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spk04: Ladies and gentlemen, thank you for standing by. Welcome to the Fox Corporation fourth 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 queue 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, Ms. Gabrielle Brown. Please go ahead, Ms. Brown.
spk01: Thank you, Operator. Good morning, and welcome to our fiscal 2023 fourth 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 will 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 filing. 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.
spk02: Thanks, Gabby, and thanks, everyone, for joining us this morning. With this morning's earnings release, we closed out a very strong fiscal 2023, fueled by successes across every aspect of our business. While Steve will cover the details of the fourth quarter in just a moment, for the full year, we generated record annual revenue and EBITDA. Notably, we reported revenue growth of 7%, including 12% advertising growth, supported by major tentpole events like the midterm election, Super Bowl 57, and the FIFA Men's World Cup, as well as outstanding growth of Tubi, and 3% affiliate growth, led by the first third of our distribution renewal cycle. These results demonstrate that Fox's differentiated strategy continues to deliver engaged audiences at scale for our advertising and distribution partners across our sports and news verticals, while also driving exceptional growth across our digital businesses. In a world of increasing audience fragmentation, Fox's collective linear and digital viewership was up 8% year over year. The on-screen reflection of that strategy was clearly apparent throughout fiscal 23 across our networks and platforms. Fox's broadcast of Super Bowl 57 was the most watched TV show of all time. Our Thanksgiving Day game was the most watched NFL regular season game of all time. And the U.S.-England match was the most watched U.S. Men's World Cup match of all time. Fox News maintained its lead as both a top-rated national cable news channel as well as a top-rated network across the entire cable ecosystem and ranks as the number two national network in all of U.S. television. And on the streaming front, Tubi made its debut in Nielsen's The Gauge. growing total consumption in fiscal 2023 by 79%, making it the number one AVOD player with consumption levels equal to a top five cable network. 2B's fiscal 23 was nothing short of spectacular, underpinned by growth in total view time, which in turn powered revenue growth. It was a year of increased awareness and engagement for 2B, whether that was being recognized by Nielsen as America's most-watched AVOD service, its expanding content library and TBT metrics, or the five Cannes Lions Awards bestowed upon Tubi's Super Bowl spot. Each quarter during the year saw successive gains at Tubi, and the fiscal fourth quarter was its most impressive of all, with revenue growth of 47% driven by strong engagement, with total viewer time growing by 65%. Each month of the quarter set new records for monthly viewers. With Tubi's revenue and engagement accelerating in fiscal 23, we are looking to further strengthen Tubi's position in fiscal 24. To that end, we are very excited to welcome Anjali Sood as the new CEO of Tubi and look forward to seeing Tubi flourish further under her leadership. At Fox News Media, we continue to lead both in ratings and engagement. The Fox News channel ended the fourth quarter as the most watched cable network in total day for the ninth consecutive quarter, while maintaining its lead as the most watched cable news network, beating CNN and MSNBC in both total viewers in the demo for both prime time and total day. Fox News debuted its tweaked prime time lineup last month. We are pleased with the initial results and are confident that our deep bench of talent will continue to set the standard for all news services as we move towards the 2024 presidential election. This past year, Fox News leadership position was never at risk. We sustained double digit advantages in total viewership over our nearest competitors for the entire fiscal year, even during the period where our prime time lineup was in transition. In fact, since its mid July debut, Fox News' new prime time lineup is up over 35% in total viewers and up over 40% in the 25 to 54 demographic versus the June schedule. Meanwhile, the Fox Business Network ended the quarter as the most watched business cable news network, beating CNBC in total viewers during the business day for the fifth consecutive quarter. Across at Fox Entertainment, We had a solid year, notching multiple wins, including the number one entertainment telecast with Next Level Chef, the number one new drama of 2023 with The Accused, and the number one new unscripted series with Special Forces, World's Toughest Test. Our local TV station group delivered a record midterm election sales cycle that was just shy of the last presidential cycle. We are very pleased with fiscal 23. a year where Fox again delivered best-in-class results and further differentiated itself from its peers. We enter fiscal 24 from a position of strength, despite headwinds facing our industry and the lingering effect of some macroeconomic uncertainty. We will renew the next third of our distribution agreements and navigate a variable ad environment supported by solid results from the recent upfront for our unique content offering, which distinguishes itself in any marketplace. You've heard me say this many times. Fox's focus strategy is different from our peers. It's uniquely good. Nowhere is that more evident than in the current environment where Fox's leadership position is proven. In this year's Upfront, we believe Fox led the market in both price and volume across our live sports and news offerings. While it's early in the quarter, underlying ad trends have shown signs of improvement over last quarter. We are seeing an uptick in scatter, driven largely by sports, and national news is solid. And at Tubi, we saw further momentum in both revenue and TBT growth in July. This promises to be another strong year for Fox as we wrap up the Women's World Cup in a few weeks with stellar advertising support. before kicking off American football in early September with the Big Ten and the NFL. We're already seeing our live sporting events continue to break records with the Women's World Cup broadcast. The U.S. versus the Netherlands on Fox was the most watched Women's World Cup group stage match ever on U.S. English language television. We'll also broadcast our first UEFA European Soccer Championship later this year. Further, we expect that our relaunched news lineup will continue its momentum as we head into the presidential election cycle, which will also be a boon to our local stations. And, of course, we expect Tubi's growth and scale to extend even further. Underpinning all of this, we can't forget our balance sheet, which remains robust even after this year's legal costs. We ended the quarter with $4.3 billion in cash and approximately 7.2 billion in debt, giving us a net leverage ratio of roughly one times, the best balance sheet in the business. We have said it time and time again, our mix of assets puts us in a uniquely stronger position than our peers. With this strength and our relentless focus on our core business, we are committed to delivering value for our shareholders in a thoughtful and disciplined manner as we look forward to 2024. And with that, I'll turn it over to Steve to take you through the operating details of the quarter and full year.
spk03: Thanks, Lachlan, and good morning, everyone. Fox delivered strong financial results for fiscal 2023, with total company revenue growth of 7% and record EBITDA. Advertising revenues across the company were up 12%, led by a 17% increase at our television segment, made all the more impressive when comparing against revenues generated from last year's broadcasts of Thursday Night Football. This growth was driven by a banner year of events, including the record-breaking Super Bowl 57, FIFA Men's World Cup, and the midterm election cycle, along with the considerable momentum we are driving at Tubi. We completed approximately one-third of our distribution renewals this year, supporting the lift in our total company affiliate fee revenues of 3%. As signaled previously, the impact from these initial renewals primarily benefited our television segment, leading to an 8% increase year-over-year. Total Company other revenues saw a 5% increase, a result of the full-year impact of Marvista, TMZ and Studio Ramsey Global, which were acquired in fiscal 22, along with the higher Fox Nation subscription revenues. From a bottom-line perspective, this robust company-wide revenue growth was the key driver of the 8% increase in full-year EBITDA to $3.19 billion. Net income attributable to stockholders was $1.24 billion or $2.33 per share, up versus the $1.21 billion or $2.11 per share reported in fiscal 22. As you may recall, OtherNet was impacted this year by charges associated with the Fox News media litigation and the gain associated with the change in fair value of the company's investment in Flutter. Excluding this impact and other non-core items, Full year adjusted net income increased 17% to $1.87 billion, with adjusted EPS up 26% to $3.51 per share. Turning to our fiscal fourth quarter results, Fox delivered total company revenues of $3.03 billion, which is consistent with the amount reported in Q4 fiscal 22. Quarterly EBITDA was $735 million, down from the $770 million in the prior year. This was largely due to the cyclical comparison with the prior year's midterm election and advertising impacts on our Fox News and Fox Entertainment businesses, along with a modest increase in overall expenses. Total company affiliate revenues grew 3% in the quarter as the pricing benefits from our recent renewals were partially offset by the impact of industry subscriber declines. Total company advertising revenues decreased 4%, which was primarily a result of lower political advertising revenues at our television stations, especially when compared to our record June quarter last year, along with the impact of a softer direct response marketplace at Fox News Media. The momentum we have seen at Tubi throughout the fiscal year accelerated in our fourth quarter, with revenue up 47% on the back of increased engagement and stable pricing. Total company other revenues were essentially unchanged from the prior year. Growth in total company expenses was held to 1% and includes investments at Tubi, albeit at a slower rate than Tubi's revenue growth, and the expansion of the USFL, as well as higher programming rights, amortization, and production costs at Fox Sports. Net income attributable to stockholders of $375 million, or 74 cents per share, was up versus the $306 million, or $0.55 per share, reported in the prior year quarter, as the EBITDA movements just described, along with the restructuring and other below-the-line costs, were more than offset by the mark-to-mark increases of our investment in Flutter. Excluding non-core items, adjusted net income in the quarter increased to $443 million, and adjusted EPS increased 19% to $0.88 per share. Now turning to the quarterly results of our main operating segments. At cable networks, fourth quarter revenue saw a 3% decrease year over year. Cable affiliate fee revenues were down 2% in the quarter as pricing gains from our affiliate renewals were more than offset by net subscriber declines of approximately 8%. Cable advertising revenues fell 11%, largely on the back of the softer direct response marketplace at Fox News. while cable other revenues increased 7%, led by revenues generated by the second season of the USFL. Quarterly adjusted EBITDA at cable was down 7% as these revenue impacts were partially offset by lower expenses, led by lower digital and news gathering costs at Fox News Media, partially offset by higher costs associated with the USFL. A television segment reported 4% growth in quarterly revenues, This was led by a 9% increase in television affiliate fee revenues as healthy growth in pricing across Fox-owned and operated and Fox-affiliated stations continued to outpace the impact from subscriber declines. Television advertising revenues fell 1% as the strong growth at Tubi was offset by lower off-cycle political revenues and a slower rebound in the base market at the Fox television stations and lower ratings at Fox Entertainment. Television other revenues grew 8% in the quarter, primarily a result of increased activity at our entertainment production companies. Quarterly adjusted EBITDA at our television segment remained flat compared to the prior year quarter, as the increase in revenues was offset by higher expenses, where we had higher programming rights amortization and production costs at Fox Sports. Costs at Tubi were also higher than the prior year. However, this was outpaced by the rate of revenue growth to deliver improved EBITDA in the quarter. During the full year, we generated free cash flow, which we define as net cash provided by operating activities less capex, of $1.4 billion, inclusive of legal settlement payments. Before we get to capital allocation and balance sheet, it is worth noting some key items for fiscal 24. We will, of course, be comparing to the marquee events of fiscal 23, including the Super Bowl and the midterm election cycle, as well as transitioning to the first year of our NFL rights renewal and broadcasting our first UEFA European Championship. At the Cable Sports Networks, we expect margins to improve in fiscal 24, reflecting our disciplined approach to college sports rights renewals net of sub-licensing income. In terms of affiliate revenue, we make no predictions on industry subscriber volumes. However, as we've previously indicated, we have another third of our total company distribution revenues up for renewal this year, and expect to see the benefit of those renewals towards the back half of the year and skewed towards our television segment. We expect to continue to invest in our growth initiatives. Here, too, we will be the focus of investment spend with the collective portfolio expected to deliver EBITDA in line or better than fiscal 23. And from a cash flow perspective, we expect Fox will be subject to the new corporate alternative minimum tax beginning this fiscal year. This will not impact our P&L tax provision, but will likely elevate our cash taxes in the near term. However, we still expect to realize the full benefit of our cash tax asset over time. Returning to capital allocation, over the course of fiscal 23, we returned $2 billion of capital through the repurchase of 46 million Class A shares and 7.5 million Class B shares. This includes the cash impact of our previously announced $1 billion accelerated share repurchase transactions. This buyback activity was supplemented by over $260 million in dividend payments in the year, and underlining our continued commitment to shareholder returns, today we announced an increase in our semi-annual dividend to $0.26 per share. With the payment of this dividend, we will have cumulatively returned over $6 billion of capital to our shareholders since the spin in 2019. This includes over $4.6 billion of share repurchases, including the ASR, representing over 22% of our total shares outstanding since the launch of the buyback program in November 2019. This is all supported by the strength of our balance sheet, where, as Lachlan mentioned, we ended the quarter with $4.3 billion in cash and approximately $7.2 billion in debt. Fiscal 2023 was another year of strategic focus and strong execution at Fox. That, combined with the most robust balance sheet in the industry, supports our ongoing commitment to capital returns, as well as flexibility to pursue value-accreted investment. And with that, let's turn the call back to Gabby to get started with Q&A.
spk01: Thank you, Steve. And now we would be happy to take questions from the investment community.
spk04: Ladies and gentlemen, I'd like to emphasize the functionality for the question and answer cue. 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 cue. You may remove yourself from cue at any time by once again pressing the 1 then 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 then 0 at this time. And one moment please for your first question. Your first question comes from the line of Phil Cusick from J.P. Morgan. Please go ahead.
spk05: Hi, guys. A couple quick ones, if I can. First, ESPN talking about looking for partners. Given your portfolio of sports rights, could a sports-centric JV make sense for Fox? And alternatively, would a league investment in a peer or competitor run into legal issues? And then second, can you just give us any update on the overall ad environment, including demand for linear versus digital? Thank you.
spk02: Hey, Phil. Good morning. Thanks for the questions. So, you know, as regards Fox Sports and our sports portfolio and any sort of direct to consumer proposition, you know, I think our business is fundamentally, you know, very similar to ESPN's. And so, you know, we face the same strategic challenges. priorities as they do. I'm probably looking at similar paths forward as we go forward with our portfolio. The thing that we put first and foremost is really to protect our premium sports content and place it in front of consumers wherever we can. At the moment, that premium content derives the most value from being behind you know, a paywall within the traditional cable and satellite pay TV universe. And we think that that pay TV ecosystem, you know, continues to be of tremendous value for our businesses and really drives, you know, the value of Fox Sports and that content and will for a long time to come. Having said that as consumer, you know, demands change, consumer tastes change, we will endeavor to put our content and our brands in front of consumers in whichever manner makes the most sense for them, provided that it remains behind a paywall and we get full value for those rights and those brands. But it's very important to say it's not an either-or proposition. We don't envision it as a a moment when you leave a pay TV universe and quickly transition to a direct-to-consumer universe. We think you'll enter a phase where both are important. You're not choosing between one or the other, or ultimately the consumer might choose between one or the other, but we'll be well-positioned in any distribution mechanism. I can't answer your question on the legal side, ramifications of having league investors in a platform, but I can give you an update on the broader advertising environment. We're very pleased with our upfront from a national advertising perspective. Our upfront results were very pleasing. We were able to drive both pricing and volume across, you know, our key categories of news and sports. And obviously, you've heard about the tremendous growth at Tubi this past quarter and, in fact, all year. Categories that really impacted the upfront were, like, positive and just for national – remaining with national – automobiles, you know, very strong category for us, travel in the upfront, very strong, and pharmaceuticals. From a local perspective, if you look at a local pacing, ex-political, obviously you've got a year-on-year comparison with very strong political year last year. Ex-political, we're pacing flat to slightly up. That includes some of the local digital revenues. And those categories, similar, auto is very strong, financial services strong, health, but offset by softness and retail, telecom, and we know, as we've talked about in past quarters, wage rent. So overall, we're very pleased with where we are, and we think we're going to have a pretty decent second half, calendar second half.
spk04: Your next question comes from the line of Jessica Reif from Bank of America. Please go ahead.
spk00: Thank you. Just moving back to the balance sheet, I know you've commented in your prepared remarks, but litigation aside, you really do have the strongest balance sheet. And at this point, it seems like there are attractive assets, possible attractive assets, at depressed multiples. Can you give us a little bit more of your thought process in terms of what areas are interesting to you? Or is it really just about returning capital to shareholders? And then on content, you mentioned the sports step up with the NFL. But overall content spend, like entertainment, are you rethinking how you're spending on entertainment? Will overall content spend be up or down in the coming years?
spk02: Thanks very much, Jessica. On the balance sheet, and Steve can chime in, but we continue to agree with you wholeheartedly that I think we have the best balance sheet in the business. It gives us tremendous flexibility moving forward in both how we return capital to shareholders, whether it's through dividends or share repurchases. I think... You know, Steve mentioned in his remarks, I mean, we purchased $2 billion worth of shares this past year. That's probably an elevated level because, you know, as we look across the landscape, we didn't see any attractive M&A opportunities this past year that particularly caught our attention. We are always looking for businesses, you know, that fit our portfolio and that will, you know, be attractive growth businesses for the business. But we take this with a, what's the word, a dispassionate kind of view in terms of what's going to drive the best sort of long-term shareholder value. So we balance up return of capital and sort of accretive value opportunities on pretty much a daily basis. Steve, do you want to add anything to that?
spk03: Yeah, no, I think that's exactly right. I think the balance sheet that we've assembled gives us the flexibility to to look at everything and we'll ultimately do what delivers ultimately the best value for shareholders. Jessica, just on your content spend question, next year's a bit of the year-on-year change is heavily influenced by the fact that we don't have a Super Bowl running through the amortization line of our content costs. But if you look sort of through that, we would expect content spend to increase. We've got increasing rights amortization costs of the sports business, the entertainment business from a linear perspective probably holds steady if you normalize for strike. It'll probably be down given the strike. But then we're going to continue to invest in content at Tubi. Some of that is passive in the form of revenue share payments, but we'll also be active in terms of production and licensing costs and use as a relatively sort of... low growth, but continued growth in increased spending content. So hopefully that gives you enough color there.
spk01: Operator, next question, please.
spk04: Next question comes from the line of John Hodelick from UBS. Please go ahead.
spk08: Okay, thanks. You guys recently announced that you'll be winding down FoxBet. So I guess three quick ones. First, any financial implications to that? Has your view on the sports betting opportunity in the U.S. changed and Anything you can tell us about your sports betting strategy going forward? Thanks.
spk02: Thanks, John. Why don't I start back to front with the strategy and the shuttering of FoxBet, or the joint venture at least, and Steve can jump in on the financial implications. So, yeah, as we announced last week, or it was announced last week, Flutter exercised its right to terminate the FoxBet joint venture. They had every right to do this. They were the operator and really the entire funder of FoxBet. And when they reached a certain benchmark investment, they had the right to cancel that joint venture and really chose to focus on their other brand, FanDuel, which is America's number one sports wagering site. So while it's fair to say we were disappointed by this outcome, ultimately we aspire to be operators of a sports wagering business. We did anticipate it, and I can't stress more that we are extremely pleased with the financial outcome and the value creation through Fox Bet that we've generated for all of our shareholders. And to explain that, I should just step back a moment and remind everyone of a couple of things. Fox Bet, we didn't spend any capital in Fox Bet. It was entirely funded by Flutter. and we had the option to pick up 50% of FoxBet upon licensing if we became a licensed betting operator in the United States. So while we didn't put any cash into the FoxBet joint venture, I think we was extremely successful, and we derived significant value from it. One of the remaining elements of value coming out of FoxBet is – the brand of Fox Bet Super 6, which is the most successful free-to-play wagering business in the United States and offers a tremendous funnel for wagering sites going forward. And this is a brand and an operation that we will continue to operate. Of course, we anticipated this potential outcome with a sort of moving away from Fox Bet. So we're able to negotiate our 18.6% option in FanDuel, as I mentioned, the number one site in the United States. If you just look at the value of DraftKings, the increasing value of DraftKings over recent times, some people have put that value of our option in FanDuel up to $2 billion. So We are very pleased with that outcome, and we wish FanDuel every continued success. We also, as part of this journey, invested into the top code at Flutter, purchasing 2.5% of the business for roughly $400 million. I think that investment now sits at a value of over $800 million. And, you know, importantly now, as we move forward, we are now free to work with any of the other betting operators. Many of them have reached out to us already. So we feel our existing sort of performance in FoxBet has been terrific. We've built a tremendous amount of value, and we're really positioned well to continue to benefit from the emergence of sports wagering in the United States. That gives you kind of an overview of where we are. It's an important time, but Steve, do you want to mention any financial?
spk03: Yeah, that's a pretty comprehensive overview and financial overview. So financially, just to reiterate, as Lachlan mentioned, we weren't funding the business at all, so there's no change to us from that perspective. There were some pretty small sort of commercial payments between FoxBet and Fox. which are immaterial to us in the grand scheme of things and are potentially ameliorated by the fact that we're now sort of free to look at other partnerships. So from that perspective, I think it's a bit of a push either way. And then as Lachlan mentioned, we absolutely preserve the value of the Fangio option, which is very valuable to us, as well as the value of our holding in the headstock. But I think Lachlan covered it pretty well in his opening remarks.
spk01: Operator, next question, please.
spk04: Your next question comes from the line of Ben Swinburne from Morgan Stanley. Please go ahead. Thanks. Good morning.
spk06: Lachlan, could you talk a little bit more about the long-term strategy around 2B, particularly on the programming side, how you see that product evolving over a multi-year period? I apologize if you guys have already talked about it, but any sense of sort of the impact, uh, from EBITDA to be, uh, if that's still an investment mode, like when you see that turning profitable. And I was just curious if you could talk about the big 10 quickly with the additional expansion, whether that's going to have a notable financial impact as you guys go into the, uh, the season as the big 10 becomes, I think the big 16 now. Thank you.
spk02: Hey, thanks, Ben. Uh, like first on, on, on to be, um, the, uh, Obviously, Anjali, she starts September 1st, and we're looking forward to her adding her expertise and experience to the business. And obviously, with any incoming CEO, I'm sure she'll see it with fresh eyes and find fresh opportunities. If you look at the 2B business today, the TBT growth has really been everything. It's grown tremendously rapidly and strongly. And then what that's done is then that's obviously driven advertising opportunities and revenue. TBT growth continues to grow at a faster pace than revenue. So you see fill rates. not actually keeping up to pace with TVT growth, which is a good thing because there's actually more opportunities to place clients advertising than we can fill at the moment. And that's really driven by the strong viewership growth. I think over time, I should also say with the viewership growth, I think one of the key differentiators for Tuvi, if you look across the AVOD market, is that it's primarily built on an on-demand platform. So our viewers are actively, proactively clicking on content to watch. And so we know they're engaged and we know they're in front of their screens watching that content. This is very different from just a fast channel. where someone might tune in the channel and then leave it on and it autoplays in the background. There's an absolute room and a place for fast channels. Tubi has a fast channel service within it, but I think 90% of its viewing is actually from video on demand, people proactively clicking on that content and coming up to us to watch that movie or that TV show. and the library of those movies and TV shows continues to grow. I think this time last quarter we had 55,000 titles. We now have 60,000 titles, which equates to roughly 200,000 hours of individual movies and TV shows for our consumers to enjoy. So that will continue. I think one of the areas that we'll be looking at is expanding the categories that we're strong in. You know, there's certain sort of content categories and verticals, you know, that we are super serving, and other ones that we can continue to, you know, there's a low-hanging fruit to continue to monetize. Steve, do you want to talk to the EBITDA investment? Yeah, sure.
spk03: So, Ben, I'm not sure if you caught it in the opening remarks. In terms of Tubi, the investment For the full year, we're sort of in the low to mid negative 200s range, which is similar to where we had it in fiscal 22. The quarter, we were actually better. We were better by nearly $30 million. As we look to 24, Tubi is an absolute shining light from our growth portfolio, our digital portfolio. And given the momentum we're seeing in the business, whether it be what we just saw in Q4 or what we're seeing already in 2020, in July, it sort of behooves us to continue to invest in that business. And so you should expect to see the same net investment level or even a bit more going into fiscal 24. But that will be offset as we look at the broader growth portfolio by things like nation, weather, USFL, sort of coming back a bit in terms of investment. So we're we're pretty excited and sort of very convinced of Tubi, so we're going to continue to maintain a leadership position.
spk02: And just finally on the Big Ten, as regards to University of Oregon and University of Washington coming into the Big Ten conference, we just think these additions will only strengthen our college football franchise across Fox Sports, but particularly our partnership, and it is a partnership in the Big Ten network. So, We think it's very positive for us across the board.
spk01: Operator, we have time for one more question.
spk04: Okay. That question comes from the line of Robert Trishman from Moffitt Nathanson. Please go ahead.
spk07: Good morning, everyone. After seeing some of the news earlier this year with CBS and its affiliates negotiating with the VMBCDs, can you just help us think about how Fox's relationship is with affiliates today? And with this backdrop, if you can talk about your confidence about continuing to grow affiliate fees despite the elevated levels of court cutting. Thank you.
spk02: Thank you very much, Robert. So, look, our relation with affiliates is very strong. We catch up with them regularly, and we understand affiliates. you know, the headwinds facing broadcast television. And, you know, we're in our station group, right? We have all the same issues that they have. So we're simpatico, you know, with them in both the, you know, both the opportunities and the risks of the headwinds in that business. You know, we, you know, are... pretty, what's the word, vocal or proud of the fact that we've protected our key sports franchises for pay TV environment, but also for our affiliates, our distribution, our most important distribution partners. We don't take our NFL games and put them anywhere else. We keep them exclusive for our distribution partners. And I think that's understood and very well received. And because of that, I think we will be able to continue to drive the sort of industry-leading pricing, both in a pay universe and a free universe. And that pricing will certainly continue to ameliorate or balance any reduction in subscriber erosion and subscribers across the universe. That's where we feel we are with our affiliates, and I think we're in a pretty good place for them.
spk01: Great. 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.
spk04: Thank you. 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.
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