Exchange: NASDAQ | Sector: Communication Services | Industry: Entertainment
Q1 2025
Published: Nov 4, 2024
Earnings Highlights
Revenue of $3.56B up 11.1% year-over-year
EPS of $1.78 increased by 118.3% from previous year
Gross margin of 100.0%
Net income of 827.00M
"Based on the current revenue run rate, we're looking for Tubi to cross the $1 billion revenue mark this fiscal year." - Lachlan Murdoch
Fox Corporation (FOXA) QQ1 2025 Results Analysis — Record Political Advertising, Tubi monetization, and EBITDA expansion across a diversified Entertainment portfolio
Executive Summary
Fox Corporation delivered a strong start to fiscal 2025 (QQ1 2025) with broad-based top-line growth and an expanded EBITDA footprint, underscored by resilient demand across News, Sports, and Entertainment. Revenue rose 11% year over year to $3.56 billion, and quarterly EBITDA reached $1.05 billion, up 21% versus the prior year. The quarter showcased the power of Fox’s diversified platform strategy, with FOX News Media posting elevated ratings and engagement, Tubi accelerating its monetization and political spend, and FOX Sports driving high-profile live events that supported pricing strength across the portfolio. Management signaled continued confidence in the trajectory of Tubi toward a $1 billion revenue run rate in the current fiscal year, and highlighted meaningful cross-channel synergies that underpin the company’s long-term shareholder value creation.
Key drivers include a robust political advertising cycle, record political revenues for Q1 and the full year, and continued strength in local station advertising alongside growth at Tubi. However, Fox cautioned that elevated sports rights amortization and higher sports-related costs modestly offset revenue gains, while the timing of sports schedules (e.g., UFC/UEFA timelines) and the broader ad-market environment remain potential headwinds. The company reinforced its capital-allocation discipline through ongoing buybacks (roughly $5.9B repurchased since 2019) and a solid balance sheet (approximately $4.1B cash and $7.2B debt). The combination of leading brands, scale, and a flexible content ecosystem positions Fox to navigate near-term volatility while advancing a multi-year growth agenda.
Key Performance Indicators
Revenue
3.56B
QoQ: 15.27% | YoY:11.13%
Gross Profit
3.56B
1.00% margin
QoQ: 15.27% | YoY:11.13%
Operating Income
953.00M
QoQ: 42.03% | YoY:23.93%
Net Income
827.00M
QoQ: 159.25% | YoY:103.19%
EPS
1.79
QoQ: 163.24% | YoY:118.29%
Revenue Trend
Margin Analysis
Key Insights
Revenue: $3.564B, up 11% YoY, QoQ up 15.3% (per described quarters and ratios).
EBITDA: $1.05B, up 21% YoY; EBITDA margin 36.6% (EBITDA/Revenue).
Segment EBITDA: Cable EBITDA $748M (+23% YoY); Television EBITDA $372M (+6% YoY); Total EBITDA by segments ≈ $1.12B (before corporate/ eliminations).
Financial Highlights
- Revenue: $3.564B, up 11% YoY, QoQ up 15.3% (per described quarters and ratios).
- EBITDA: $1.05B, up 21% YoY; EBITDA margin 36.6% (EBITDA/Revenue).
- Net income: $827M; Net income margin 23.2%.
- EPS: $1.78; Diluted EPS: $1.78; Adjusted EPS: $1.45 (+33% YoY).
- Segment EBITDA: Cable EBITDA $748M (+23% YoY); Television EBITDA $372M (+6% YoY); Total EBITDA by segments ≈ $1.12B (before corporate/ eliminations).
- Advertising revenue: +11% YoY; Affiliate fee revenues: +6% YoY (Television +10%; Cable +3%); Other revenues: +47% (driven by higher sports sub-licensing).
- Cash flow: Net cash provided by operating activities $158M; CapEx $64M; Free cash flow $94M.
- Balance sheet: Cash and cash equivalents $4.052B; Total debt $8.136B; Net debt $4.084B; Cash flow/capital structure supports buybacks and de-leveraging opportunities.
- Shareholder returns: $300M of repurchases in the quarter; cumulative buybacks $5.9B (≈29% of shares outstanding since 2019); full authorization of $7B.
- Leverage and coverage: Interest coverage ~9.3x; Net debt to EBITDA ~3.1x; Dividend yield around 0.67%; Payout ratio ~15.8%.
- Cash conversion and working capital: Seasonality in working capital; CFO-to-revenue and FCF-to-revenue metrics indicate modest cash efficiency but strong liquidity.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
3.56B
11.13%
15.27%
Gross Profit
3.56B
11.13%
15.27%
Operating Income
953.00M
23.93%
42.03%
Net Income
827.00M
103.19%
159.25%
EPS
1.79
118.29%
163.24%
Key Financial Ratios
currentRatio
2.59
grossProfitMargin
100%
operatingProfitMargin
26.7%
netProfitMargin
23.2%
returnOnAssets
3.67%
returnOnEquity
7.33%
debtEquityRatio
0.72
operatingCashFlowPerShare
$0.34
freeCashFlowPerShare
$0.2
dividendPayoutRatio
15.8%
priceToBookRatio
1.73
priceEarningsRatio
5.9
Net Income vs. Revenue
Expense Breakdown
Management Commentary
- Political advertising and Tubi: Fox reported record political revenue for both the quarter and the full fiscal year, with Tubi gaining share in political spend due to its reach, geo-targeting, and audience profile. Management emphasized that local station budgets and targeted digital spend complemented each other rather than cannibalizing one another, signaling a complementary multi-channel political strategy.
- Tubi monetization and scale: Lachlan Murdoch highlighted that Tubi revenue is accelerating, with a trajectory to cross the $1B revenue mark this fiscal year, driven by a large but targeted AVOD library and a content mix that balances revenue-share viewing with purchased content to optimize monetization.
- Cross-platform synergies and strategy: The leadership stressed the importance of synergies across FOX Network, FOX Sports, FOX News, and Tubi, noting that breaking apart the business would be costly and potentially detrimental to promotional capabilities and revenue growth. This underpins Fox’s integrated media ecosystem and its ability to monetize audiences across platforms.
- Sports and live events: The transcript emphasized the strength of FOX Sports’ portfolio, including NFL on Fox and the MLB postseason, with World Series viewership and record pricing expectations for the upcoming Super Bowl. This reinforces pricing power and the revenue/margin upside from live sports.
- Growth outlook and risk factors: Management signaled a robust near-term revenue outlook supported by political advertising, sports rights momentum, and Tubi, while acknowledging higher sports rights amortization and potential ad-market volatility as key inputs in the model.
- Flutter/FanDuel licensing and future content strategy: The call touched on the Flutter and FanDuel licensing process (state-by-state licensing over ~a year) and hinted at alternative uses for Flutter/FanDuel assets, underscoring Fox’s willingness to pursue strategic monetization of non-core assets while focusing on core content operations.
Based on the current revenue run rate, we're looking for Tubi to cross the $1 billion revenue mark this fiscal year.
— Lachlan Murdoch
breaking apart, part of the business would be very difficult, both from a cost point of view and from a revenue and a promotional synergy point of view.
— Lachlan Murdoch
Forward Guidance
- Growth trajectory: Management expects Tubi to reach a $1B revenue run rate within the current fiscal year, underpinning Fox’s strategy to monetize streaming-ad-supported video more aggressively and harness advanced targeting for political and demographic-specific campaigns.
- Content and live-events tailwinds: Ongoing strength in FOX News advertising, high NFL audience engagement, and robust World Series/Super Bowl dynamics suggest continued advertising demand—supporting near-term topline growth and pricing power despite higher sports rights costs.
- Rightsholders and cost dynamics: Higher sports programming rights amortization contributed to expense pressure in QQ1; ongoing rights negotiations (e.g., Big Ten/Soccer) may temper EBITDA expansion in the near term, though offset by higher affiliate revenues and Tubi monetization.
- Catalyst risks: The timing of major sports rights cycles, regulatory/policy changes affecting streaming or ad targeting, and macro ad-market volatility could influence quarterly performance. The Flutter/FanDuel licensing process adds execution risk, with a potential reallocation of value if licensing slows or requires extended regulatory clearance.
- Key monitorables for investors: (1) Tubi revenue trajectory and fill-rate expansion; (2) political advertising spend mix and pricing, particularly local vs. national shifts; (3) sports rights amortization cadence and scheduling impact (e.g., UEFA, FIFA events); (4) progress on Venue licensing/licensing strategy and potential third-party partnerships; (5) net debt trajectory and ability to sustain buybacks while funding growth investments.
- Conclusion: Fox’s QQ1 momentum supports a constructive investment thesis anchored in diversified revenue streams, scalable digital monetization (Tubi), and premium content assets. Given the company’s disciplined capital allocation, strong balance sheet, and leadership brands, Fox should navigate near-term rights-cost pressures while capturing upside from its multi-channel ecosystem.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
FOXA Focus
1.00%
26.70%
7.33%
5.90%
FWONA
36.00%
-0.90%
4.55%
-92.03%
IPG
11.30%
-1.81%
-2.38%
-29.62%
NWSA
1.00%
8.77%
1.44%
31.84%
PARAA
31.00%
7.65%
0.92%
12.24%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Fox Corporation offers an attractive blend of durable cash generation, escalating digital monetization, and a diversified content ecosystem underpinned by leadership brands. The QQ1 2025 results demonstrate: (1) robust revenue growth (11% YoY) with a meaningful EBITDA expansion (21% YoY) despite higher sports-rights amortization, (2) a compelling growth trajectory for Tubi, which management estimates will exceed $1B in annual revenue this fiscal year, and (3) strong brand-driven advertising demand across News, Sports, and Entertainment, supporting continued pricing power. Fox’s balance sheet remains liquid with roughly $4.1B cash and $7.2B debt, yielding solid liquidity and ample capacity for buybacks (cumulative $5.9B since 2019) and potential selective M&A or strategic investments.
From an investment perspective, Fox trades at a modest earnings multiple given the scale and quality of earnings (P/E around 5.9x and EV/EBITDA near 18x in the provided benchmarks), suggesting a valuation akin to a high-quality media conglomerate with strong cash flow characteristics. The company’s multi-channel portfolio, led by FOX News, FOX Sports, and Tubi, provides diversification of cyclical ad demand and exposure to scalable digital monetization, which is a meaningful positive in the evolving media landscape.
Key downside risks include ongoing sports-rights monetization headwinds, potential ad-market softness, and execution risk around Flutter/FanDuel licensing and Venue-related initiatives. Investors should monitor: (i) Tubi’s fill rate and monetization trajectory, (ii) evolution of political and local advertising demand, (iii) trajectory of subscriber declines and affiliate revenue dynamics, and (iv) the timing and regulatory clearance of Flutter/FanDuel licensing and potential Venue monetization outcomes. If Fox maintains its current trajectory—especially the strong Tubi growth and cross-platform synergies—alongside disciplined capital allocation, the stock could re-rate higher as the market increasingly values multi-platform, content-led monetization and robust cash returns.
Key Investment Factors
Growth Potential
- Tubi: Path to $1B revenue this fiscal year with accelerating ad monetization and geo-targeted campaigns; potential for continued scale through additional content acquisition, retention of viewers, and partnerships.
- Cross-platform monetization: Synergies across FOX News, FOX Sports, and FOX Entertainment to uplift advertising demand, pricing power, and bundled viewer engagement.
- Flutter/FanDuel and Venue: Licensing opportunities and alternative monetization routes that could unlock additional value if regulatory approvals proceed on a timely basis; potential licensing of FOX Sports content if Venue faces delays.
- Content strategy: Strong live-sports slate and compelling entertainment franchises support premium ad demand and subscriber engagement over time.
Profitability Risk
- Sports-rights inflation and amortization: Ongoing rights renewals and schedule changes pose EBITDA headwinds if cost growth outpaces revenue gains.
- Advertising cycle dependence: A significant portion of Fox’s revenue is tied to ad spend, which can be volatile around elections and macro conditions.
- Subscriber declines in traditional bundles: While moderation is underway, continued declines in cable subscribers could pressure affiliate revenues and cash flows over the medium term.
- Regulation and competition: Streaming competition, regulatory changes in ad tech/digital markets, and potential licensing delays (Venue, Flutter/FanDuel) introduce execution and regulatory risk.
Financial Position
- Balance sheet strength: Approximately $4.1B cash and $7.2B debt; net debt of about $4.08B; interest coverage ~9.3x, suggesting ample liquidity to fund content investments and buybacks.
- Leverage and profitability: Net debt to EBITDA roughly 3.1x, with EBITDA margin ~36.6% and net income margin ~23.2%, indicating strong profitability against a diverse content portfolio.
- Cash flow: Positive free cash flow of $94M in QQ1, with operating cash flow of $158M and capex of $64M, signaling healthy cash generation but seasonality in working capital (rights payments and receivables build in H1).
- Shareholder returns: $300M of buybacks in the quarter; cumulative buybacks ~ $5.9B since 2019; ongoing authorization of $7B supports capital-return potential.
SWOT Analysis
Strengths
Diversified, integrated media portfolio spanning News, Sports, Entertainment, and a fast-growing AVOD service (Tubi).
Leading audience reach across FOX News, FOX Sports, and local stations, with strong brand equity and high engagement metrics.
Material live sports rights and events calendar generating premium advertising demand and pricing power.
Strong balance sheet with substantial cash reserves and an active buyback program.
Strategic synergy across platforms enabling cross-promotion and monetization of audiences.
Weaknesses
High and dynamic sports rights amortization costs that can compress EBITDA margins in quarters with expensive renewals.
Revenue reliance on advertising cycles and political advertising exposure (cyclical sensitivity).
Cable subscriber declines contributing to affiliate revenue pressure and exposure to landscape shifts in bundles.
Execution risk related to licensing bets on Flutter/FanDuel and potential delays in Venue rollout.
Seasonality in working capital and capex impacting free cash flow in H1.
Opportunities
Tubi revenue acceleration toward a $1B run-rate and scale-driven profitability improvements in AVOD.
Expanded monetization of Flutter/FanDuel assets and potential for content licensing partnerships (Venue) to diversify revenue streams beyond core linear platforms.
Leveraging cross-platform promotions to strengthen pricing power in advertising and affiliate segments.
Upside from live sports calendar and international soccer events (UEFA, Copa America, FIFA) and the Super Bowl.
Threats
Competition from tech-enabled platforms and streaming incumbents impacting advertising demand and price realization.
Regulatory risk around online gambling licensing (Flutter/FanDuel) and content licensing practices.
Macro advertising slowdown or volatility around elections that could temper near-term revenue and margins.
Potential escalation in sports-rights costs or unfavorable renegotiation outcomes.
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