FOX REPORTS SECOND QUARTER FISCAL 2024 REVENUES OF $4.23 BILLION, NET INCOME OF $115 MILLION, AND ADJUSTED EBITDA OF $350 MILLION
- 4% increase in affiliate fee revenues
- Quarterly net income of $115 million
- Quarterly segment EBITDA of $564 million in Cable Network Programming
- 10% increase in affiliate fee revenues in Television segment
- 20% decrease in advertising revenues
- Quarterly net income decrease from $321 million to $115 million
- Adjusted EBITDA decrease from $531 million to $350 million
Insights
The reported decrease in total quarterly revenues and net income for Fox Corporation highlights a period of challenges influenced by cyclical events and market conditions. The absence of high-profile events such as the FIFA Men's World Cup and the 2022 midterm elections, which provided a temporary boost to advertising revenues in the previous year, has led to a significant 20% drop in advertising revenue. This is a common occurrence in the media industry where revenues can be highly variable and dependent on event-driven advertising. The 4% increase in affiliate fee revenues is a positive note, suggesting that despite a decline in subscribers, contractual rate increases have helped stabilize this revenue stream.
The substantial 34% decline in adjusted net income and the 34% decrease in Adjusted EBITDA year-over-year are critical metrics that investors monitor as they reflect the company's profitability and operational efficiency. The reduction in expenses, primarily due to lower programming rights amortization and production costs, has partially offset the revenue decline, which is indicative of the company's efforts to manage costs amidst revenue pressures.
Furthermore, the share repurchase program and the declaration of a dividend signal confidence in the company's financial position and commitment to returning value to shareholders. The repurchase of Class A and Class B common stock, coupled with the dividend payout, may be viewed favorably by investors as a sign of a healthy balance sheet and a shareholder-friendly capital allocation policy.
The performance of Fox Corporation's various segments provides insight into the evolving media landscape. The Cable Network Programming segment's modest revenue increase and significant EBITDA growth of 60% underscore the segment's ability to manage costs effectively, particularly in sports programming rights amortization. This suggests a strategic focus on profitability over top-line growth, which may be a response to the broader challenges facing cable networks, such as cord-cutting and shifts in consumer viewing habits.
On the other hand, the Television segment's revenue decline and EBITDA loss reflect the impact of cyclical advertising and content production challenges. The growth at Tubi, a streaming platform, indicates a strategic pivot towards digital and on-demand content consumption, aligning with broader industry trends towards streaming services. This resilience in a competitive market is noteworthy as it points to potential areas of growth and diversification for the company.
The reported decline in advertising revenues due to higher supply in the direct response marketplace, lower ratings and breaking news preemptions at FOX News Media, may also reflect broader industry trends of fragmentation and the challenges traditional broadcasters face in maintaining audience share in an increasingly digital and segmented media environment.
The financial results of Fox Corporation can be viewed within the context of the macroeconomic environment, which includes factors such as consumer behavior, advertising spend and industry-specific trends. The decline in advertising revenues may be partly attributable to broader economic factors such as businesses tightening their advertising budgets in response to economic uncertainties or shifts in advertising strategies towards digital and targeted platforms.
The company's ability to repay $1.25 billion of senior notes upon maturity without refinancing suggests a strong liquidity position and prudent debt management. This fiscal responsibility is particularly important in an environment where interest rates may be rising, increasing the cost of borrowing and impacting companies with high leverage. The debt repayment also reflects a strategic decision to reduce financial risk and improve the company's debt profile.
Overall, the financial performance of Fox Corporation, including the impacts on revenue and profitability, must be analyzed considering the cyclical nature of the media industry, shifts in consumer preferences towards digital media and the broader economic climate that influences advertising spend and investment decisions.
The Company reported total quarterly revenues of
The Company reported quarterly net income of
Quarterly Adjusted EBITDA2 was
Commenting on the results, Executive Chair and Chief Executive Officer Lachlan Murdoch said:
"At the halfway point in our fiscal year, our results demonstrate the strength and durability of our core brands and their ability to deliver solid audiences across our portfolio. FOX Sports continues to benefit from the power of live sports programming and FOX News has maintained its leadership in cable news, while Tubi has been resilient in an increasingly competitive market. Combining this steadfast portfolio of assets with a best-in-class balance sheet underpins our ability to deliver value for our shareholders."
REVIEW OF OPERATING RESULTS | |||||||
Three Months Ended | Six Months Ended | ||||||
2023 | 2022 | 2023 | 2022 | ||||
$ Millions | |||||||
Revenues by Component: | |||||||
Affiliate fee | $ 1,787 | $ 1,712 | $ 3,527 | $ 3,423 | |||
Advertising | 2,002 | 2,503 | 3,202 | 3,723 | |||
Other | 445 | 390 | 712 | 651 | |||
Total revenues | $ 4,234 | $ 4,605 | $ 7,441 | $ 7,797 | |||
Segment Revenues: | |||||||
Cable Network Programming | $ 1,658 | $ 1,632 | $ 3,045 | $ 3,063 | |||
Television | 2,542 | 2,934 | 4,322 | 4,648 | |||
Other, Corporate and Eliminations | 34 | 39 | 74 | 86 | |||
Total revenues | $ 4,234 | $ 4,605 | $ 7,441 | $ 7,797 | |||
Adjusted EBITDA: | |||||||
Cable Network Programming | $ 564 | $ 353 | $ 1,171 | $ 1,095 | |||
Television | (138) | 256 | 213 | 665 | |||
Other, Corporate and Eliminations | (76) | (78) | (165) | (137) | |||
Adjusted EBITDA3 | $ 350 | $ 531 | $ 1,219 | $ 1,623 | |||
Depreciation and amortization: | |||||||
Cable Network Programming | $ 19 | $ 17 | $ 37 | $ 34 | |||
Television | 28 | 30 | 57 | 59 | |||
Other, Corporate and Eliminations | 50 | 56 | 99 | 109 | |||
Total depreciation and amortization | $ 97 | $ 103 | $ 193 | $ 202 | |||
CABLE NETWORK PROGRAMMING | |||||||
Three Months Ended | Six Months Ended | ||||||
2023 | 2022 | 2023 | 2022 | ||||
$ Millions | |||||||
Revenues | |||||||
Affiliate fee | $ 1,031 | $ 1,026 | $ 2,036 | $ 2,055 | |||
Advertising | 348 | 451 | 638 | 767 | |||
Other | 279 | 155 | 371 | 241 | |||
Total revenues | 1,658 | 1,632 | 3,045 | 3,063 | |||
Operating expenses | (942) | (1,097) | (1,591) | (1,661) | |||
Selling, general and administrative | (156) | (186) | (291) | (315) | |||
Amortization of cable distribution investments | 4 | 4 | 8 | 8 | |||
Segment EBITDA | $ 564 | $ 353 | $ 1,171 | $ 1,095 | |||
Cable Network Programming reported quarterly segment revenues of
Cable Network Programming reported quarterly segment EBITDA of
TELEVISION | |||||||
Three Months Ended | Six Months Ended | ||||||
2023 | 2022 | 2023 | 2022 | ||||
$ Millions | |||||||
Revenues | |||||||
Advertising | $ 1,654 | $ 2,052 | $ 2,564 | $ 2,957 | |||
Affiliate fee | 756 | 686 | 1,491 | 1,368 | |||
Other | 132 | 196 | 267 | 323 | |||
Total revenues | 2,542 | 2,934 | 4,322 | 4,648 | |||
Operating expenses | (2,440) | (2,415) | (3,638) | (3,486) | |||
Selling, general and administrative | (240) | (263) | (471) | (497) | |||
Segment EBITDA | $ (138) | $ 256 | $ 213 | $ 665 | |||
Television reported quarterly segment revenues of
Television reported a quarterly segment EBITDA loss of
DIVIDEND
The Company has declared a dividend of
SHARE REPURCHASE PROGRAM
As of December 31, 2023, the Company has repurchased approximately
DEBT MATURITY
In January 2024,
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as "may," "will," "should," "likely," "anticipates," "expects," "intends," "plans," "projects," "believes," "estimates," "outlook" and similar expressions are used to identify these forward-looking statements. These statements are based on management's current expectations and beliefs and are subject to uncertainty and changes in circumstances. Actual results may vary materially from those expressed or implied by the statements in this press release due to changes in economic, business, competitive, technological, strategic and/or regulatory factors and other factors affecting the operation of the Company's businesses. More detailed information about these factors is contained in the documents the Company has filed with or furnished to the Securities and Exchange Commission, including the Company's Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q.
Statements in this press release speak only as of the date they were made, and the Company undertakes no duty to update or release any revisions to any forward-looking statement made in this press release or to report any events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events or to conform such statements to actual results or changes in the Company's expectations, except as required by law.
To access a copy of this press release through the Internet, access Fox Corporation's corporate website located at http://www.foxcorporation.com.
CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||
Three Months Ended | Six Months Ended | ||||||
2023 | 2022 | 2023 | 2022 | ||||
$ Millions, except per share amounts | |||||||
Revenues | $ 4,234 | $ 4,605 | $ 7,441 | $ 7,797 | |||
Operating expenses | (3,393) | (3,528) | (5,255) | (5,184) | |||
Selling, general and administrative | (495) | (550) | (975) | (998) | |||
Depreciation and amortization | (97) | (103) | (193) | (202) | |||
Interest expense, net | (72) | (60) | (114) | (128) | |||
Other, net4 | (46) | 73 | (212) | (3) | |||
Income before income tax expense | 131 | 437 | 692 | 1,282 | |||
Income tax expense | (16) | (116) | (162) | (348) | |||
Net income | 115 | 321 | 530 | 934 | |||
Less: Net income attributable to noncontrolling interests | (6) | (8) | (14) | (16) | |||
Net income attributable to Fox Corporation stockholders | $ 109 | $ 313 | $ 516 | $ 918 | |||
Weighted average shares: | 482 | 543 | 488 | 547 | |||
Net income attributable to Fox Corporation stockholders per share: | $ 0.23 | $ 0.58 | $ 1.06 | $ 1.68 | |||
CONSOLIDATED BALANCE SHEETS | |||
December 31, 2023 | June 30, 2023 | ||
$ Millions | |||
Assets: | |||
Current assets: | |||
Cash and cash equivalents | $ 4,122 | $ 4,272 | |
Receivables, net | 3,001 | 2,177 | |
Inventories, net | 1,038 | 543 | |
Other | 340 | 265 | |
Total current assets | 8,501 | 7,257 | |
Non-current assets: | |||
Property, plant and equipment, net | 1,676 | 1,708 | |
Intangible assets, net | 3,061 | 3,084 | |
Goodwill | 3,559 | 3,559 | |
Deferred tax assets | 3,065 | 3,090 | |
Other non-current assets | 2,984 | 3,168 | |
Total assets | $ 22,846 | $ 21,866 | |
Liabilities and Equity: | |||
Current liabilities: | |||
Borrowings | $ 1,250 | $ 1,249 | |
Accounts payable, accrued expenses and other current liabilities | 2,457 | 2,514 | |
Total current liabilities | 3,707 | 3,763 | |
Non-current liabilities: | |||
Borrowings | 7,195 | 5,961 | |
Other liabilities | 1,376 | 1,484 | |
Redeemable noncontrolling interests | 243 | 213 | |
Commitments and contingencies | |||
Equity: | |||
Class A common stock, | 3 | 3 | |
Class B common stock, | 2 | 2 | |
Additional paid-in capital | 7,879 | 8,253 | |
Retained earnings | 2,514 | 2,269 | |
Accumulated other comprehensive loss | (146) | (149) | |
Total Fox Corporation stockholders' equity | 10,252 | 10,378 | |
Noncontrolling interests | 73 | 67 | |
Total equity | 10,325 | 10,445 | |
Total liabilities and equity | $ 22,846 | $ 21,866 | |
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||
Six Months Ended | |||
2023 | 2022 | ||
$ Millions | |||
Operating Activities: | |||
Net income | $ 530 | $ 934 | |
Adjustments to reconcile net income to cash used in operating activities | |||
Depreciation and amortization | 193 | 202 | |
Amortization of cable distribution investments | 8 | 8 | |
Equity-based compensation | 48 | 32 | |
Other, net | 212 | 3 | |
Deferred income taxes | 29 | 152 | |
Change in operating assets and liabilities, net of acquisitions and dispositions | |||
Receivables and other assets | (853) | (952) | |
Inventories net of programming payable | (405) | (420) | |
Accounts payable and accrued expenses | (180) | (152) | |
Other changes, net | (117) | (68) | |
Net cash used in operating activities | (535) | (261) | |
Investing Activities: | |||
Property, plant and equipment | (150) | (153) | |
Purchase of investments | (6) | (50) | |
Other investing activities, net | 13 | (18) | |
Net cash used in investing activities | (143) | (221) | |
Financing Activities: | |||
Borrowings | 1,232 | — | |
Repurchase of shares | (500) | (500) | |
Dividends paid and distributions | (142) | (155) | |
Sale of subsidiary noncontrolling interest | — | 25 | |
Other financing activities, net | (62) | (30) | |
Net cash provided by (used in) financing activities | 528 | (660) | |
Net decrease in cash and cash equivalents | (150) | (1,142) | |
Cash and cash equivalents, beginning of year | 4,272 | 5,200 | |
Cash and cash equivalents, end of period | $ 4,122 | $ 4,058 | |
NOTE 1 – ADJUSTED NET INCOME AND ADJUSTED EPS
The Company uses net income and earnings per share ("EPS") attributable to Fox Corporation stockholders excluding net income effects of Impairment and restructuring charges, adjustments to Equity (losses) earnings of affiliates, Other, net, and tax provision adjustments ("Adjusted Net Income" and "Adjusted EPS" respectively) to evaluate the performance of the Company's operations exclusive of certain items that impact the comparability of results from period to period.
Adjusted Net Income and Adjusted EPS may not be comparable to similarly titled measures reported by other companies. Adjusted Net Income and Adjusted EPS are not measures of performance under GAAP and should be considered in addition to, and not as substitutes for, net income attributable to Fox Corporation stockholders and EPS as reported in accordance with GAAP. However, management uses these measures in comparing the Company's historical performance and believes that they provide meaningful and comparable information to management, investors and equity analysts to assist in their analysis of the Company's performance relative to prior periods and the Company's competitors.
The following table reconciles net income and EPS attributable to Fox Corporation stockholders to Adjusted Net Income and Adjusted EPS for the three months ended December 31, 2023 and 2022:
Three Months Ended | |||||||
December 31, 2023 | December 31, 2022 | ||||||
Income | EPS | Income | EPS | ||||
$ Millions, except per share data | |||||||
Net income | $ 115 | $ 321 | |||||
Less: Net income attributable to noncontrolling interests | (6) | (8) | |||||
Net income attributable to Fox Corporation stockholders | $ 109 | $ 0.23 | $ 313 | $ 0.58 | |||
Other, net5 | 47 | 0.10 | (72) | (0.13) | |||
Tax provision | 9 | 0.02 | 18 | 0.03 | |||
Rounding | — | (0.01) | — | — | |||
As adjusted | $ 165 | $ 0.34 | $ 259 | $ 0.48 | |||
NOTE 2 – ADJUSTED EBITDA
Adjusted EBITDA is defined as Revenues less Operating expenses and Selling, general and administrative expenses. Adjusted EBITDA does not include: Amortization of cable distribution investments, Depreciation and amortization, Impairment and restructuring charges, Interest expense, net, Other, net and Income tax expense.
Management believes that information about Adjusted EBITDA assists all users of the Company's Unaudited Consolidated Financial Statements by allowing them to evaluate changes in the operating results of the Company's portfolio of businesses separate from non-operational factors that affect net income, thus providing insight into both operations and the other factors that affect reported results. Adjusted EBITDA provides management, investors and equity analysts a measure to analyze the operating performance of the Company's business and its enterprise value against historical data and competitors' data, although historical results, including Adjusted EBITDA, may not be indicative of future results (as operating performance is highly contingent on many factors, including customer tastes and preferences).
Adjusted EBITDA is considered a non-GAAP financial measure and should be considered in addition to, not as a substitute for, net income, cash flow and other measures of financial performance reported in accordance with GAAP. In addition, this measure does not reflect cash available to fund requirements and excludes items, such as depreciation and amortization and impairment charges, which are significant components in assessing the Company's financial performance. Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies.
The following table reconciles net income to Adjusted EBITDA for the three and six months ended December 31, 2023 and 2022:
Three Months Ended | Six Months Ended | ||||||
2023 | 2022 | 2023 | 2022 | ||||
$ Millions | |||||||
Net income | $ 115 | $ 321 | $ 530 | $ 934 | |||
Add: | |||||||
Amortization of cable distribution investments | 4 | 4 | 8 | 8 | |||
Depreciation and amortization | 97 | 103 | 193 | 202 | |||
Interest expense, net | 72 | 60 | 114 | 128 | |||
Other, net6 | 46 | (73) | 212 | 3 | |||
Income tax expense | 16 | 116 | 162 | 348 | |||
Adjusted EBITDA | $ 350 | $ 531 | $ 1,219 | $ 1,623 | |||
1 | Excludes net income effects of Impairment and restructuring charges, adjustments to Equity (losses) earnings of affiliates, Other, net and tax provision adjustments. See Note 1 for a description of adjusted net income and adjusted earnings per share attributable to Fox Corporation stockholders, which are considered non-GAAP financial measures, and a reconciliation of reported net income and earnings per share attributable to Fox Corporation stockholders to adjusted net income and adjusted earnings per share attributable to Fox Corporation stockholders. | ||||||||
2 | Adjusted EBITDA is considered a non-GAAP financial measure. See Note 2 for a description of Adjusted EBITDA and a reconciliation of net income to Adjusted EBITDA. | ||||||||
3 | Adjusted EBITDA is considered a non-GAAP financial measure. See Note 2 for a description of Adjusted EBITDA and a reconciliation of net income to Adjusted EBITDA. | ||||||||
4 | Other, net presented above includes Equity earnings (losses) of affiliates. | ||||||||
5 | Other, net presented above excludes Equity earnings (losses) of affiliates. | ||||||||
6 | Other, net presented above includes Equity earnings (losses) of affiliates. | ||||||||
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SOURCE Fox Corporation
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