Fox Corporation

Ladies and gentlemen, thank you for standing by. Welcome to the Fox Corporation first quarter fiscal year 2021 earnings conference call. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session. I would like to emphasize that functionality for the question and answers queue has recently changed. 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'll 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, Greg. Hello, and welcome to our fiscal 2021 first quarter earnings call. Joining me on the call today are Lachlan Murdoch, Executive Chairman and Chief Executive Officer, John Nallen, Chief Operating Officer, and Steve Tomsik, our 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. 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. This call will include certain non-GAAP financial measures, including adjusted EBITDA, or EBITDA as we refer to it on this call. Reconciliations of non-GAAP financial measures are included in our earnings release and our SEC filings, which are 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 morning, and thank you all for joining us to discuss our first quarter results. Today is a big day for Fox, and not just because we get to brag about our strong financial performance, continued operating momentum, and burgeoning digital assets such as Fox Bet and Tubi, but because every four years we have the privilege and the responsibility of reporting on a U.S. presidential election. This very moment as we speak, our viewers are starting their election day turning on their TV sets to where they left them last night, the Fox News channel, or opening their web browsers to foxnews.com, or checking the Fox News app for the latest reporting. Throughout the day, tens of millions of Americans around the country will turn to Fox to follow our coverage of the presidential election, as well as Senate, state, and local races. They do this because they trust us and our legion of hardworking and diligent news professionals. Hours ago, our studios across the country were lit for today's coverage, and anchors, producers, camera operators, engineers, news editors, reporters, and more all got ready for a long day and night ahead. But the real preparation for today began years ago. In fact, it is over 12 months since we launched our Democracy 2020 campaign. This intentional, careful planning has served us well. The energy and excitement are palpable in the newsrooms of our local Fox television stations and at Fox News where Bret Baier and Martha McCallum will be live from Studio F in just a few hours. The news teams at the Fox television stations and Fox News have done a superb job throughout this election season. And viewers from across the political spectrum have been turning to us in record numbers as a result. Fox News finished September as the first cable network to lead all broadcast networks in weekday prime with total viewers for the full quarter. In fact, Fox News has been the most watched network in all of television from Memorial Day through Election Day. We achieved ratings growth in total day and primetime throughout the first quarter. Fox News total day ratings were up 28% in total viewers, and 31% among adults 25 to 54 years old. Prime time ratings increased even more substantially, up 43% in total viewers and up 54% among adults 25 to 54 years old. This demo is sought out by advertisers, making these gains particularly impactful. Already in the second quarter, the rate of growth in both total viewers and in the 25 to 54 demo has accelerated from last quarter. Just one recent example, last Tuesday, October 27th, Tucker Carlson Tonight on the Fox News Channel had more total viewers than the season premiere of NBC's This Is Us that same night. And while our linear platform is remarkably strong, Our audience is also increasingly accessing our digital products to connect with us. Fox News Digital ended the first quarter with record engagement, more than 11.5 billion total video views. Total minutes watched clocked in at 14.2 billion, and unique visitors jumped to 115 million per month. Fox News not only draws the largest audiences nationally, it also draws a more politically diverse audience in more strategically important states than any other cable news network. According to Nielsen, Fox News dominates share of viewing in swing states and key blue states. Fox News accounts for 50% of total primetime viewership in swing states, compared to MSNBC with 28% and CNN with 23%. This is only possible because we speak to the broadest audience of anyone in our competitive set. Our audience includes the greatest number of registered independents and likely voters of any cable news network. Fox News is relied on by 38% of registered independents. This speaks directly to the quality of our journalism and the balance of our reporting. people have noticed. This year, both presidential candidates and the PAC supporting them have turned to Fox News to reach our large, engaged, and diverse audience. In fact, 28 different political candidates or groups advertised on Fox News during the month of October. Additionally, we have shattered the record for political advertising at our local stations, surpassing the previous high set during the 2018 midterms. The geographical mix of our stations includes both the largest DMAs and locations that are long-standing and newly emerging swing states. This allows us to capture a significant share of local political ad spend. Since I spoke to you in August, we've gained increased visibility into local advertising pacing. Last quarter, our local stations were experiencing a year-over-year decrease in our base ad market of approximately 40%. Compare that to this first quarter where our core stations were down approximately 20%. Including the benefit of political and station acquisitions, we are now pacing ahead of the same time last year. Looking at it slightly differently, at the beginning of COVID, our stations were pacing down nearly 50% compared to the prior year. Today, they are pacing ahead. This is a tremendous return to strength in a remarkably short period of time. All of our stations also play an important role in connecting audiences in key sports markets with football, baseball, and other Fox sports programming. We have stations in nearly all NFC markets, including our recent additions in Seattle and Milwaukee. While overall NFL viewership has seen year-to-year declines across all of its partners, Fox's America's Game of the Week is well on its way to a 12th consecutive season as TV's most watched show. America's Game of the Week is averaging over 24 million viewers, up slightly over last year. We used this, our 27th season of NFL on Fox, to accelerate awareness and use of the free-to-play Fox Bet Super 6 app. By week five of the NFL, we signed up more than 1.3 million new users, meaningfully surpassing our estimates and increasing total installed users to over 2.9 million. More than 1.2 million people played in our November 1st NFL Super 6 game. By promoting the Fox Bet Super 6 app across our entire portfolio, we have greatly expanded its user base. Expect more sports and non-sports games and promotions across our platforms, given the results we are seeing. One week ago Sunday, the Super 6 app was number six in the entire iOS app store, only behind apps like Facebook and Snapchat. And Super 6 is consistently at or near the top of the sports category in iOS and Android downloads. Drafting off the success of Super 6, FoxBet, our sports betting app, is also energizing users. The app, which is currently available in Colorado, New Jersey, and Pennsylvania, has been the third most downloaded sportsbook app for the past two consecutive weeks. That will only increase as we launch in new states. We anticipate our next launch will be in Michigan early next year. All of our Fox businesses are committed to our partnership with Flutter and to propelling this growth of the Super 6 and Fox Bet platforms. Each week, we are driving over 100 million media impressions across our portfolio of owned and operated Fox assets. Another important digital expansion for the company, our ad-supported streaming platform Tubi, is thriving. Let me start with the astronomical growth we've seen this quarter. In August, Tubi reported 33 million monthly active users, representing a 65% year-over-year jump. More importantly, since acquisition, Tubi has averaged approximately 100% increase year-over-year in total view times. the most meaningful metric when measuring the performance of any AVOD service. This is due in part to the more than 41 Fox titles currently available on Tubi, including The Masked Singer, Gordon Ramsay's 24 Hours to Hell and Back, and Lego Masters. When Tubi began streaming The Masked Singer, the show quickly became Tubi's number one television series overall. We used the show to introduce viewers to Tubi, And we are also driving them to the platform through marketing across our networks, including the Fox Network and Fox News. Most recently, Tubi sponsored the post-game show during the Major League Playoffs and the World Series on Fox. Using these internal Fox marketing opportunities will increase consumer awareness of Tubi, which will drive exploration and viewing. We are also using our television stations to promote and differentiate Tubi. As part of Tubi's News on Tubi launch on Roku and Amazon Fire in October, viewers now have access to live feeds from 18 Fox-owned and operated stations in top markets, including New York, Los Angeles, Chicago, and Dallas. The News on Tubi offering also includes content from third parties, including Bloomberg TV and NBC News Now. News on Tubi serves several important objectives. It provides viewers with the best in local news and further leverages the assets of Fox while also expanding consumers' understanding of what Tubi offers. With News on Tubi, the platform is, for the first time, providing live viewing opportunities. And we are now monetizing this new content and our impressive viewership gains. We are including Tubi in all of our ad sales discussions. The power of the Fox and Tubi partnership is evident. Since September 1st, Tubi has achieved 45 of the top 50 revenue days in its history. With a median age of 34, Tubi's audience is young, diverse, and in demand for many brands. The leading Fox entertainment programs that feed Tubi are an important synergy that we will continue to capitalize on with new and returning shows. All of Fox Entertainment's returning shows, including the 911 franchise, Prodigal Son, The Resident, and Last Man Standing, are back in production with scheduled return dates in early January. As in previous years, Fox will launch a robust and strong slate of shows mid-season, utilizing the end of the NFL season and NFC Championship as a springboard. Despite pandemic-related production halts in the summer that impacted its fall lineup, Fox Entertainment had a successful premiere week this television season. For premiere week, which is the week of September 21st, Fox was the number one network for entertainment programming. Fox also kicked off the 2020-2021 fall television season with the number one new series, the number one comedy, and the number one drama. And Fox has continued that leadership position, ranking as the number one network for the week of October 19th. Each of our four brands is a powerhouse, distinctly positioned to differentiate itself from competitors and appeal to viewers. The power of our total portfolio, though, is even greater than the sum of its parts. Look at the share of voice recently achieved by the Fox network and the Fox News channel on Thursday, October 29th. Together, these networks made up 65% of TV total viewer share compared to the rest of broadcast. The reliable primetime strength of Fox News in combination with NFL and Fox captured nearly two-thirds of all viewers watching broadcast television that evening. On several October evenings, our leadership brands accounted for at least half of all viewers watching broadcast television. And that occurs when we have sports on the network and also when we air one of our entertainment hits. The power of our brands is not only recognized by our audiences and advertisers, it is also valued by our distribution partners. In the first quarter, we saw affiliate revenues grow by 10%, driven by healthy rate increases. While we did continue to see a decline in subscriber volume, that trend is improving. This past quarter, we saw industry subscribers decline around 6%, which is an approximately 50 basis point improvement from what we experienced last quarter. And our recent agreements, coupled with updates we heard during their recent earnings calls in October from AT&T, Comcast, and Charter, give us an encouraging look into the December quarter. Our networks and content continue to be essential to the services offered by traditional and virtual MVPDs. We are sustaining our momentum and building on our strengths. With increased visibility to the market and a resumption of sports and entertainment production, we are optimistic about and excited for the remainder of the fiscal year. And now, Steve will take us through the details of the quarter. Thanks, Lachlan, and good morning.