Fox Corporation

Ladies and gentlemen, thank you for standing by welcome to the fox corporation second quarter fiscal year 2023 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 the functionality for the question and answer Q will be given at that time. If you should require assistance during the call please press star them zero as a reminder, this conference is being recorded. I'll now turn the conference over to Chief Investor Relations Officer, Ms. Gabrielle Brown. Please go ahead, Ms. Brown.

Thank you, Operator. Good morning, and welcome to our fiscal 2023 second quarter earnings call. Joining me on the call today are Lachlan Murdoch, Executive Chair and Chief Executive Officer, John Mallon, Chief Operating Officer, and Steve Tomczyk, 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. Additionally, 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 on 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, Gabby, and thank you all for joining us this morning to discuss our second quarter results. Our fiscal second quarter continued to build upon the strength of the first quarter to deliver record first half ratings and revenue at Fox. Financially, we delivered a 4% increase in our top line, including 4% advertising revenue growth. Our EBITDA grew a massive 71%, principally due to strong advertising results from sports and political, as well as the impact of exiting Thursday Night Football. Our television segment led this growth and had a truly stellar performance. The stations group posted another record political midterm cycle with approximately $250 million booked during the first half of our fiscal year. This is higher than our previous midterm record and just shy of our fiscal 21 presidential year record. These are impressive numbers and reinforce the strength and breadth of our station group. Fox Sports reported was also a key growth driver this past quarter, where advertising pricing and demand remained solid on the back of viewership records for the NFL and for the World Cup. By every measure, Fox Sports is having an extraordinary year. Fox's domination of the fall was led by four of our most prominent rights packages, the NFL, the Big Ten Network, Major League Baseball, and FIFA, all coming together to produce a truly powerful schedule. For the fourth straight calendar year, Fox Sports is the industry leader in live events with some notable achievements that bode well for our future, including the current NFL regular season on Fox averaged over 19 million viewers and finished as the number one NFL package on television. America's Game of the Week averaged just over 24 million viewers and is projected to be the most watched program of all of television for the 14th straight year. And our Thanksgiving game this year was the most watched regular season game ever on any network, delivering 42 million viewers. College football had its most watched season ever on Fox, led by Big Noon Saturday, which was the most watched college football window for the second straight year. while the annual Ohio State-Michigan rivalry was the most watched regular season college game on any network in 11 years. And, of course, the 2022 Men's World Cup exceeded our expectations, with average viewership over the tournament up 30% from the 2018 matches. We can't wait for the Women's World Cup this summer, and we're already getting ready for the 2026 Men's World Cup here in North America. Of course, the strength of the Fox Sports portfolio was on full display this past Thanksgiving, with our traditional Thanksgiving NFL game, USA versus England in the World Cup, a huge college football game, and America's Game of the Week all spread over just four days. The ratings were impressive, but the revenue we generated was even better. We wrote just shy of $250 million over the long weekend. and the strength of Fox Sports has continued into the current quarter on the back of exciting playoff football and what will be a record sold-out Super Bowl this coming Sunday. At Tubi, we had another strong quarter where ad revenues grew by 25% over last year as we continue to outperform our peers. We have seen increases in almost every major KPI at Tubi, including CPMs, TVT, and engagements. In fact, Tubi had its highest quarterly viewership in the fiscal second quarter, with total viewing time up 41% year on year, while December alone was the highest TVT and highest user month ever. These trends have continued early into the third quarter as Tubi adds viewers and content to the platform. At Fox Entertainment, Rob Wade has settled into his new role as CEO and has already launched two of the season's biggest hits, Accused ranked as the most watched debut on any broadcast or cable network in two years. And Special Forces World's Toughest Test is this season's number one unscripted program. Further, Fox Entertainment recently announced a multi-year extension with Hulu of our long-standing content licensing agreement, which bolsters Fox's streaming audience and provides Hulu with a key point of differentiation in a crowded streaming world. Turning to Fox News Media, the Fox News Channel ended the second quarter as the most watched cable network in total day and in prime time, while maintaining its lead as the most watched cable news network, beating CNN and MSNBC combined in both total viewers and demo in the quarter for both prime and total day. And the Fox Business Network ended the quarter as the most watched business cable network, beating CNBC in total viewers during the business day and market hours for the third consecutive quarter. Fox Nation accelerated subscriber growth over the last quarter and last year, and had the best quarter ever for engagement in terms of hours viewed, no doubt driven by brilliant, fresh content like Yellowstone 150. Looking at the distribution side of our business, we have now completed most of the deals expiring in the first year of our multi-year affiliate renewal cycle. So far, the results confirm the confidence we have in monetizing our leading brands and content, and we are pleased that the market recognizes the value that Fox delivers to their offerings. It has been a truly strong quarter, one that showcased the very best of Fox and has shown that the underlying performance of Fox is exceptionally healthy. Looking ahead into this third fiscal quarter, Our top line will, of course, be aided by a record Super Bowl. But we are still seeing solid national demand for our news and sports platforms, growth in the 2B KPIs, and we are encouraged to see multiple ad categories pacing strongly, positive at our local stations. Before handing the call over to Steve, I want to add some perspective to the Fox story. In the almost four years since the spin, Fox has grown and flourished while pursuing a simple strategy, a core business of trusted brands that delivers consistent and substantial audiences and a portfolio of digital growth initiatives that scale over time. With our focus sports and news franchises, we have taken a differentiated approach, choosing to serve our audience primarily through the pay TV ecosystem, which optimizes the delivery and value of live programming. Our ability to drive our business and execute our strategy is underpinned by a number of accomplishments. For example, our affiliate and advertising revenue growth is driven by our pricing power reinforced by regularly delivering large scale audiences and uniquely providing exclusive content to our pay TV distributors. This approach has led to nearly $2 billion in affiliate revenue growth and over 1.3 billion in advertising revenue growth since the spin in 2019. By focusing on live content, our core Fox brands have been able to run sharply counter to the broader trend of linear TV. We can see this by looking at consumption trends. Over the past 10 years, consumption of Fox Sports events is up 18%, and consumption of Fox News is up 28%. Our portfolio of sports rights is secure and is the best out there, with the vast majority of them locked up for the foreseeable future. Our NFL rights, the single best package in all of television, extends through the 2033 season. We just completed the first year of our Major League Baseball extension and renewed our Big Ten rights, which each takes us out through the end of the decade. We have the European Championships through 2028 and another cycle with our FIFA World Cup rights. These long-term rights provide us the visibility and necessary flexibility to plan our businesses and pursue growth opportunities moving forward. On the digital side, we have made calculated investments in areas where we believe we can add significant value. Sports wagering and advertising video on demand are the two best examples of this. We have a firm footing in the sports gambling space. We were the first among U.S. media companies to strike a partnership with a betting operator because we see the potential for sports betting to drive engagement, enhance the viewing experience, and keep viewers coming back to Fox Sports linear and digital platforms. The various financial options and investments we have reflect our view that sports gambling is a long-term play, and we are focused on cementing our leadership in this rapidly evolving and high-growth sector. Tubi, the number one AVOD player, leads our streaming strategy, and with minimal investment when compared to our peers. Revenue and engagement KPIs at Tubi have far exceeded our expectations, and are consistently growing in the healthy double-digit range since we acquired it almost three years ago. The results of Tubi are proof that our strategy is working and we will continue investing in and growing this platform. Finally, I'd like to address the recent announcement regarding News Corporation. As you know, my father and I reached the conclusion that exploring a combination with News Corp is not optimal for shareholders of Fox or News Corp at this time. As such, the special committees were disbanded, and no further time or action is being taken on this topic. I've said in the past that I think scale provides flexibility, and that it's important to be prepared when opportunities present themselves. The rationale behind considering accommodation with News Corp was about that. Scale, flexibility, synergies, opportunities, great IP, and above all, creating value for all shareholders. As the CEO of Fox, I've never felt more confident about our strategy, the quality of our assets, and the strength of our financial position. This confidence is clearly demonstrated by this morning's announcement to increase our share repurchase authorization to $7 billion, with the immediate deployment of $1 billion of the expanded authorization toward an accelerated share repurchase transaction, while continuing our current in-market purchases. Consistent with our track record, we remain committed to delivering value for our shareholders in a thoughtful and disciplined manner, and we will continue to explore every opportunity to maximize that value over the long term. And now let me turn it over to Steve for more on the results.

Thanks, Lachlan, and good morning, everyone. Excuse me. Fox continued to deliver financially in the fiscal second quarter, with total company revenue growth of 4% and 71% growth in EBITDA, Notwithstanding the absence of Thursday night football, our overall revenue growth was led by a 4% increase in advertising revenues, where in the quarter we saw continued strength in political advertising at the stations, which when viewed across the full fiscal first half, nearly matched the political record set during the 2020 presidential cycle. Additionally, our sports advertising was supported by a full roster of marquee events and to be continued to sustain its high growth trajectory. Our affiliate revenues increased by 1%, with limited renewal activity impacting the quarter and trailing 12-month subscriber losses remaining consistent at approximately 7%. Quarterly adjusted EBITDA was $531 million, up $220 million over the prior year. In addition to our revenue growth, we also benefited from lower expenses as a result of our early exit from the Thursday night football agreement. Net income attributable to stockholders was $313 million, or 58 cents per share, up meaningfully against the net loss of $85 million, or negative 15 cents per share, reported in the prior year period. Alongside our growth in EBITDA, you'll recall that our GAAP P&L is regularly impacted by the change in fair value of the company's investment in Flutter, which we recognize in other net. Excluding this impact and other non-core items, Growth was strong, with adjusted EPS of $0.48 per share, up $0.35 against last year's $0.13 per share. Turning to our segments, at television we delivered 6% revenue growth, including a 5% increase in advertising revenues. As you know, our advertising revenues in the December quarter of last year benefited from our coverage of Thursday Night Football. Despite that comparable headwind, we delivered meaningful gains across the segments. This was led by the strong political cycle, the addition of the World Cup at Fox Sports, and continued strong growth at Tubi. On the NFL specifically, we also benefited from strong pricing, a record-breaking Thanksgiving Day broadcast, and the timing of week 18 of the season sliding back into the December quarter. Meanwhile, advertising revenue growth at Tubi was up 25% in the quarter and exceeded $200 million on the back of record levels of engagement In an uneven programmatic advertising marketplace, we are able to maintain CPMs and are well positioned to deploy more inventory as market conditions strengthen. Television affiliate fee revenues were up 6% as healthy growth in pricing across all Fox-affiliated stations continued to outpace the impact from subscriber declines. Other revenues increased 26% in the quarter, primarily reflecting the consolidation of the prior year acquisition of Mar Vista. EBITDA at our television segment was up $529 million to $256 million as we benefited from the strong political market and realized the anticipated financial benefit from the exit of our Thursday night football agreement. These benefits were partially offset by higher costs from the World Cup and the annual growth in rights amortization we see across our sports portfolio. Similar to the levels reported in our fiscal first quarter, Our net EBITDA investment in Tubi amounted to approximately $50 million in the December quarter. At Cable, we saw revenues generally in line with the prior year. Cable advertising revenues were essentially flat. As Lachlan mentioned, we continue to see meaningful pricing gains in national advertising across our leadership brands. Additionally, our national sports networks benefited from the broadcast of the World Cup in the quarter. However, this was offset by a softer direct response marketplace that impacted Fox News Media. Cable affiliate fee revenues were broadly flat, coming in at $1.03 billion. As we have signalled previously, we are in the early days of our next distribution renewal cycle where we expect revenue gains to be skewed towards the television segment. Meanwhile, cable other revenues were up 7% in the quarter, once again led by high in Fox Nation subscription revenues. EBITDA at our cable segment was $353 million compared to the $668 million reported last year, largely due to higher costs at the national sports networks led by the World Cup and post-season baseball. Expenses were also elevated at Fox News Media due to the digital investments at Nation and Weather and higher legal costs associated with ongoing litigation. Now turning to cash flow, where consistent with the normal seasonality of our working capital cycle, we recorded a free cash flow deficit of $610 million in the quarter. This typical first-half trend reflects the concentration of payments for sports rights and the build-up of advertising-related receivables, both of which were reversed in the second half of our fiscal year. From a capital deployment perspective, fiscal year to date, we have repurchased $550 million via our share buyback programs. This takes the total cumulative amount repurchased to $3.15 billion, representing 15% of our total shares outstanding since the launch of the program in 2019. In addition, today we declared a $0.25 semiannual dividend. And as Lachlan mentioned, this morning we also announced an incremental buyback authorization of $3 billion, taking our total authorization to $7 billion. we will immediately deploy $1 billion of this expanded authorization toward an accelerated share repurchase transaction, while concurrently continuing with our normal course buyback pacing, which would see us repurchase $450 million in additional shares across the remainder of the fiscal year. These meaningful capital return measures are enabled by the strength of our financial position that we again close the quarter with a very robust balance sheet, comprising $4 billion in cash and $7.2 billion in debt. And with that, let me turn it back to Gabby.

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

Ladies and gentlemen, I'd like to emphasize the functionality for the question and answer queue. If you wish to ask a question, please press 1 then 0 on your touchtone phone. You will hear a tone indicating you have been placed in queue. You may remove yourself from queue at any time by once again pressing 1 and 0. 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 1 and 0 at this time. And one moment, please, for your first question. Your first question comes from the line of Robert Fishman from Moffett Nathanson. Please go ahead.

Good morning, everyone. Lachlan, you've talked about the importance of scale in the media industry. So now that the News Corp deal is no longer being explored, can you just help investors think about what the future of Fox is as a standalone entity in the coming years? And ultimately, do you think it'd be better off combined with another strategic or financial partner?

Hey, good morning, Robert. Good to hear your voice. Thank you for the question. So I do think scale is important, and as we look at our growth going forward and enhancing our growth opportunities, I think scale is important. But equally important is the depth of our business. So we think about scale in terms of adding and broadening our business lines, but also the depth of how we engage with our consumers. And so we'll be investing, I think, probably equally in both. If we look at our strategy and how it's performing, I think you just have to look at our results. This quarter, our results have really been truly stellar. I think we stand out in the media landscape, certainly in this country, in terms of the health of our results. And that goes to our strategy. We're very focused. We're focused on a core set of brands that are really must-have brands in the United States media landscape. So we like our strategy. We're absolutely focused on it, but we will pursue both scale and further investments for the depth of our engagement with our consumers.

Your next question comes from the line of Jessica Reif-Ehrlich from Bank of America Securities. Please go ahead.

Thank you. Good morning. I guess two topics, but one, you know, can you give us some color on the advertising outlook? Obviously, it'll be a great quarter with the Super Bowl, but just besides that, underneath that. And then to be, you know, maybe talk a little bit more about the drivers of growth. I think you're adding Warner Brothers, Discovery, Fast Channels. I think that Steve said that something that you held back advertising, what's going on with demand there, but how many minutes are you selling And how many can you go up to?

Hey, Jessica. Good morning. So let me start with the advertising market. And as you mentioned, obviously, and I'll talk to kind of the outlook. I know there's a lot of talk about advertising being soft in the market. We're really not seeing that. We're seeing advertising being sort of fluid and money coming in late. So it is different. It's a different environment than we were in a year ago or even a couple quarters ago. But at the end of the day, we're still hitting our goals and achieving our revenue targets. It's just coming in late. And look, I think, to be honest, I think that goes to the strength of our portfolio, right? I think being in news and being in sports and the leader in those two categories is I think sets us apart in the advertising marketplace from a lot of our peers. So I don't want to say that that's our strength, and certainly our relative strength in advertising is not indicative of the whole marketplace, but it's definitely indicative of our brands and our ability to achieve our revenue goals. So this Super Bowl, to talk about some specifics, As I said, the money came in late, so we had some nervous moments. But we will write just shy, gross, about $600 million of revenue next Sunday. We are sold out. It will be a record Super Bowl for us, both in terms of total revenue and obviously in what we've achieved for each spot. X the Super Bowl, if you back out the Super Bowl – We are still up in national advertising revenue. And so I think that, again, bodes to the strength of our brands and to the power of Fox. If I look at local stations, Jessica, categories, we're really happy to see a lot of categories back into robust growth. Auto is pacing up almost 30%. Health, up 30%. Pharmaceuticals, up 45%. Travel, up 60%. And, of course, this is offset with categories like crypto money exchanges, I think down 97%. I'm still trying to find out who the 3% is left that's advertising. So there are some sort of swings and roundabouts. But the key categories are back in a very strong way. So that's probably more than you wanted on advertising, Jessica. On Tubi, almost all of our KPIs are at record highs. I think December, the end of December, was actually a particularly strong year, appeared in terms of TBT and engagement. And what we'll see is we'll see revenue. Revenue is up 25%, but I think what we're really pleased about is when your engagement and your total viewing time is up by more than that, as the market strengthens, we expect certainly more revenue to flow and follow that audience that we've garnered in Tubi. And all of the major studios continue to work with us. I think we're seeing... benefit of people realizing that their libraries, their sort of deep libraries, we can help them monetize those libraries. And so we're seeing, you mentioned the Warner Brothers deal, we're seeing everyone work with us, which is why Tubi has the biggest television and movie library in streaming anywhere in the world. So we're really very, very pleased with it.

Next question, please, operator.

Your next question comes from the line of Phil Cusick from JP Morgan. Please go ahead.

Hi, guys. Thanks. I wonder if we could talk about wagering. Lachlan, you discussed cementing your leadership today, and last quarter I think you discussed potential volatility in that market. Where do you see the market going at this point, and how ideally would you like to see Fox involved? Thanks.

Look, I think we have a – besides the market, we remain incredibly – excited and optimistic about the waging market going forward in this country. You know, obviously, it'll take some more time for further states to be licensed. And you'll start to see a shift from wagering advertising and marketing shift from local markets to national markets. We're obviously incredibly well positioned on both sides to capture revenue from the wagering operators as they battle it out for supremacy in each of their markets. So we've done extremely well at the local stations, and I think we'll see that shift to the national markets where obviously Fox Sports and to some extent Fox News and the entertainment network will continue to capture that revenue. So we're incredibly optimistic about I think from a corporate perspective, we're also the best positioned media brand to continue to partner with our wagering partners. Particularly, obviously, the 18.6% option that we have in FanDuel is a fantastic position to be in. We have about a 10-year option. I think we have about eight years to go. on the option, and Flutter will be our partner for a long time. So we feel very well in terms of where we're positioned.

Next question, please, operator.

Your next question comes from the line of Ben Swinburne from Morgan Stanley. Please go ahead.

I ask when Tom Brady is joining the Fox booth, so it might as well be me. And if you don't want to answer that one, maybe just a couple of strategic questions picking up on Phil's. What do you guys think the value of FoxBet is? And what could that business or that asset be over the longer term in sort of the bull case? And then you extended with Hulu, not a huge shock, but just any comment on sort of whether that's enough of a needle mover financially or how robust the market was for for that content, because obviously that's a lot of licensing revenue potential. Just wondering if you could comment a little bit on how you approach that renewal and the outcome.

Thanks, Ben.

I'll answer the Tom Brady part of the question and maybe the Hulu part. I'll let Steve talk to the value of FoxBend and, importantly, obviously the Flutter or FanDuel option. I won't be the first to congratulate Tom on a stellar career and congratulate him on his retirement. The whole Fox Sports team and Fox Corporation overall is really excited to have Tom join the team here. That will be in the fall of next year, 24. He's going to take a little bit of time to decompress, which he well deserves after such a stellar career. Let me just quickly talk to Hulu. The Hulu renewal was very important to us and also very important to Hulu. The kind of symbiotic relationship that we have with Hulu, it grows in significance as viewers more and more watch our content on a sort of catch-up basis. So when we look at our hit shows, We're not monetizing them in the first window, in the live or even live plus same day window, as you all know, in the same manner that we used to. And so by being able to capture the engagement after live and same day or even live plus seven days is critically important. And our Hulu deal really allows us to do that. For Hulu, it gives them tremendous content the next day. and they are able to, I'd say, sort of benefit from or piggyback on the marketing spend and the reach that we give all of our content as we push it out. So it works very well for Hulu, and it works very well for us. Steve, do you want to talk to the FoxBet value?

Yeah, Ben, listen, on FoxBet, I think we take a step back and just see our – Our betting in totality in terms of the investment, so FoxBet is one component of it and it's an important component. We'd like to see it in more states than the four states it's in at the moment, but it's being operated by Flutter who bear the investment cost of that asset and so in some respects we're at their behest in terms of how they develop that. But we look at it as a clear mark of success in terms of FoxBet Super 6 for us in terms of the way we've developed that and cross promoted that with our stations Also, it's not just Fox Sports betting, but it also includes the PokerStars non-sports betting assets. So it's an important asset, but when we look at the totality of our betting position, we increasingly think that the option that we have over Fangio is the one that's really important for us. It's the leading market player. We have the opportunity over a long, long period of time to take a very, very meaningful stake in a player that's sort of... head and shoulders market leader right now.

Operator, we can go to the next question.

Your next question comes from the line of Doug Mitchelson from Credit Suisse. Please go ahead.

Oh, thank you. You know, good morning, Lachlan. Where are you in the life cycle for your digital investments? I'm just sort of curious when I think about Tubi, pretty consistently you've been talking about growth, you know, every quarter on these calls and engagement viewer and adding more content. How much more content is there to add? How much more growth is there to drive it to be? And same question on the Fox digital side. Thanks.

Thanks, Doug. So in terms of the life cycle for our digital investments, I think the reality is they're that are putting on muscle and growing pretty spectacularly. So if I look at Tubi as an example, and you think about the key metric we've talked about now for several quarters is the total viewing time. Total viewing time is, I don't know, it's not the equivalent, but it's like ratings. We can get, we continue to grow to total viewing time The revenue that we're seeing follow that, and we have 25% up in this quarter, which I think is pretty fantastic, but the opportunity is much higher, right? Because the total viewing time has grown faster at a much bigger rate, a faster rate, than the revenue has. So already within Tubi, and when we look at these metrics, there's a... a ripeness for very significant revenue growth. So the digital investments are adolescents, but they're a huge upside as they get older. And then when you talk about Fox Digital, the digital assets, I was pretty amazed. We went through some numbers yesterday, just things like the local TV stations. The digital advertising business now at the local TV stations is really becoming quite significant. So when we look across our whole portfolio and we push further into our websites, our fast channels, our apps, this revenue is becoming very significant and even in parts of the company that you wouldn't expect. So we believe that the future of our business is obviously are digital, and we're making that transition pretty rapidly and very robustly.

Operator, we have time for one more question.

Okay, that question comes from the line of John Hodelick from UBS. Please go ahead.

First question on the balance sheet. Investors are definitely going to like the accelerated repurchase, but you still have $4 billion on the books, relatively low debt. I mean, just maybe talk about sort of the usage of that cash. I mean, how much cash do you need on the books and maybe what the M&A environment looks like out there and what kind of opportunities you see. And then on the affiliate line, you said, you know, you haven't seen the impact of the renewals and the third, third, third that you expect that you'll see over the renewals you'll expect to do over the next couple of years. I mean, when do you expect to sort of get into the sort of, you know, the wheelhouse and see that those lines really start to turn from the renewals? Thanks.

Thanks, John. Steve, jump in at any point. No, no, I'll start. Thanks, John. So first of all, on the balance sheet, I think we do have an enviable balance sheet. We're going to deploy our capital as we have in a very disciplined manner and entirely focused on on shareholder returns for all of our shareholders. That'll be both as evidenced this morning with our accelerated share repurchase, which we think is a great sort of a mechanism and strategy to return some of this capital to our shareholders. But we will also obviously be looking at M&A and other opportunities to use or to deploy our capital against. We don't have anything on the table today, but we are, I think, in a strong position to capture opportunities when they present themselves. And obviously, there are you know, other companies in our sector that are not in as great a position and, you know, will be things that we'll, I'm sure, cast our eyes over. So we, you know, we do expect the M&A will be part of a more important part of our toolkit as we deploy capital, but we have nothing on the table in front of us today. Before I go on to affiliates, Steve, do you have anything to add to that?

Yeah. Just, John, I think if you fast forward, like if you fast forward to the end of the fiscal based on the ASR and our regular way share repurchases, we'll have done $4.6 billion in share repurchases by 30 June, call it. You compare that against how much we've deployed in M&A, which on a gross basis is about $1.9 billion, on a net basis after asset sales is probably $500 million, $600 million. been super balanced, super disciplined on M&A. And if anything, the skew so far in the life of Fox has been towards capital returns to shareholders. So we're going to continue to be thoughtful in the way we deploy capital.

And then on the affiliate question, John. So I think we are now through for this fiscal year. All of our significant, bar maybe one, all of our significant affiliate renewals will start again in the very beginning of the next fiscal year, this summer, with some important renewals. But for this fiscal, we're through them. What we've seen in the renewals this past year is the importance, really, of our Fox brands with our affiliate partners and the pricing power that we have with them. And I think that's been pretty, you know, very evident in all of our renewals to date. You know, more and more, like when you look at the split between our cable affiliate revenue and our television affiliate revenue, we really negotiate those together. So, you know, we've been focused on the television half of that ledger, but you have to think about the strength of these brands as a combined strength and, you know, where we – where we, in the marketplace, find our kind of best ability to push right is where we do, and that's been really on the television side, the retransmission side of that ledger. But it's the strength of the portfolio that allows us to do that. So, yeah, so we're looking forward to, you know, continued success in our affiliate renewals as we get into the next fiscal year.

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 again for joining us today.

Thank you, everyone. Ladies and gentlemen, that does conclude your conference for today. Thank you for your participation and for using AT&T Executive Teleconference. You may now disconnect.

We're sorry. Your conference is ending now. Please hang up. Thank you. Thank you. Thank you. you Thank you. Bye.

Ladies and gentlemen, thank you for standing by welcome to the fox corporation second quarter fiscal year 2023 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 the functionality for the question and answer Q will be given at that time. If you should require assistance during the call please press star them zero as a reminder, this conference is being recorded. I'll now turn the conference over to Chief Investor Relations Officer, Ms. Gabrielle Brown. Please go ahead, Ms. Brown.

Thank you, Operator. Good morning, and welcome to our fiscal 2023 second quarter earnings call. Joining me on the call today are Lachlan Murdoch, Executive Chair and Chief Executive Officer, John Nallen, Chief Operating Officer, and Steve Tomczyk, 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. Additionally, 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 on 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.

Lachlan Campbell- Thanks, Gaby, and thank you all for joining us this morning to discuss our second quarter results. Our fiscal second quarter continued to build upon the strength of the first quarter to deliver record first half ratings and revenue at Fox. Financially, we delivered a 4% increase in our top line, including 4% advertising revenue growth. Our EBITDA grew a massive 71%, principally due to strong advertising results from sports and political, as well as the impact of exiting Thursday Night Football. Our television segment led this growth and had a truly stellar performance. The stations group posted another record political midterm cycle with approximately $250 million booked during the first half of our fiscal year. This is higher than our previous midterm record and just shy of our fiscal 21 presidential year record. These are impressive numbers and reinforce the strength and breadth of our station group. Fox Sports was also a key growth driver this past quarter, where advertising pricing and demand remained solid on the back of viewership records for the NFL and for the World Cup. By every measure, Fox Sports is having an extraordinary year. Fox's domination of the fall was led by four of our most prominent rights packages, the NFL, the Big Ten Network, Major League Baseball, and FIFA, all coming together to produce a truly powerful schedule. For the fourth straight calendar year, Fox Sports is the industry leader in live events with some notable achievements that bode well for our future, including the current NFL regular season on Fox averaged over 19 million viewers and finished as the number one NFL package on television. America's Game of the Week averaged just over 24 million viewers and is projected to be the most watched program of all of television for the 14th straight year. And our Thanksgiving game this year was the most watched regular season game ever on any network, delivering 42 million viewers. College football had its most watched season ever on Fox, led by Big Noon Saturday, which was the most watched college football window for the second straight year. while the annual Ohio State-Michigan rivalry was the most watched regular season college game on any network in 11 years. And, of course, the 2022 Men's World Cup exceeded our expectations, with average viewership over the tournament up 30% from the 2018 matches. We can't wait for the Women's World Cup this summer, and we're already getting ready for the 2026 Men's World Cup here in North America. Of course, the strength of the Fox Sports portfolio was on full display this past Thanksgiving, with our traditional Thanksgiving NFL game, USA versus England in the World Cup, a huge college football game, and America's Game of the Week all spread over just four days. The ratings were impressive, but the revenue we generated was even better. We wrote just shy of $250 million over the long weekend. and the strength of Fox Sports has continued into the current quarter on the back of exciting playoff football and what will be a record sold-out Super Bowl this coming Sunday. At Tubi, we had another strong quarter where ad revenues grew by 25% over last year as we continue to outperform our peers. We have seen increases in almost every major KPI at Tubi, including CPMs, TVT, and engagements. In fact, Tubi had its highest quarterly viewership in the fiscal second quarter, with total viewing time up 41% year on year, while December alone was the highest TVT and highest user month ever. These trends have continued early into the third quarter as Tubi adds viewers and content to the platform. At Fox Entertainment, Rob Wade has settled into his new role as CEO and has already launched two of the season's biggest hits, Accused ranked as the most watched debut on any broadcast or cable network in two years. And Special Forces World's Toughest Test is this season's number one unscripted program. Further, Fox Entertainment recently announced a multi-year extension with Hulu of our longstanding content licensing agreement, which bolsters Fox's streaming audience and provides Hulu with a key point of differentiation in a crowded streaming world. Turning to Fox News Media, the Fox News Channel ended the second quarter as the most watched cable network in total day and in prime time, while maintaining its lead as the most watched cable news network, beating CNN and MSNBC combined in both total viewers and demo in the quarter for both prime and total day. And the Fox Business Network ended the quarter as the most watched business cable network, beating CNBC in total viewers during the business day and market hours for the third consecutive quarter. Fox Nation accelerated subscriber growth over the last quarter and last year, and had the best quarter ever for engagement in terms of hours viewed, no doubt driven by brilliant, fresh content like Yellowstone 150. Looking at the distribution side of our business, we have now completed most of the deals expiring in the first year of our multi-year affiliate renewal cycle. So far, the results confirm the confidence we have in monetizing our leading brands and content, and we are pleased that the market recognizes the value that Fox delivers to their offerings. It has been a truly strong quarter, one that showcased the very best of Fox and has shown that the underlying performance of Fox is exceptionally healthy. Looking ahead into this third fiscal quarter, Our top line will, of course, be aided by a record Super Bowl. But we are still seeing solid national demand for our news and sports platforms, growth in the 2B KPIs, and we are encouraged to see multiple ad categories pacing strongly, positive at our local stations. Before handing the call over to Steve, I want to add some perspective to the Fox story. In the almost four years since the spin, Fox has grown and flourished while pursuing a simple strategy, a core business of trusted brands that delivers consistent and substantial audiences and a portfolio of digital growth initiatives that scale over time. With our focus sports and news franchises, we have taken a differentiated approach, choosing to serve our audience primarily through the pay TV ecosystem, which optimizes the delivery and value of live programming. Our ability to drive our business and execute our strategy is underpinned by a number of accomplishments. For example, our affiliate and advertising revenue growth is driven by our pricing power reinforced by regularly delivering large scale audiences and uniquely providing exclusive content to our pay TV distributors. This approach has led to nearly $2 billion in affiliate revenue growth and over 1.3 billion in advertising revenue growth since the spin in 2019. By focusing on live content, our core Fox brands have been able to run sharply counter to the broader trend of linear TV. We can see this by looking at consumption trends. Over the past 10 years, consumption of Fox Sports events is up 18%, and consumption of Fox News is up 28%. Our portfolio of sports rights is secure and is the best out there, with the vast majority of them locked up for the foreseeable future. Our NFL rights, the single best package in all of television, extends through the 2033 season. We just completed the first year of our Major League Baseball extension and renewed our Big Ten rights, which each takes us out through the end of the decade. We have the European Championships through 2028 and another cycle with our FIFA World Cup rights. These long-term rights provide us the visibility and necessary flexibility to plan our businesses and pursue growth opportunities moving forward. On the digital side, we have made calculated investments in areas where we believe we can add significant value. Sports wagering and advertising video on demand are the two best examples of this. We have a firm footing in the sports gambling space. We were the first among US media companies to strike a partnership with a betting operator because we see the potential for sports betting to drive engagement, enhance the viewing experience, and keep viewers coming back to Fox Sports linear and digital platforms. The various financial options and investments we have reflect our view that sports gambling is a long-term play, and we are focused on cementing our leadership in this rapidly evolving and high-growth sector. Tubi, the number one AVOD player, leads our streaming strategy, and with minimal investment when compared to our peers. Revenue and engagement KPIs at Tubi have far exceeded our expectations, and are consistently growing in the healthy double-digit range since we acquired it almost three years ago. The results of Tubi are proof that our strategy is working and we will continue investing in and growing this platform. Finally, I'd like to address the recent announcement regarding News Corporation. As you know, my father and I reached the conclusion that exploring a combination with News Corp is not optimal for shareholders of Fox or News Corp at this time. As such, the special committees were disbanded, and no further time or action is being taken on this topic. I've said in the past that I think scale provides flexibility, and that it's important to be prepared when opportunities present themselves. The rationale behind considering accommodation with News Corp was about that. Scale, flexibility, synergies, opportunities, great IP, and above all, creating value for all shareholders. As the CEO of Fox, I've never felt more confident about our strategy, the quality of our assets, and the strength of our financial position. This confidence is clearly demonstrated by this morning's announcement to increase our share repurchase authorization to $7 billion, with the immediate deployment of $1 billion of the expanded authorization toward an accelerated share repurchase transaction, while continuing our current in-market purchases. Consistent with our track record, we remain committed to delivering value for our shareholders in a thoughtful and disciplined manner, and we will continue to explore every opportunity to maximize that value over the long term. And now let me turn it over to Steve for more on the results.

Thanks, Lachlan, and good morning, everyone. Excuse me. Fox continued to deliver financially in the fiscal second quarter, with total company revenue growth of 4% and 71% growth in EBITDA. Notwithstanding the absence of Thursday night football, our overall revenue growth was led by a 4% increase in advertising revenues, where in the quarter we saw continued strength in political advertising at the stations, which when viewed across the full fiscal first half, nearly matched the political record set during the 2020 presidential cycle. Additionally, our sports advertising was supported by a full roster of marquee events and to be continued to sustain its high growth trajectories. Our affiliate revenues increased by 1%, with limited renewal activity impacting the quarter and trailing 12-month subscriber losses remaining consistent at approximately 7%. Quarterly adjusted EBITDA was $531 million, up $220 million over the prior year. In addition to our revenue growth, we also benefited from lower expenses as a result of our early exit from the Thursday night football agreement. Net income attributable to stockholders was $313 million, or 58 cents per share, up meaningfully against the net loss of $85 million, or negative 15 cents per share, reported in the prior year period. Alongside our growth in EBITDA, you'll recall that our GAAP P&L is regularly impacted by the change in fair value of the company's investment in Flutter, which we recognize in other net. Excluding this impact and other non-core items, Growth was strong, with adjusted EPS of $0.48 per share, up $0.35 against last year's $0.13 per share. Turning to our segments, at television we delivered 6% revenue growth, including a 5% increase in advertising revenues. As you know, our advertising revenues in the December quarter of last year benefited from our coverage of Thursday Night Football. Despite that comparable headwind, we delivered meaningful gains across the segments, This was led by the strong political cycle, the addition of the World Cup at Fox Sports and continued strong growth at Tubi. On the NFL specifically, we also benefited from strong pricing, a record-breaking Thanksgiving Day broadcast and the timing of week 18 of the season sliding back into the December quarter. Meanwhile, advertising revenue growth at Tubi was up 25% in the quarter and exceeded $200 million on the back of record levels of engagement, In an uneven programmatic advertising marketplace, we are able to maintain CPMs and are well positioned to deploy more inventory as market conditions strengthen. Television affiliate fee revenues were up 6% as healthy growth in pricing across all Fox-affiliated stations continued to outpace the impact from subscriber declines. Other revenues increased 26% in the quarter, primarily reflecting the consolidation of the prior year acquisition of Marvista. EBITDA at our television segment was up $529 million to $256 million as we benefited from the strong political market and realized the anticipated financial benefit from the exit of our Thursday night football agreement. These benefits were partially offset by higher costs from the World Cup and the annual growth in rights amortization we see across our sports portfolio. Similar to the levels reported in our fiscal first quarter, Our net EBITDA investment in Tubi amounted to approximately $50 million in the December quarter. At Cable, we saw revenues generally in line with the prior year. Cable advertising revenues were essentially flat. As Lachlan mentioned, we continue to see meaningful pricing gains in national advertising across our leadership brands. Additionally, our national sports networks benefited from the broadcast of the World Cup in the quarter. However, this was offset by a softer direct response marketplace that impacted Fox News Media. Cable affiliate fee revenues were broadly flat, coming in at $1.03 billion. As we have signalled previously, we are in the early days of our next distribution renewal cycle where we expect revenue gains to be skewed towards the television segment. Meanwhile, cable other revenues were up 7% in the quarter, once again led by high Fox Nation subscription revenues. EBITDA at our cable segment was $353 million compared to the $668 million reported last year, largely due to higher costs at the national sports networks led by the World Cup and post-season baseball. Expenses were also elevated at Fox News Media due to the digital investments at Nation and Weather and higher legal costs associated with ongoing litigation. Now turning to cash flow, where consistent with the normal seasonality of our working capital cycle, we recorded a free cash flow deficit of $610 million in the quarter. This typical first half trend reflects the concentration of payments for sports rights and the buildup of advertising-related receivables, both of which reverse in the second half of our fiscal year. From a capital deployment perspective, fiscal year to date, we have repurchased $550 million via our share buyback programs. This takes the total cumulative amount repurchased to $3.15 billion, representing 15% of our total shares outstanding since the launch of the program in 2019. In addition, today we declared a 25 cent semi-annual dividend. And as Lachlan mentioned, this morning we also announced an incremental buyback authorization of $3 billion, taking our total authorization to $7 billion. we will immediately deploy $1 billion of this expanded authorization toward an accelerated share repurchase transaction, while concurrently continuing with our normal course buyback pacing, which would see us repurchase $450 million in additional shares across the remainder of the fiscal year. These meaningful capital return measures are enabled by the strength of our financial position that we again close the quarter with a very robust balance sheet, comprising $4 billion in cash and $7.2 billion in debt. And with that, let me turn it back to Gabby.

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

Ladies and gentlemen, I'd like to emphasize the functionality for the question and answer queue. If you wish to ask a question, please press 1 then 0 on your touchtone phone. You will hear a tone indicating you have been placed in queue. You may remove yourself from queue at any time by once again pressing 1 and 0. 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 1 and 0 at this time. And one moment, please, for your first question. Your first question comes from the line of Robert Fishman from Moffett Nathanson. Please go ahead.

Good morning, everyone. Lachlan, you've talked about the importance of scale in the media industry. So now that the News Corp deal is no longer being explored, can you just help investors think about what the future of Fox is as a standalone entity in the coming years? And ultimately, do you think it'd be better off combined with another strategic or financial partner?

Hey, good morning, Robert. Good to hear your voice. Thank you for the question. So I do think scale is important, and as we look at our growth going forward and enhancing our growth opportunities, I think scale is important. But equally important is the depth of our business. So we think about scale in terms of adding and broadening our business lines, but also the depth of how we engage with our consumers. And so we'll be investing, I think, probably equally in both. If we look at our strategy and how it's performing, I think you just have to look at our results. This quarter, our results are really being truly stellar. I think we stand out in the media landscape, certainly in this country, in terms of the health of our results. And that goes to our strategy. We're very focused. We're focused on a core set of brands that are really must-have brands in the United States media landscape. So we like our strategy. We're absolutely focused on it, but we will pursue both scale and further investments for the depth of our engagement with our consumers.

Your next question comes from the line of Jessica Reif-Ehrlich from Bank of America Securities. Please go ahead.

Thank you. Good morning. I guess two topics, but one, you know, can you give us some color on the advertising outlook? Obviously, it'll be a great quarter with the Super Bowl, but just besides that, underneath that. And then to be, you know, maybe talk a little bit more about the drivers of growth. I think you're adding Warner Brothers Discovery Fast Channels. I think that Steve said that something that you held back advertising, what's going on with demand there, but how many minutes are you selling advertising? And how many can you go up to?

Hey, Jessica. Good morning. So let me start with the advertising market. And as you mentioned, obviously, and I'll talk to kind of the outlook, advertising, I know there's a lot of talk about advertising being soft in the market. We're really not seeing that. We're seeing advertising being sort of fluid and money coming in late. So it is different. It's a different environment than we were in a year ago or even a couple quarters ago. But at the end of the day, we're still hitting our goals and achieving our revenue targets. It's just coming in late. And look, I think, to be honest, I think that goes to the strength of our portfolio, right? I think being in news and being in sports and the leader in those two categories is I think sets us apart in the advertising marketplace from a lot of our peers. So I don't want to say that that's our strength, and certainly our relative strength in advertising is not indicative of the whole marketplace, but it's definitely indicative of our brands and our ability to achieve our revenue goals. So this Super Bowl, to talk about some specifics, As I said, the money came in late, so we had some nervous moments. But we will ride just shy of gross, about $600 million of revenue next Sunday. We are sold out. It will be a record Super Bowl for us, both in terms of total revenue and obviously in what we've achieved for each spot. X the Super Bowl, if you back out the Super Bowl, We are still up in national advertising revenue. And so I think that, again, bodes to the strength of our brands and to the power of Fox. If I look at local stations, Jessica, categories, we're really happy to see a lot of categories back into robust growth. Auto is pacing up almost 30%. Health, up 30%. Pharmaceuticals, up 45%. Travel, up 60%. And, of course, this is offset with categories like crypto money exchanges, I think down 97%. So I'm still trying to find out who the 3% is left that's advertising. So there are some sort of swings and roundabouts. But the key categories are back in a very strong way. So that's probably more than you wanted on advertising, Jessica. On Tubi, almost all of our KPIs are at record highs. I think December, the end of December, was actually a particularly strong year in terms of TBT and engagement. And what we'll see is we'll see revenue. Revenue is up 25%, but I think what we're really pleased about is when your engagement and your total viewing time is up by more than that, as the market strengthens, we expect certainly more revenue to flow and follow that audience that we've garnered in Tubi. And all of the major studios continue to work with us. I think we're seeing... benefit of people realizing that their libraries, their sort of deep libraries, we can help them monetize those libraries. And so we're seeing, you mentioned the Warner Brothers deal, we're seeing everyone work with us, which is why Tubi has the biggest television and movie library in streaming anywhere in the world. So we're really very, very pleased with it.

Next question, please, operator.

Your next question comes from the line of Phil Cusick from JP Morgan. Please go ahead.

Hi, guys. Thanks. I wonder if we could talk about wagering. Lachlan, you discussed cementing your leadership today, and last quarter I think you discussed potential volatility in that market. Where do you see the market going at this point, and how ideally would you like to see Fox involved? Thanks.

Look, I think we have a – besides the market, we remain incredibly – excited and optimistic about the wagering market going forward in this country. You know, obviously, it'll take some more time for further states to be licensed. And you'll start to see a shift from wagering advertising and marketing shift from local markets to national markets. We're obviously incredibly well positioned on both sides to capture revenue from the wagering operators as they battle it out for supremacy in each of their markets. So we've done extremely well at the local stations, and I think we'll see that shift to the national markets where obviously Fox Sports and to some extent Fox News and the entertainment network will continue to capture that revenue. So we're incredibly optimistic about it. I think from a corporate perspective, we're also the best positioned media brand to continue to partner with our wagering partners. Particularly, obviously, the 18.6% option that we have in FanDuel is a fantastic position to be in. We have about a 10-year option. I think we have about eight years to go on the option, and Flutter will be our partner for a long time. So we feel very well in terms of where we're positioned.

Next question, please, operator.

Your next question comes from the line of Ben Swinburne from Morgan Stanley. Please go ahead.

I ask when Tom Brady is joining the Fox booth, so it might as well be me. And if you don't want to answer that one, maybe just a couple of strategic questions picking up on Phil's. What do you guys think the value of FoxBet is? And what could that business or that asset be over the longer term in sort of the bull case? And then you extended with Hulu, not a huge shock, but just any comment on sort of whether that's enough of a needle mover financially or how robust the market was for for that content, because obviously that's a lot of licensing revenue potential. Just wondering if you could comment a little bit on how you approach that renewal and the outcome.

Thanks, Ben.

I'll answer the Tom Brady part of the question and maybe the Hulu part. I'll let Steve talk to the value of FoxBend and, importantly, obviously the Flutter or FanDuel option. I won't be the first to congratulate Tom on a stellar career and congratulate him on his retirement. The whole Fox Sports team and Fox Corporation overall is really excited to have Tom join the team here. That will be in the fall of next year, 24. It's going to take a little bit of time to decompress, which he well deserves after such a stellar career. Let me just quickly talk to Hulu. The Hulu renewal was important, very important to us and also very important to Hulu. The kind of symbiotic relationship that we have with Hulu, it grows in significance as viewers more and more watch our content on a sort of catch-up basis. So when we look at our hit shows, we're not monetizing them in the first window, in the live or even live plus same day window, as you all know, in the same manner that we used to. And so by being able to capture the engagement after live and same day or even live plus seven days is critically important. And our Hulu deal really allows us to do that. For Hulu, it gives them tremendous content the next day. and they are able to, I'd say, sort of benefit from or piggyback on the marketing spend and the reach that we give all of our content as we push it out. So it works very well for Hulu, and it works very well for us. Steve, do you want to talk to the FoxBet value?

Yeah, Ben, listen, on FoxBet, I think we take a step back and just see how, Our betting in totality in terms of the investment, so FoxBet is one component of it and it's an important component. We'd like to see it in more states than the four states it's in at the moment, but it's being operated by Flutter who bear the investment cost of that asset and so in some respects we're at their behest in terms of how they develop that. But we look at it as a clear mark of success in terms of FoxBet Super 6 for us in terms of the way we've developed that and cross-promoted that with our stations Also, it's not just FoxBet sports betting, but it also includes the PokerStars non-sports betting assets. So it's an important asset, but when we look at the totality of our betting position, we increasingly think that the option that we have over FanDuel is the one that's really important for us. It's the leading market player. We have the opportunity over a long, long period of time to take a very, very meaningful stake in a player that's sort of... head and shoulders market leader right now.

Operator, we can go to the next question.

Your next question comes from the line of Doug Mitchelson from Credit Suisse. Please go ahead.

Oh, thank you. You know, good morning, Lachlan. Where are you in the life cycle for your digital investments? I'm just sort of curious when I think about Tubi, pretty consistently you've been talking about growth, you know, every quarter on these calls and engagement viewer and adding more content. How much more content is there to add? How much more growth is there to drive it to be? And same question on the Fox Digital side. Thanks.

Thanks, Doug. So in terms of the life cycle for our digital investments, I think the reality is they're that are putting on muscle and growing pretty spectacularly. So if I look at Tubi as an example, and you think about the key metric we've talked about now for several quarters is the total viewing time. Total viewing time is, I don't know, it's not the equivalent, but it's like ratings. We can get, we continue to grow to total viewing time The revenue that we're seeing follow that, and we have 25% up in this quarter, which I think is pretty fantastic, but the opportunity is much higher, right? Because the total viewing time has grown faster at a much bigger rate, a faster rate, than the revenue has. So already within Tubi, and when we look at these metrics, there's a... a ripeness for very significant revenue growth. So the digital investments are adolescents, but they're a huge upside as they get older. And then when you talk about Fox Digital, the digital assets, I was pretty amazed. We went through some numbers yesterday, just things like the local TV stations. The digital advertising business now at the local TV stations is really becoming quite significant. So when we look across our whole portfolio and we push further into our websites, our fast channels, our apps, this revenue is becoming very significant and even in parts of the company that you wouldn't expect. So we believe that the future of our business is obviously are digital, and we're making that transition pretty rapidly and very robustly.

Operator, we have time for one more question.

Okay, that question comes from the line of John Hodelick from UBS. Please go ahead.

First question on the balance sheet. I mean, investors are definitely going to like the accelerated repurchase, but you still have $4 billion on the books, relatively low debt. I mean, just maybe talk about sort of the usage of that cash. I mean, how much cash do you need on the books and maybe what the M&A environment looks like out there and what kind of opportunities you see. And then on the affiliate line, you said, you know, you haven't seen the impact of the renewals and the third, third, third that you expect that you'll see over the renewals you'll expect to do over the next couple of years. I mean, when do you expect to sort of get into the sort of, you know, the wheelhouse and see that those lines really start to turn from the renewals? Thanks.

Thanks, John. Steve, jump in at any point. No, no, I'll start. Thanks, John. So first of all, on the balance sheet, I think we do have an enviable balance sheet. We're going to deploy our capital as we have in a very disciplined manner and entirely focused on on shareholder returns for all of our shareholders. That'll be both as evidenced this morning with our accelerated share repurchase, which we think is a great sort of a mechanism and strategy to return some of this capital to our shareholders. But we will also obviously be looking at M&A and other opportunities to deploy our capital against. We don't have anything on the table today, but we are, I think, in a strong position to capture opportunities when they present themselves. And obviously, there are you know, other companies in our sector that are not in as great a position and, you know, will be things that we'll, I'm sure, cast our eyes over. So we, you know, we do expect the M&A will be part of a more important part of our toolkit as we deploy capital, but we have nothing on the table in front of us today. Before I go on to affiliates, Steve, do you have anything to add? Yeah.

Just, John, I think if you fast forward, like if you fast forward to the end of the fiscal based on the ASR and our regular way share repurchases, we'll have done $4.6 billion in share repurchases by 30 June, call it. You compare that against how much we've deployed in M&A, which on a gross basis is about $1.9 billion, on a net basis after asset sales is probably $500 million, $600 million. We've been super balanced, super disciplined on M&A, and if anything, the skew so far in the life of Fox has been towards capital returns to shareholders. So we're going to continue to be thoughtful in the way we deploy capital.

And then on the affiliate question, John, so I think we are now through for this fiscal year. All of our significant, bar maybe one, all of our significant affiliate renewals will start again in the very beginning of the next fiscal year, this summer, with some important renewals. But for this fiscal, we're through them. What we've seen in the renewals this past year is the importance, really, of our Fox brands with our affiliate partners and the pricing power that we have with them. And I think that's been pretty, you know, very evident in all of our renewals to date. You know, more and more, like when you look at the split between our cable affiliate revenue and our television affiliate revenue, we really negotiate those together. So, you know, we've been focused on the television half of that ledger, but you have to think about the strength of these brands as a combined strength and, you know, where we – where we, in the marketplace, find our kind of best ability to push right is where we do, and that's been really on the television side, the retransmission side of that ledger. But it's the strength of the portfolio that allows us to do that. So, yeah, so we're looking forward to, you know, continued success in our affiliate renewals as we get into the next fiscal year.

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

Thank you, everyone. Ladies and gentlemen, that does conclude your conference for today. Thank you for your participation and for using AT&T Executive Teleconference. You may now disconnect.