Fox beats quarterly estimates, boosts buyback by $5 billion

Fox Corp significantly surpassed Q4 revenue and profit estimates, reporting $3.29 billion in revenue and $1.27 adjusted EPS, driven by robust advertising growth (7.1%) fueled by its free ad-supported streaming service Tubi and a 2.6% increase in affiliate fees. The company also announced a $5 billion increase to its share repurchase authorization, leading to a 1.8% premarket share rise. This strong performance, coupled with strategic digital expansion through Tubi's success and plans for new streaming services like Fox One, underscores Fox's effective pivot into the evolving digital media landscape.

Analysis

Fox Corp delivered a robust fiscal fourth quarter, significantly surpassing Wall Street estimates with revenue of $3.29 billion against a $3.12 billion forecast and adjusted EPS of $1.27, well ahead of the 99 cents consensus. The outperformance was driven by broad-based strength, notably a 7.1% increase in advertising revenue, which is particularly impressive given tough year-over-year comparisons with major sporting events. This growth was primarily fueled by the company's free ad-supported streaming service, Tubi, and strong pricing in its news division. Affiliate fee revenues also demonstrated resilience with a 2.6% increase, and the cable network programming unit grew revenue by nearly 7% to $1.53 billion, defying broader cord-cutting trends. The company's strategic pivot towards digital is evident in Tubi's success and is being reinforced by the planned launch of a new subscription service, Fox One, and the acquisition of Caliente TV to expand its sports footprint in Mexico. Further bolstering investor confidence, Fox announced a $5 billion increase to its share repurchase authorization, signaling strong conviction in its financial outlook and commitment to capital returns.

Key Decisions for Investors

• The strong top- and bottom-line beats, coupled with a significant $5 billion increase in the share buyback program, validate Fox's digital transition strategy and support a bullish outlook on the stock.
• Investors should closely monitor the growth metrics of the Tubi streaming service and the market adoption of the new 'Fox One' subscription platform, as these are critical to the company's long-term digital revenue diversification.
• Given the 7.1% advertising revenue growth, it is crucial to assess whether this momentum can be sustained, particularly in the context of the broader economic environment and its potential impact on ad spending.