Fox Reports Third Quarter Fiscal 2021 Net Income of $582 Million, Earnings per Share of $0.96
Fox Corporation (Nasdaq: FOXA, FOX) reported strong quarterly financials for the period ending March 31, 2021. Quarterly net income soared to $582 million, up from $90 million the prior year, driven largely by changes in fair value of investments. Total revenues fell to $3.22 billion from $3.44 billion, mainly due to the absence of Super Bowl LIV broadcasts. However, affiliate revenues increased by 10%. Adjusted EBITDA stood at $899 million, slightly lower than $920 million year-over-year. The company also emphasized strong results at Tubi and its sports rights expansions.
- Net income increased significantly to $582 million compared to $90 million in the prior year.
- Adjusted net income was $523 million, demonstrating solid profitability despite challenges.
- Affiliate revenues grew by 10%, indicating strong performance in subscription revenue.
- Tubi's continued growth contributes positively to long-term business prospects.
- FOX Sports secured a key agreement to extend NFL rights, enhancing future revenue potential.
- Total revenues declined to $3.22 billion, primarily due to the absence of Super Bowl LIV.
- Advertising revenues fell to $1.20 billion from $1.57 billion, impacting overall income.
- Adjusted EBITDA decreased to $899 million, signaling pressures in the Television segment.
NEW YORK, May 5, 2021 /PRNewswire/ -- Fox Corporation (Nasdaq: FOXA, FOX) ("FOX" or the "Company") today reported financial results for the three months ended March 31, 2021.
The Company reported quarterly net income of
Total quarterly revenues were
Quarterly Adjusted EBITDA2 was
Commenting on the results, Executive Chairman and Chief Executive Officer Lachlan Murdoch said:
"The company continues to deliver operationally and financially with our year-to-date Revenues and EBITDA pacing well ahead of last year, despite the impact of COVID and the comparison against a Super Bowl year. Consistent with our expectations, FOX News reclaimed its leadership position as America's number one cable news network and the most watched cable network in primetime, while FOX Sports reached a landmark agreement with the NFL to extend our Sunday NFC rights package with expanded digital rights. These strategic milestones, coupled with a slate of complementary, high-growth, digital-focused assets, led by continued record growth at Tubi, provide a powerful platform to grow our business for the long-term."
REVIEW OF OPERATING RESULTS
Three Months Ended March 31, | Nine Months Ended March 31, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
$ Millions | ||||||||||||||||
Revenues by Component: | ||||||||||||||||
Affiliate fee | $ | 1,719 | $ | 1,559 | $ | 4,770 | $ | 4,389 | ||||||||
Advertising | 1,198 | 1,570 | 4,449 | 4,621 | ||||||||||||
Other | 298 | 311 | 800 | 875 | ||||||||||||
Total revenues | $ | 3,215 | $ | 3,440 | $ | 10,019 | $ | 9,885 | ||||||||
Segment Revenues: | ||||||||||||||||
Cable Network Programming | $ | 1,471 | $ | 1,467 | $ | 4,284 | $ | 4,221 | ||||||||
Television | 1,695 | 1,926 | 5,601 | 5,548 | ||||||||||||
Other, Corporate and Eliminations | 49 | 47 | 134 | 116 | ||||||||||||
Total revenues | $ | 3,215 | $ | 3,440 | $ | 10,019 | $ | 9,885 | ||||||||
Adjusted EBITDA: | ||||||||||||||||
Cable Network Programming | $ | 850 | $ | 792 | $ | 2,202 | $ | 2,032 | ||||||||
Television | 135 | 224 | 407 | 261 | ||||||||||||
Other, Corporate and Eliminations | (86) | (96) | (239) | (256) | ||||||||||||
Adjusted EBITDA3 | $ | 899 | $ | 920 | $ | 2,370 | $ | 2,037 | ||||||||
Depreciation and amortization: | ||||||||||||||||
Cable Network Programming | $ | 16 | $ | 15 | $ | 41 | $ | 44 | ||||||||
Television | 26 | 17 | 77 | 46 | ||||||||||||
Other, Corporate and Eliminations | 36 | 25 | 98 | 74 | ||||||||||||
Total depreciation and amortization | $ | 78 | $ | 57 | $ | 216 | $ | 164 | ||||||||
CABLE NETWORK PROGRAMMING
Three Months Ended March 31, | Nine Months Ended March 31, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
$ Millions | ||||||||||||||||
Revenues | ||||||||||||||||
Affiliate fee | $ | 1,068 | $ | 1,006 | $ | 2,969 | $ | 2,902 | ||||||||
Advertising | 283 | 304 | 1,023 | 895 | ||||||||||||
Other | 120 | 157 | 292 | 424 | ||||||||||||
Total revenues | 1,471 | 1,467 | 4,284 | 4,221 | ||||||||||||
Operating expenses | (505) | (554) | (1,725) | (1,866) | ||||||||||||
Selling, general and administrative | (122) | (126) | (374) | (342) | ||||||||||||
Amortization of cable distribution investments | 6 | 5 | 17 | 19 | ||||||||||||
Segment EBITDA | $ | 850 | $ | 792 | $ | 2,202 | $ | 2,032 | ||||||||
Cable Network Programming reported quarterly segment revenues of
Cable Network Programming reported quarterly segment EBITDA of
TELEVISION
Three Months Ended March 31, | Nine Months Ended March 31, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
$ Millions | ||||||||||||||||
Revenues | ||||||||||||||||
Advertising | $ | 915 | $ | 1,266 | $ | 3,426 | $ | 3,726 | ||||||||
Affiliate fee | 651 | 553 | 1,801 | 1,487 | ||||||||||||
Other | 129 | 107 | 374 | 335 | ||||||||||||
Total revenues | 1,695 | 1,926 | 5,601 | 5,548 | ||||||||||||
Operating expenses | (1,359) | (1,486) | (4,613) | (4,713) | ||||||||||||
Selling, general and administrative | (201) | (216) | (581) | (574) | ||||||||||||
Segment EBITDA | $ | 135 | $ | 224 | $ | 407 | $ | 261 | ||||||||
Television reported quarterly segment revenues of
Television reported quarterly segment EBITDA of
SHARE REPURCHASE PROGRAM
On November 6, 2019, the Company announced the authorization of a
IMPACT OF COVID-19
The outbreak of the COVID-19 pandemic has resulted in widespread and continuing negative impacts on the macroeconomic environment and disruption to the Company's business. Weak economic conditions and increased volatility and disruption in the financial markets pose risks to the Company and its business partners, including advertisers whose expenditures tend to reflect overall economic conditions. The COVID-19 pandemic has caused some of the Company's advertisers to reduce their spending, and future declines in the economic prospects of advertisers or the economy in general could negatively impact their advertising expenditures further. Depending on the duration and severity of the weak economic environment, it could lead to changes in consumer behavior, including increasing numbers of consumers canceling or foregoing subscriptions to multi-channel video programming distributor services, that adversely affect the Company's affiliate fee and advertising revenues. In addition, the Company's business depends on the volume and popularity of the content it distributes, particularly sports content. Following the COVID-19 outbreak, sports events to which the Company has broadcast rights were cancelled or postponed and the production of certain entertainment content the Company distributes was suspended. Although most sports events and productions have resumed, there may be additional content disruptions in the future, and depending on their duration and severity, these disruptions could materially adversely affect the Company's future advertising revenues and, over a longer period, its future affiliate fee revenues. To the extent the pandemic further negatively impacts the Company's ability to air sports events, it could result in a significantly greater adverse effect on the Company's business, financial condition or results of operations than the Company has experienced thus far. In addition, shifting sports schedules may negatively impact the Company's ability to attract viewers and advertisers to its sports and entertainment programming.
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, including the impact of COVID-19 and other widespread health emergencies or pandemics and measures to contain their spread. More detailed information about these factors is contained in the documents the Company has filed with or furnished to the Securities and Exchange Commission (the "SEC"), including the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2020.
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 March 31, | Nine Months Ended March 31, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
$ Millions, except per share amounts | ||||||||||||||||
Revenues | $ | 3,215 | $ | 3,440 | $ | 10,019 | $ | 9,885 | ||||||||
Operating expenses | (1,885) | (2,061) | (6,399) | (6,620) | ||||||||||||
Selling, general and administrative | (437) | (464) | (1,267) | (1,247) | ||||||||||||
Depreciation and amortization | (78) | (57) | (216) | (164) | ||||||||||||
Impairment and restructuring charges | - | - | (35) | (9) | ||||||||||||
Interest expense | (98) | (89) | (296) | (269) | ||||||||||||
Interest income | - | 8 | 3 | 33 | ||||||||||||
Other, net4 | 61 | (632) | 752 | (345) | ||||||||||||
Income before income tax expense | 778 | 145 | 2,561 | 1,264 | ||||||||||||
Income tax expense | (196) | (55) | (632) | (347) | ||||||||||||
Net income | 582 | 90 | 1,929 | 917 | ||||||||||||
Less: Net income attributable to noncontrolling interests | (15) | (12) | (32) | (40) | ||||||||||||
Net income attributable to Fox Corporation stockholders | $ | 567 | $ | 78 | $ | 1,897 | $ | 877 | ||||||||
Weighted average shares: | 593 | 612 | 598 | 619 | ||||||||||||
Net income attributable to Fox Corporation stockholders per share: | $ | 0.96 | $ | 0.13 | $ | 3.17 | $ | 1.42 | ||||||||
CONSOLIDATED BALANCE SHEETS
March 31, | June 30, | |||||||
Assets: | $ Millions | |||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 5,765 | $ | 4,645 | ||||
Receivables, net | 2,153 | 1,888 | ||||||
Inventories, net | 685 | 856 | ||||||
Other | 91 | 97 | ||||||
Total current assets | 8,694 | 7,486 | ||||||
Non-current assets: | ||||||||
Property, plant and equipment, net | 1,626 | 1,498 | ||||||
Intangible assets, net | 3,156 | 3,198 | ||||||
Goodwill | 3,403 | 3,409 | ||||||
Deferred tax assets | 3,853 | 4,358 | ||||||
Other non-current assets | 2,175 | 1,801 | ||||||
Total assets | $ | 22,907 | $ | 21,750 | ||||
Liabilities and Equity: | ||||||||
Current liabilities: | ||||||||
Borrowings | $ | 749 | $ | - | ||||
Accounts payable, accrued expenses and other current liabilities | 2,236 | 1,906 | ||||||
Total current liabilities | 2,985 | 1,906 | ||||||
Non-current liabilities: | ||||||||
Borrowings | 7,201 | 7,946 | ||||||
Other liabilities | 1,412 | 1,482 | ||||||
Redeemable noncontrolling interests | 225 | 305 | ||||||
Commitments and contingencies | ||||||||
Equity: | ||||||||
Class A common stock, | 3 | 3 | ||||||
Class B common stock, | 3 | 3 | ||||||
Additional paid-in capital | 9,555 | 9,831 | ||||||
Retained earnings | 1,912 | 674 | ||||||
Accumulated other comprehensive loss | (392) | (417) | ||||||
Total Fox Corporation stockholders' equity | 11,081 | 10,094 | ||||||
Noncontrolling interests | 3 | 17 | ||||||
Total equity | 11,084 | 10,111 | ||||||
Total liabilities and equity | $ | 22,907 | $ | 21,750 | ||||
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended March 31, | ||||||||
2021 | 2020 | |||||||
$ Millions | ||||||||
Operating Activities: | ||||||||
Net income | $ | 1,929 | $ | 917 | ||||
Adjustments to reconcile net income to cash provided by operating activities | ||||||||
Depreciation and amortization | 216 | 164 | ||||||
Amortization of cable distribution investments | 17 | 19 | ||||||
Impairment and restructuring charges | 35 | 9 | ||||||
Equity-based compensation | 112 | 101 | ||||||
Other, net | (752) | 345 | ||||||
Deferred income taxes | 528 | 255 | ||||||
Change in operating assets and liabilities, net of acquisitions and dispositions | ||||||||
Receivables and other assets | (382) | (395) | ||||||
Inventories net of program rights payable | 257 | 167 | ||||||
Accounts payable and accrued expenses | 88 | (178) | ||||||
Other changes, net | (182) | (59) | ||||||
Net cash provided by operating activities | 1,866 | 1,345 | ||||||
Investing Activities: | ||||||||
Property, plant and equipment | (333) | (192) | ||||||
Acquisitions, net of cash acquired | - | (611) | ||||||
Proceeds from dispositions, net | 93 | 45 | ||||||
Sale of Investments | - | 349 | ||||||
Purchase of investments | (86) | - | ||||||
Other investing activities, net | (3) | 12 | ||||||
Net cash used in investing activities | (329) | (397) | ||||||
Financing Activities: | ||||||||
Repurchase of shares | (713) | (600) | ||||||
Non-operating cash flows from (to) The Walt Disney Company | 113 | (70) | ||||||
Settlement of Divestiture Tax prepayment | 462 | - | ||||||
Dividends paid and distributions | (182) | (321) | ||||||
Purchase of subsidiary noncontrolling interest | (67) | - | ||||||
Other financing activities, net | (30) | 5 | ||||||
Net cash used in financing activities | (417) | (986) | ||||||
Net increase (decrease) in cash and cash equivalents | 1,120 | (38) | ||||||
Cash and cash equivalents, beginning of year | 4,645 | 3,234 | ||||||
Cash and cash equivalents, end of period | $ | 5,765 | $ | 3,196 | ||||
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 March 31, 2021 and 2020:
Three Months Ended | ||||||||||||||||
March 31, 2021 | March 31, 2020 | |||||||||||||||
Income | EPS | Income | EPS | |||||||||||||
$ Millions, except per share data | ||||||||||||||||
Net income | $ | 582 | $ | 90 | ||||||||||||
Less: Net income attributable to noncontrolling interests | (15) | (12) | ||||||||||||||
Net income attributable to Fox Corporation stockholders | $ | 567 | $ | 0.96 | $ | 78 | $ | 0.13 | ||||||||
Other, net5 | (61) | (0.10) | 627 | 1.02 | ||||||||||||
Tax provision | 17 | 0.03 | (137) | (0.22) | ||||||||||||
Rounding | - | (0.01) | - | - | ||||||||||||
As adjusted | $ | 523 | $ | 0.88 | $ | 568 | $ | 0.93 | ||||||||
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, Interest income, 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 and the impact of COVID-19).
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 nine months ended March 31, 2021 and 2020:
Three Months Ended March 31, | Nine Months Ended March 31, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
$ Millions | ||||||||||||||||
Net income | $ | 582 | $ | 90 | $ | 1,929 | $ | 917 | ||||||||
Add: | ||||||||||||||||
Amortization of cable distribution investments | 6 | 5 | 17 | 19 | ||||||||||||
Depreciation and amortization | 78 | 57 | 216 | 164 | ||||||||||||
Impairment and restructuring charges | - | - | 35 | 9 | ||||||||||||
Interest expense | 98 | 89 | 296 | 269 | ||||||||||||
Interest income | - | (8) | (3) | (33) | ||||||||||||
Other, net | (61) | 632 | (752) | 345 | ||||||||||||
Income tax expense | 196 | 55 | 632 | 347 | ||||||||||||
Adjusted EBITDA | $ | 899 | $ | 920 | $ | 2,370 | $ | 2,037 | ||||||||
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 losses of affiliates.
5 Other, net presented above excludes Equity losses of affiliates.
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SOURCE Fox Corporation
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