Fox Corporation

Ladies and gentlemen, thank you for standing by. Welcome to the Fox Corporation third quarter fiscal year 2024 earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. I would like to emphasize that functionality for the question and 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.

Thank you, Operator. Good morning, and welcome to our fiscal 2024 third 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 filing. 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 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.

Thank you, Gabby, and thanks, everyone, for joining us this morning. This quarter, Fox continued to distinguish itself from its peers, delivering 7% EBITDA growth and demonstrating again the strength of our brands and the advantages of our strategy. This result is even more impressive when considering we are comping to last year's third quarter, which enjoyed a significant tailwind from Super Bowl 57. In the fiscal third quarter, total affiliate revenue fees grew 4%, with positive growth at both our television and cable segments, driven by pricing benefits from our recent renewals. Headline advertising revenues were down during the quarter, as expected, due to the absence of the Super Bowl and fewer NFL broadcasts than in the prior year. If not for the difference in our NFL postseason schedule, our total advertising revenues would have increased a few percent. Overall advertising trends at Fox are clearly moving in the right direction, both in the scatter market and in early upfront discussions. Demand for sports remains robust, while trends at Fox News are improving across the board, including the fact that we have now fully lapped the direct response market issue that had adversely impacted Fox News DR revenues. And while there wasn't much of a primary season this year, We do expect strong political advertising for national and local races, as well as local ballot issues in the first half of our fiscal 25, which would largely benefit our station group. As we look to our annual upfront presentation next week, our focus on live content and must-watch events, such as the coming presidential election cycle and next year's Super Bowl, combined with Tubi's position as the most-watched free TV and movie streaming service, will favor our enviable position with advertisers across the Fox portfolio. Operationally, Fox News again ended the third quarter as the most watched cable network in total day and prime time. Fox News also strengthened its leadership position inside the category, gaining share to now again command 50% of total day viewing. These gains are underpinned by a dedicated team of journalists and staff, who are focused on delivering coverage and insights on current events most relevant to our viewers. Building from our strength in primetime, we are expanding our leadership across day parts, whether that be mornings with Fox & Friends, afternoons with The Five, or late nights with Gutfeld. And we expect this momentum to continue as we ramp our election coverage heading into the fall. Tubi ended the third quarter with 22% revenue growth, driven by a 36% increase in total view time and 20% growth in monthly active users to just under 80 million MAUs. Our expansive content library and our differentiated user base have solidified Tubi's position as the most watched free TV and movie streaming service in the U.S., with 1.6% of total TV viewing, ahead of Peacock, Max, The Roku Channel, Paramount Plus, and Pluto TV. and only marginally behind Disney+. From its debut on the Nielsen Gauge in February of 23 to the most recent gauge in March of 24, Tubi's share of total US TV view time grew 60%, which is faster than any other streaming service over that same period of time. Apart from just its growing scale, Tubi is also unique and uniquely valuable to advertisers through its reach and through its engagement. Over 60% of Tubi users are classified as cord cutters or cord nevers, and 90% of those users' time watching is proactively on demand as opposed to passively watching a fast channel. This positions Tubi very well as an important part of the growing digital streaming advertising marketplace. We are looking forward to showcasing Tubi's strengths at next week's Upfront. Fox Sports had an impressive quarter, with strength across all areas of our portfolio. We finished the 30th anniversary of the NFL on Fox on a high note, with three NFC playoff games on Fox averaging an incredible 45 million viewers. This was capped with the NFC Championship game drawing over 56 million viewers, which is 19% higher than last year's NFC Championship game, and the most watched in over a decade. This season also reinforced Fox's solid position in college sports with strong viewership in both college football and college basketball. In fact, in the current academic year, Fox has aired the most watched college football, men's college basketball, and women's college basketball games across the regular season. College sports has grown to become the second biggest source of Fox viewership behind only the NFL. Total consumption of college sports on Fox has grown by over 40% through the last five years. And in the March quarter, we launched the UFL, United Football League, the result of the merger of the USFL and XFL. With this merger, the outlook for spring football is promising, and we are pleased with the results through the midpoint of the season. While the sports calendar in our upcoming fiscal fourth quarter tends to be quieter Fox Sports is excited to present its Summer of Soccer, featuring over 200 hours of live soccer coverage across our platform, starting with the UEFA European Football Championship on June 14th and Copa America on June 20th. This summer will also feature a new schedule from Fox Entertainment with returning favorites like Gordon Ramsay's Food Stars and exciting new shows like the 1% Club. This follows a successful spring slate that featured two of the top five new primetime series in Crapopolis and The Floor, with Crapopolis ranking as the number one new primetime entertainment show and The Floor as the number one game show season to date. Last quarter, we announced the formation of a new sports-focused digital distribution platform with our partners Disney and Warner Brothers Discovery. We are happy to have hired a truly world-class CEO in Pete Distad, and he is off to a flying start. In just several weeks, the JV now has over 150 engineers and executives dedicated to building a unique, innovative product which focuses on sports fans outside of the traditional TV bundle. We've already launched an internal beta service, which I have been trialing this past week, and I have to say it's an incredibly exciting product, and we can't wait to launch it this fall. Today's media market is certainly dynamic, but the strength and leadership of our brands and their capacity to convert those strengths financially underscores our considered strategy. Underpinned by our best-in-class balance sheet, we ended the quarter with $3.8 billion in cash and just one times net leverage. We remain committed to driving long-term shareholder value creation through the thoughtful balance of managing our existing businesses pursuing new adjacencies, and returning capital to our shareholders. And with that, I'll hand it over to Steve.