on our sort of our broadcast affiliate.
Speaker Change: Stations. So we will continue to support in every way possible. The traditional model is it served really the whole industry very well and served us very well and we will.
Speaker Change: We'll not be engaging in sort of activities or strategies that undermine the FERC undermine.
Speaker Change: Traditional distribution models, having said that we think the DTC, it's time for us to launch a DTC service, it's time for us to target our service specific data cord.
Speaker Change: Never.
Speaker Change: Going back to Jessica's question before when I mentioned that 65% of <unk> audience is cord Nevers, that's remarkably high and I failed to mention because that is actually higher.
Speaker Change: <unk> than anyone in our competitive sets of 65% of our audience Gordon estrogen cord Nevers, that's higher than Roku is higher than Pluto is higher than freebie, Max Paramount plus or Peacock.
Speaker Change: And actually there's two things it shows us why <unk> is so valuable to advertisers who need to reach you can't get to that audience without us, but it also shows a growing expertise in the company about how we focus on these core on this cordless.
Speaker Change: This quarter the segment and so we're going to really take a lot of the learnings we have from <unk> to focus our DTC strategy away from people, who might be churning out of the <unk>.
Speaker Change: The cable universe.
Speaker Change: We do see.
Speaker Change: This is part of the ecosystem that we're talking about obviously the emergence of the skinny bundles. We think are positive for Fox. The fact that our broadcast our news in our sport are in all of these skinny our core bundles. We think is very positive it's too early yet to see the impact of the skinny bundles, but.
Speaker Change: But we are very optimistic about them and.
Speaker Change: And even though we've had a few quarters now of declining sub erosion in the market. It's too early to see how much of that is working the market getting towards a base level of subscribers or whether it's the impact of skinny bundles, but I'd remind you that in the fourth quarter of 2004.
Speaker Change: Desktop declines of about eight 7% say they wanted to first quarter 'twenty five to seven 8% in the second quarter.
Speaker Change: Two.
Speaker Change: Now minus $6 five so continuing decline in sub erosion as we see it as a very healthy trend.
Speaker Change: And then in terms of the FCC, we can't speculate on what the FCC.
Speaker Change: It's going to do.
Speaker Change: But we certainly see the affiliate network.
Speaker Change: Relationship as a healthy one.
Speaker Change: It's always a negotiation that's left to the market.
Speaker Change: And when we think it's at its best.
Speaker Change: <unk> left the market.
Speaker Change: We also do note that our affiliate agreements are unique on our network is unique and one very important way because we broadcast the fewest amount of network hours of any of the national networks that leaves our stations to really be able to invest in their own programming, particularly.
Speaker Change: And local news, which we think is critically important to the health of both the local news broadcast industry local broadcast industry and also to the local communities that they serve.
Speaker Change: Next question please operator.
Speaker Change: We have a question from Steven <unk> from Wells Fargo. Please go ahead.
Speaker Change: Yes.
Speaker Change: Thanks.
Speaker Change: On Fox one I think that's a pull forward in timing if I recall it was going to be year end and now it's before the football season. So.
Speaker Change: Is that right and congrats on that and how are you thinking about bundling opportunities with Fox one I, just think about cord cutters and cord nevers or probably looking for some integrated subscription options and integrated viewing experiences that go across sports and across the NFL. So just curious how youre thinking about partnering opportunities on Fox one.
Speaker Change: And then Steve maybe just following up on Jessica's question could you talk about the timeline.
Speaker Change: For the fans to our licensing that you need to go through and is it correct for us to assume that as soon as you are able to exercise that it's in your interest because the option only gets higher over time.
Speaker Change: Balancing the exercise of that option with other capital allocation opportunities and priorities. Thanks.
Speaker Change: Thanks, Steve So first with Fox one.
Speaker Change: I think we might have a regionally you might be right or it might be half right.
Speaker Change: I think we might have originally said end of the year, but I think we did say after that it would be.
Speaker Change: Available for the football season. So I think we have said that before so once again, we're not breaking any news on this.
Jeff: On this call Jeff for the name.
Speaker Change: And that is a breaking news so.
Jeff: So.
Jeff: It's an aggressive timeline youre correct to launch a service.
Jeff: But we've been we've been planning this for a long time, we've had the technology in place for a long time, obviously, we benefit from a lot of the work done around the venue.
Jeff: Venue servers.
Jeff: Which didn't go forward. So so we feel confident in reaching that timeframe of course being up before the football season.
Jeff: As a as a critical date for us.
Jeff: Our very confident moving forward that we're going to make that date and we will announce the specific.
Jeff: De in the weeks or months.
Jeff: Ahead, we will be bundling with.
Jeff: A number of other services.
Jeff: <unk>.
Jeff: Again, I wouldn't want to announce that pretty.
Jeff: Prematurely on this call.
Jeff: But but obviously with our services as valuable as Fox a lot of other upstream.
Jeff: Our streaming services have approached us about bundling and.
Jeff: And we will be we'll be moving forward with a number of those.
Jeff: Relationships.
Jeff: Fox one will also be available to every traditional subscriber of our services, we don't want to compete with our distributors that's not our intent to have you're already paying for the Fox services through your cable subscription you'll be.
Jeff: Sure.
Jeff: Able to download and receive a fox one as well.
Speaker Change: Just to pick up on the on the <unk>.
Jeff: Sandro option just to level set there so we've got.
Jeff: Until the end of 2013 to exercise our option over 86% of that business.
Jeff: So it's a state by state licensing regime, and so we're actively in discussions with each of the 26 states that we need to get licensed.
Jeff: As you would know Theres, an incredible amount of value left in the options. If I just look at where the straight set in terms of the in the money necessary, so that sort of the value of the $88 six versus the strike price is worth about $2 $8 billion to us in intrinsic value and so it's absolutely an error in our interest to get live.
Jeff: Since then we will get license over the over the coming years.
Jeff: But I think when you look at the sort of the accretion and the strike price of about five Cassini that's not a driving factor in terms of their decision on when to deploy capital towards that it's really about sort of getting through the licensing regime and then we could go.
Speaker Change: Operator, we have time for one more question.
Speaker Change: We have a question from Michael <unk> from Goldman Sachs. Please go ahead.
Speaker Change: Hey, good morning, Thank you very much for the question.
Michael Morris: I was just wondering if you could give us an update on the digital investments I think last quarter. It was the high $200 million, obviously with the.
Michael Morris: Outperformance of <unk> to date as well as the greater clarity into the timing of launch of Fox. One I was wondering if you could just talk about that for this year and perhaps into next year.
Michael Morris: And then secondly, there've been reports of plans.
Michael Morris: For Disney to vacate the Fox slot in century City I was just wondering if you had any future plans there that you could discuss or options that you may have thank you.
Michael Morris: Thanks, Mike.
Michael Morris: On the digital investment in student give more detail but.
Michael Morris: In our TV to be.
Michael Morris: <unk> continues to improve our financially.
Michael Morris: We.
Michael Morris: Our.
Michael Morris: Continuing to invest in to be however, and we will continue to do that.
Michael Morris: Really as we see.
Michael Morris: Fitness sort of suits their business. We think we're built on an incredibly valuable business in <unk> and so we don't want to.
Michael Morris: Create kind of a.
Michael Morris: Costs, a hurdle for us in terms of profitability, but it's sooner rather than later.
Michael Morris: And to be as you know has now reached beyond $1 billion in revenue for the trailing 12 months. So that the business is on absolutely the right trajectory, but we will continue to invest in it for the.
Michael Morris: The near to medium term future. Obviously, though is that is that is that a business.
Michael Morris: Business reached profitability, we continue to invest organically in the future of our businesses.
Michael Morris: And so the overall investment and industrial properties remains broadly.
Michael Morris: In line.
Michael Morris: Steve can give you more detail on that but just let me quickly answer the Disney Fox.
Michael Morris: Fox Law question.
Michael Morris: Question.
Michael Morris: So obviously the Santos ages are in very high demand and we'll continue to work with Disney and others as they see them effectively.
Michael Morris: Our booked out what Disney has announced they will.
Speaker Change: <unk> indicated to us that they will vacate at their office space.
Speaker Change: On the loss that is not connected to production and that represents less than a third of the office space.
Speaker Change: <unk>.
On the Fox law, it's highly.
Speaker Change: Valuable.
Speaker Change: Our real estate.
Probably valuable level, our real estate.
Speaker Change: In the.
Speaker Change: The center city sort of Santa Monica region of AR.
Speaker Change: Los Angeles, and we think we will have no problem in selling it Steve.
Speaker Change: Steve you want to add so much as an additional digitally investment I think in fiscal 'twenty forward in the mid threes, we'd expect that to come come down for fiscal 'twenty five to be included in our numbers. This quarter was a bit of a surge into the investment spend.
Speaker Change: Obviously at the Super Bowl and marketed heavily around that and really win.
Speaker Change: Really use that as a as a sort of marketing piece as well as the user acquisition pace, but you should expect to say that come back a bit in the final quarter and say, our overall digital sort of growth investment envelope shrink over the when you look at full year versus full year, and it's probably a bit premature to talk about where we land in fiscal 'twenty.
Speaker Change: I definitely expect to be as Lachlan mentioned to continue to improve and then it's a question of how we saw the clocks money.
Great at this point, we're out of time, but if you have any further questions. Please give me or Charlie can sanzo economy. Thank you once again for joining us today. Thank.
Speaker Change: Thanks.
Speaker Change: Ladies and gentlemen that does conclude the Fox Corporation third quarter fiscal year 2025 earnings conference call. Thank you.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Yeah.
Speaker Change: Yeah.