Fox Corporation

Ladies and gentlemen, thank you for standing by. Welcome to the Fox Corporation Second Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we'll conduct a -and-answer session. Instructions will be given at that time. If you should require assistance during the call, please press star, then zero. As a reminder, this conference is being recorded. I now turn the conference over to Chief Investor Relations Officer and Executive Vice President of Corporate Initiatives, Mr. Joe DiRego. Please go ahead, sir.

Thank you, operator. Hello, and welcome to our Second Quarter Fiscal 2020 Earnings Conference Call. Joining me on the call today are Lachlan Murdoch, Executive Chairman and Chief Executive Officer, John Nowlin, Chief Operating Officer, and Steve Tomsik, Chief Financial Officer. First, Lachlan and Steve will give some prepared remarks on the most recent quarter, and then we'll take questions from the investment community. Excuse me. Please note that this call may include forward-looking statements regarding Fox Corporation's financial performance and operating results. 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 SEC filings. Additionally, this call will include certain non-GAP financial measures, included adjusted EBITDA, or EBITDA, as we refer to it on this call. Reconciliation of non-GAP financial measures are included in our earnings release and our SEC filings, which are both available in the investor relations section of our website. And with that, I'm pleased to turn the call over to Lachlan.

Thanks, Joe. Good afternoon, and thanks to everyone for joining us for our Fiscal 2020 Second Quarter Earnings Call. We just reported an exceptional quarter which really underscores the strength of Fox and our unique position in the market. Nowhere was that strength and uniqueness on greater display than this past weekend, culminating with our groundbreaking broadcast of Super Bowl 54. Let me say at the outset how pleased I am of the efforts of our entire company. Our people delivered a flawless broadcast of Sunday's Game to more than 150 million unique viewers across the country, virtually guaranteeing its place as the most watched live television event of 2020. We surrounded the Super Bowl with an immersive and innovative programming lineup from Miami across Fox Sports, Fox News, Fox Sports One, and our local stations. And we used this enormous platform to launch season three of the Masked Singer right after the game, which became TV's highest rated reality telecast in eight years. On Sunday, Fox did the largest revenue day in TV history, generating around $600 million of gross revenue and providing an unmatched platform for over 100 advertisers from the pregame through the Masked Singer. And we delivered extraordinary ratings for our advertising, distribution, and NFL partners. And while there's a massive amount of planning and activity that goes with broadcasting the Super Bowl, it has not been at the expense of delivering other imperatives for our business. During the first six months of the fiscal year, we have already achieved a substantial number of key operating milestones in support of Fox's growth and momentum. Among them were attaining number one status for the Fox network and broadcast and maintaining the number one position of Fox News in all of cable, delivering a strong sports calendar to viewers and advertisers, particularly across baseball and football, launching the WWE, acquiring credible and activating Fox bet. We announced the expansion of our local station footprint with the acquisition of two key local market stations. We completed a substantial number of major distribution deals in line with our expectations, including gaining carriage for Fox News and Fox Business on Sling. And we have delivered impressive financial results led by revenue growth. This quarter, we really knocked it out of the park. Steve will provide further color around the financial results shortly, but our first half results illustrate the power and importance of our brands to our partners and audiences, validating our strategy to build Fox around live sports, live news and event programming. Overall, our top line revenue is trending nicely. Total affiliate revenue increased by nearly 6% in the first six months of the fiscal year. And our advertising markets, both national and local are buoyant, as illustrated by the current scatter market, where we see pricing well over 20% higher than upfront levels. The strength of the television advertising market for us is at a level that we have not seen for some time. Across all of Fox, we are seeing growing demand because we are delivering sizable audiences for brands. At our national networks, categories that are leading this intensity include financial, insurance, the streamers, technology and foreign auto. At the local level, most of these same categories are prominent, except domestic autos are currently running ahead of foreign. On the national news side of our business, Fox News and Fox Business are seeing a significant advertising client expansion across both our linear and digital advertising business, led by the financial and technology categories. The Fox News audience is increasingly sought after by more and more advertisers, as they look to reach a large engaged audience, particularly across middle America. This advertising strength is based, in large part, from delivering on the promise made last May at our upfront, that Fox would own the fall across the entire Fox network. Overall, the Fox network took the top rating spot for the fall broadcast season, marking its first number one finish in the 18 to 49 demographic in 10 years. Additionally, Fox is the only network to achieve year over year gains in both total viewers and in the 18 to 49 demo. Fox also ranked as the number one entertainment network in the fall in all viewers for the first time in our history, fueled by the success of the Masked Singer, 911 and the top new series, Prodigal Son. We're focused on sustaining this momentum in the second half of the year, with the addition of the deputy and 911 Lone Star, and non-scripted content like Gordon Ramsay's 24 Hours to Hell and Back, the third season of the Masked Singer, and our newest show, Lego Masters, which debuts tonight on Fox. I suggest watching with your whole family, it's truly great. On the sports side of our business, we continue to drive unparalleled audiences to our signature programming. So far this fiscal year, Fox Sports has been home to the US Women's National Soccer Team, a riveting seven game World Series, the inaugural broadcast presentation of WWE SmackDown, an ambitious new college football strategy, and the launch of our partnership with TSG and Fox Bet. And clearly, it was a great year for NFL football on Fox, which culminated Sunday with the broadcast of Super Bowl 54. For the second year in a row, Fox was able to expand its audience for Thursday Night Football, College Football Saturdays, and NFL Sundays. In aggregate, total regular season football viewing on Fox, NFL and college football combined, was up 14% over 2018. It's worth noting that no other network was up more than half this level. While the momentum we've seen at the broadcast network has been strong, equally as impressive is the performance of Fox News. Fox News finished calendar 2019 as a top rated basic cable network across all cable networks for a fourth year in a row, beating its nearest competitors by over 40% and achieving its highest rated prime time in history. Given the well-documented headwinds facing the broader cable industry, Fox News' ability to grow its audience over last year is a testament to the enduring power of the brand. The current news cycle continues to drive passionate viewers to Fox News, and it's hard to see that trend subsiding. All of these achievements point to a simple fact. Fox is the home to both the top rated broadcast network and the most viewed cable network, and that is an exciting position to be in. Equally exciting is to be the home of the two events that command the attention of the entire country in the same year. We started calendar 2020 with the first event, the broadcast of Super Bowl 54 on Fox. We now set our focus on the second event, the news equivalent of the Super Bowl, the presidential election. Fox News' branded Democracy 2020 election coverage is already in full swing. If history is any guide, audience levels and engagement will build significantly as the cycle progresses through the upcoming primaries and caucuses, the conventions, and the presidential debates, all culminating in our election night coverage across Fox News media on Tuesday, November 3rd. As we build towards November, the financial benefits are not limited to Fox News. We'll see a sizable ad revenue uplift at our local television stations. As reference, in calendar 2018, during the last midterm election, our stations collectively generated record gross political revenues in excess of $200 million, shattering the previous record set during the 2012 Obama-Romney election by 40%. Although we are very early in the political season, we are already seeing signs of further increased political spending, with a vast majority of the spend dedicated to the unmatched reach of television. We saw it on Sunday with spending in the Super Bowl on a national level, and we've already been seeing it at our local stations, which positions us to deliver a new record for political revenues in calendar 2020. Our confidence is further strengthened by the fact that we will soon be expanding our station footprint, which already includes stations in Florida, Michigan, Minnesota, Pennsylvania, and Virginia, into another perennial swing state, Wisconsin, with the previously announced acquisition of the Fox affiliate in Milwaukee. As you can tell, I'm thrilled with the rapid progress that we have made and the recognition of the great value of our networks by our distribution partners. As indicated earlier, we have achieved our goals in all the distribution renewals we have completed, which reflects the importance of our content to the market. But, of course, we recognize that the trends in the paid subscriber universe has an impact on our business. As you know, we are dependent on our traditional and digital distribution partners and their business plans for our inclusion in their pay television retail offerings. And while I'm not going to predict where a normalized pay TV subscriber base ends up in the near to medium term, I know that this ecosystem will still be the largest component of our revenues for some time. Nevertheless, we have begun allocating capital to expand our revenue base while preserving our subscriber-few relationships into -to-consumer initiatives which will grow in importance over time. Fox Nation, Foxbet, and Credible are three recent examples of this, but we continue to evaluate opportunities where Fox can bring unique value directly to consumers while sustaining existing business models. Nonetheless, there is solid growth and momentum at the company's existing digital businesses with total engagement increasing last quarter by over 40% versus the previous quarter. Fox News Digital had a record calendar 2019 beating CNN.com in both total views and minutes consumed. And for the first time, Fox News Digital averaged over 100 million unique comScore monthly visitors. Fox Sports also had a record digital year in calendar 2019, growing both total video views across streaming and social platforms, and total minutes consumed by over 20%. It was also our highest streamed regular season for the NFL on Fox, with growth of 57% over last year. And to refer to the Super Bowl one more time, the game was the most streamed ever. 11.7 million users streamed all are part of the Super Bowl. And 70% of their consumption was on Fox-owned platforms. While we have remained focused on executing against our operational plans and hitting our financial targets, we have also demonstrated how we look to deploy our capital to an appropriate balance of organic investment, strategic M&A, and return of capital to our shareholders. On the organic investment side, the previously announced $200 to $250 million EBITDA investment began to ramp up this past quarter with the broadcast of WWE SmackDown and our investments in greater originality and co-production rights at the Fox Network, along with investment in our digital initiatives led by Fox Nation and the refresh of Fox Business. In terms of strategic M&A, in October, we deployed approximately $260 million for the previously mentioned acquisition of Credible Labs. In the short time we've owned Credible Labs, we have seen the signs of the exceptional growth the business is capable of. For example, during the calendar of 2019, Credible more than doubled its cumulative registered user base and experienced record closed loan volume, both of which drove substantial top-line revenue growth. We have also committed around $300 million to acquire the next-star television stations in Seattle and Milwaukee in exchange for our stations in Charlotte. We expect this deal to close in the next month or so. And our commitment to return capital to our shareholders remains an integral element of our capital allocation strategy. In addition to the just announced semiannual dividend, we have now finished the initial $500 million of share repurchases that we committed to when we announced the $2 billion authorization three months ago. As we have consistently noted, we remain committed to deploying capital in a disciplined manner to maximize shareholder value through this balanced approach. Now I will turn the call over to Steve to provide more detail on our financial results.

Thanks, Loughlin, and good afternoon. As you just heard, our operating momentum continued in the second quarter, and we continue to exceed the internal goals that we commenced the year with. This past quarter, we delivered strong top-line growth, led by an increase in total affiliate revenue of 7%. We achieved this growth despite aggregate industry pay TV subscribers continuing to decline at a rate in excess of 4% over calendar year 2019. During this period, the losses across traditional distributors, many of whom reported last week, were at least partially offset by continued growth of digital MVPDs, where subscribers have grown 2.3 million. In this past quarter, we saw digital MVPDs grow by over 1.5 million, representing sequential quarterly growth of over 20%. As we have highlighted in the past, the natural seasonality of our business means the second quarter is traditionally the low-water mark from an EBITDA margin standpoint. This is primarily due to the timing of broadcast sports and entertainment expenses that are concentrated in the fall season. This includes the investments in sports and entertainment content at the Fox network, which, as we have previously outlined, set us up well to complete our remaining distribution renewals in this cycle and achieve our longer-term financial targets. Let me now take you through our second quarter results and, along the way, remind you of some key factors that shaped the remainder of our fiscal year. In the second quarter, the company reported total revenues of $3.78 billion, up 5% over the comparative period in fiscal 2019, reflecting revenue growth across all operating segments. EBITDA was $261 million, which compares to the $445 million generated in the prior year period, as growth at the cable segment was more than offset by lower operating results for the television segment and the impact of corporate expenses at the other segment now being reported on an actual basis. The latter reflects the costs of Fox operating as a standalone public company in the current year quarter versus the presentation of carve-out financial statements in the prior year. From a bottom-line perspective, net income attributable to stockholders of $300 million, or $0.48 per share, was higher than the $8 million, or $0.01 per share, in the prior year quarter. This growth was primarily due to the change in fair value of the company's investments recognised in other net, including the Stars Group and Roku, which together have a current market value of approximately $1.1 billion. Excluding this impact, another one-time items, adjusted EPS of $0.10 was down compared to last year's $0.43 per share, reflecting the change in EBITDA and interest expense, which as we have flagged in the past, now reflects the amount associated with operating as a standalone company. So now turning to the performance of our operating segments for the quarter, where cable network EBITDA of $556 million was up 7% on revenue growth of 2%. Cable affiliate revenues increased 2% as the impact of higher average rates across essentially all of our brands was partially offset by the net decrease in pay television subscribers that I mentioned earlier. Assuming current subscriber volume trends continue, we continue to anticipate modestly accelerating growth in cable affiliate revenue in the second half of the fiscal year, as the full impact of rate resets from recent renegotiations begin to take effect. Cable advertising revenues decreased 5% due to fewer units at Fox News Media, including higher preemptions associated with its breaking news coverage of the impeachment hearings and the absence of UFC programming at the national sports networks. These impacts were partially offset by strong results from our coverage of the MLB American League Championship Series between New York Yankees and Houston Astros on Fox Sports 1. Cable other revenues grew by $32 million. This increase was driven by high sports sub-licensing revenue and -per-view boxing revenues associated with the heavyweight bout between Wilder and Ortiz, as well as subscription revenues from Fox Nation. EBITDA at our cable segment increased 7% over the prior year, reflecting these higher revenues while costs were essentially held flat. From a cost perspective, savings from our non-renewal of UFC programming were offset by the contractual increases on existing sports rights agreements at the national sports networks, along with higher costs at Fox News Media, which includes our investment in digital. It is worth noting that we anticipate aliphated growth in cable segment expenses in our fiscal third quarter versus the prior year. This is driven by increased costs at our national sports networks, reflecting both contractual increases for our sports rights and the production costs of the shoulder programming around the broadcast of Super Bowl 54. It also includes increased costs at Fox News Media related to our coverage of the presidential election and continued investment in Fox Nation. The television segment reported an EBITDA loss of $214 million, higher than the loss of $14 million in the prior year quarter on revenue growth of 5%. The revenue growth was led by an 18% increase in television affiliate revenues, reflecting double-digit programming fee growth from non-own station affiliates and double-digit direct retransmission revenue growth at our owned and operated stations. Television advertising revenues in the quarter increased $39 million, or 2%. This was achieved despite us lapping the record political advertising revenues at our owned and operated stations from the midterm elections in the prior year quarter. This result was underpinned by the very robust advertising market conditions that Lachlan just described, coupled with stronger NFL ratings, the programming successes we've delivered at Fox Entertainment, a compelling seven-game World Series, and the introduction to the schedule of WWE's Friday Night SmackDown. EBITDA at our television segment decreased $200 million over the prior year as an increase in expenses of over $300 million, more than offset strong revenue growth. The increase in expenses was due to the anticipated increase in sports programming amortisation and production expenses, led by the NFL, along with investments we have made in television segment programming. During the quarter, these investments included the premiere of WWE, the expansion of original entertainment programming, and our participation in co-production arrangements with third-party studios. Finally, from a P&L perspective, the net EBITDA loss in our other segment amounted to $81 million, which reflects a full quarter of standalone costs as opposed to the carve-out basis of presentation in the corresponding quarter of the prior year. Turning now to cash flow, over the first six months of fiscal 2020, the company generated negative free cash flow of $366 million, which we calculate as net cash used in operating activities plus cash invested in property, plant and equipment. As a reminder, this anticipated use of capital reflects the typical seasonality you should expect to see in the business. Here, the first half of our fiscal year is impacted by the working capital deficit that results from the concentration of our annual sports rights payments and the recognised but -to-collect peak advertising revenues that are associated with our sports and entertainment programming in the fall broadcast season. These factors reverse in the second half of our fiscal year as we harvest cash from the collection on prior quarter's advertising revenues and payments for sports rights subside, resulting in a significant cash surplus. On a full-year basis, we will benefit from the natural low working capital usage of our business along with our cash tax benefit and will therefore convert a significant percentage of the company's EBITDA to free cash flow. From an overall balance sheet perspective, we ended the quarter with just under $2 billion in cash and $6.8 billion in debt. As Lachlan mentioned earlier, we've completed the initial $500 million stock repurchase goal that we outlined three months ago, comprising $350 million of Class A shares and $150 million of Class B shares. You will also have seen that we just declared our semiannual dividend of 23 cents a share. Finally, as part of our balanced approach to capital allocation, we closed on the acquisition of the 67% stake in credible ads in early October and with regulatory approvals now secured, we expect to soon close the previously announced Nextstar Television Stations transaction at a net purchase price of approximately $300 million. And with that, I would now like to turn the call back to Joe.

Thank you, Steve. And now we'd be happy to take questions from the investment community.

Ladies and gentlemen, if you wish to ask a question, please press one then zero on your touchtone phone. You'll hear a tone indicate you've been placed in queue. You may remove yourself from queue at any time by once again pressing one then zero. If you're using a speakerphone, please pick up the handset before pressing the numbers. It has been requested that you limit yourself to one question. Once again, if you have a question, please press one zero at this time. One moment please for our first question. And first question will come from Michael Nathanson. Please go ahead.

Thanks, I have two for anyone who wants to take it. So the first one is, when you guys separated this new company out, the assumption was you'd have more bargaining clout with distributors because you have less channels to defend. As Lachlan said, you achieved your goals in these negotiations just happened. Can you give us a sense of what those goals were and maybe how the goals have changed, given the change in terms of landscape for court cutting? And then secondly, I believe you still own 5% stake in Roku. Can you talk about how that asset fits in with your cap allocation scheme, especially in light of what happened last week with the impasse you guys had with Roku? So thanks.

Hey, Michael, thank you very much for the question, two questions. John, do you wanna address our success with the affiliate fees and I'll address Roku.

So Michael, thanks. I would say the first six months of the year was unprecedented for us with the amount of renewals that we had, all of which were successful against our internal plans. And you're right, when we said in the separation that our goals were different than we were at 21 CF, it was because we now had the opportunity to use the full power and leverage of the Fox Network and Fox News on a pricing standpoint and a full distribution standpoint. And your phrase of bargaining clout, those as Lachlan referred to earlier are the two most successful television channels in America right now. So we were able to use that to achieve multi-year pricing for those channels at levels that were at or above what we planned and distribution fully with our distribution partners. So I think those were the two that we were really focused on.

And in light of that, Michael, I think we can say that, I know we can say that, our announced expectation that we will do a billion dollars of additional affiliate revenue by calendar 22. We are absolutely still expecting to hit that number and cross that hurdle. So, and that's factoring in the subscriber volume declines. So I think we're really doing a terrific job in driving those affiliates. In regards to Roku, as sort of widely reported last Friday, our distribution deal with Roku was expiring. We went through, frankly, a very normal course sort of negotiation with them, not unlike the negotiations we have with all of our distributors. What happens in these negotiations, and often this is what becomes public, is both sides prepare for a non-resolution of the issues. But ultimately, they, like all of our distributors and platforms, saw the value of the Fox brands and content on their platform, and we were able to resolve our differences and agree to a new agreement, really, I think, to mutual benefit. You know, throughout it all, it was very professional. We have a huge regard for Anthony Wood and his management team at Roku. We think they're doing a tremendous stake. They've positioned the company to really be one of the leading, if not the lead beneficiary of -the-top streaming. And we are happy shareholders in the company.

I think we're ready for the

next question.

The next question will come from the line of Alexa Quadrini with JPMorgan. Please go ahead.

Thank you. On Fox News, you've seen such a great rebound, which, you know, given the news environment, looks like this momentum will continue. I guess my question is, how well can you capitalize on the ratings growth from an advertising perspective? Do you have enough inventory to sell? And then, just to follow up on the NFL, any colleagues you can give us in terms of when you think the discussions from the renewal might really kick in?

So, on advertising, so, you know, you're right, we're obviously doing well because of our rating strength, and obviously not just at the Fox network, but at Fox News as well. And the, as I mentioned in my earlier comments, you know, we see that that ratings strength, you know, really just continuing. In fact, last night over the State of the Union broadcast, I think, I know, because I've seen the numbers, maybe many of you have already, but Fox News ratings were double the ratings of CNN and MSNBC combined. So it really is a tremendous performance. You know, what we've been doing, and I think others have followed our lead, is working to, you know, to build in as many advertising units as we can. This includes, you know, using the innovative use of sort of squeezing back advertising and having sort of a split screen, split screen sort of experience, where you can, you know, cover some of the breaking news while also showing the ad or the ad break. So we are gathering as much of that revenue as possible. I think the important note though, around Fox News advertising, is really the expansion in the number of marketers and partners that we have on Fox News. You know, there's a growing sense in the market that if you want to reach, you know, middle America, there's no better place than placing, you know, your brand, your advertising, than on Fox News. So the advertising team is doing a tremendous job, and we expect to capture, you know, a significant amount of sort of the upside revenue as we run through this political season. And that's not to say, they're not even mentioned, you know, the local stations. You know, obviously in California, we have two markets, in Texas, where we have three markets, North Carolina, Virginia, Minnesota, and now with the addition soon of Wisconsin, you know, we are very well placed in swing states, where there'll be a significant amount of, you know, advertising spent towards this election.

Second

part of the question, sorry. Oh, the NFL, sorry, I was too verbose on the first part of the question. NFL renewal, you know, conversations have, you know, early stages, but they certainly have begun. We obviously spent practically all of last week with the NFL, both the administration and many of the, you know, the terrific families or the owners of the teams. And we feel we're in a good place to work with them as our most important partner to, you know, to renew our rights going forward, but it's early days in the conversations.

Operator, I think we can

go to the next question. Our next question will be from the line of Michael Morris with Guggenheim. Please go ahead.

Thank you, good afternoon. On the affiliate revenue in the fiscal second quarter, you guided to sort of a similar level to what you saw in the first, but you reported that acceleration. My question is, can you parse that? Was it all virtual MVPD driven? Were there other parts? Did it have anything to do with your new renewals that you'd done? And is that an incremental tailwind as you move into the step ups next year that will also be beneficial? And then just on the digital side, you know, I'm not sure about your partnerships with your traditional providers. You have left the door open to doing something digital. I believe that's the case, if or when at the time came that that would make sense. If you look at your current content base, do you have what you need to perhaps pursue that? Or are there specific places that you would still want to bolster to have a product ready? Thank you.

You can take that. I'll take the affiliate. So Michael, in terms of the affiliates, a combination of what you just outlined. So we got the benefit of an increase in that stub period in the final quarter of the calendar year with a couple of the renewals that we completed last calendar year. The other piece to it is just a little bit around subscriber mix where we obviously talk to the sort of heightened level of growth at the digital MVPDs. And given the sort of more recent deal vintage there, the pricing is a little bit better than some of the older deals. And so we benefited from that. But it doesn't, as I said in my opening remarks, we continue to expect that we'll get progressive increases in cable affiliate growth going into this second half of our fiscal year.

And then Michael, on the digital question, I think we're always gonna play to our strengths. And our strengths are very clearly live news, live sport and big event entertainment programming. And if we, yes, do we have what we need to succeed in those sectors, whether it's on broadcast or in a -to-consumer experience, we have the two of the most watched channels in America, the number one broadcast network and the number one cable channel. So clearly, our audiences are engaging with our content. They're engaging with our content today in a number of different forms, not just broadcast. I mentioned in my early remarks, I think it was 11.7 million people watch the Super Bowl via streaming, our broadcast Super Bowl via streaming. And 70%, which is actually a remarkable number, 70% of those, about 11.7 million, watch on platforms that we own. So I think we are already sort of progressing down that path. And I should also just call out Fox Nation, which is obviously a really excellent sort of -to-consumer product out of Fox News. 80% of the people who sample Fox Nation who take a free trial, 80% of them convert to paid subscribers. And December and January were the two highest months in history in terms of both subscriber acquisition but also, and just as importantly, in terms of engagement on the platform. So we're really very happy with how Fox Nation is progressing as well.

Operator, the next question, please. Our next question will be from Doug Mitchelson with Credit Suisse. Please go ahead.

Thanks so much, Lachlan. It's interesting to hear you mention sort of investments in -to-consumer. So I just wanted to continue along that theme. Is this sort of an urgent priority for the company or something that you just wanna lean into the next few years to capture growth? And I think what investors wanna know is at what point would you take Fox Broadcast Network or Fox News, put them online a la carte at maybe a big premium to your wholesale rate, but what has to happen in the broader environment for that to become an interesting pivot for the company? And if I could, I was just gonna ask John an -of-weeds question. You had Masked Singer on last year, second half of the season as well, so you're starting to comp you over a year on that. But I imagine the ad rates this year are a little bit better than the ad rates last year and any sort of color around sort of ad rate increase on that show would be super interesting. Thank you.

Hey, Doug, thank you very much. Look, it's something we're always looking at but we also have an eye on not damaging the current business model where we generate still a tremendous and growing amount of revenue from our cable subscribers. So I think that we have the capability to go direct consumer. We took the technology that we built with us when we separated from Disney. We are running direct consumer businesses with Fox Sports in -per-view, with Fox Nation, and in a different manner through Credible. So we're happy where we are now and we'll see what the future brings.

And, Doug, just with advertising, I think both Lachlan and Steve touched on advertising, we just haven't seen markets like this for a while and each of our products is leaning into this, each of our shows and whether it's entertainment or sports but just as guides, you'll remember the upfront was up 10% and scatter is now up over 20% on top of that. So it's not like Massing was fully sold in the upfront so we're enjoying the benefit of what is a very active market right now. Okay, operator, I think we have time

for one more

question.

Our last question to come from John Hodlick with UBS. Or UBS, please go ahead.

Great, thanks. Maybe for Lachlan following up on the political question and the 200 million, can you give us some more color on the sort of the pacing as you saw that that's been the last election cycle through the year and maybe the benefits you saw on maybe the sort of TV side versus the cable side. And then secondly, this might be for Steve, you completed the 500 million buyback, obviously very low leverage. How should we think of the buyback pacing going forward?

I'll let John answer the buyback piece but I mean, don't steal your thunder John but we fully expect to spend the remaining amount of the $1.5 billion that we have approval to buyback share. But I'll let John give some more detail on that. Thank you for your headline. So, sorry John. On the political pacing, it's really, it's very strong but we're at the very beginning of it. Obviously, we've seen some national advertising from both sides of the political spectrum. On the local side, we haven't seen any advertising yet locally from the president's reelection campaign but of course you've seen a lot of advertising already starting to come in from the Democratic side. You know, it's relatively short and I think it was reported the Bloomberg campaign has expected to sort of double its advertising spend earlier this week but the Bloomberg campaign is buying on a week to week basis so it's hard to project that out. Obviously, we expect it to be very strong and particularly, as I mentioned, in the markets of our local TV stations.

Hey John, it's John. I'll just, I'll end it on really something Lachlan said at the beginning. This is with respect to the buyback which is our commitment to the two returns of capital to the shareholders is just an integral element of the overall balanced capital allocation. We committed to a two billion authorization and we're going to complete that. Okay.

At this point, we are out of time but if you have any further questions, please give me or Dan Carey a call. Thank you once again for joining today's call.

Thanks everyone.

That, ladies and gentlemen, does conclude our conference for today. Thank you for your participation and for using AT&T Executive Teleconference. You may now disconnect.