Fox Corporation

Ladies and gentlemen, thank you for standing by. Welcome to the Fox Corporation's first quarter fiscal year 2026 earnings conference call. At this time, all participants are in listen-only mode. Later, we will conduct a question and answer session. I would like to emphasise that functionality for the question and answer queue will be given at that time. If you require assistance during the call, please press star, then zero on your touch-tone keypad. 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, Paulie. Good morning, and welcome to our fiscal 2026 first quarter earnings call. Joining me on the call today are Lachlan Murdoch, Executive Chair and Chief Executive Officer, John Nallen, President and 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 EPS and 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. We also refer to free cash flow. which we define as net cash provided by operating activities, less capital expenditures. And with that, I'm pleased to turn the call over to Lachlan.

Thank you, Gabby, and thank you all for joining us this morning to discuss our fiscal first quarter earnings. Fiscal 2026 started strong across our businesses with revenue growth of 5% and EBITDA growth of 2%. Advertising revenue grew 6% during the quarter, despite not having last year's political revenue, with robust trends at news, sports, entertainment, and Tubi. This was supported by a gain in engagement across the portfolio, which distinguishes us from our peers and again underscores the strength of our brand and of the leading positions they hold in our ecosystem. Distribution revenue grew by 3%, with subscriber declines remaining below 7% for the third consecutive quarter. The momentum in Q1 is continuing into Q2, led by a very healthy advertising market for us, stemming from both the upfront and from a strong scatter market. In fact, we are enjoying the most robust advertising market we have seen for some time. Also in this quarter, we launched Fox One, Though it's only been two months, we are encouraged by the enthusiastic response to the product. Subscriber trends have exceeded our expectations with those subscribers coming through direct acquisition and partnerships. We continue to believe that our content is best served as part of a bundle, whether it's in the pay TV bundle or a direct-to-consumer bundle, as it provides value and choice to the consumer. At Fox, we are distribution agnostic. We are committed to ensuring our networks and content reach as many households as possible. With that in mind, we launched two Fox One bundle partners earlier this month, ESPN and Verizon. These will build upon the strong momentum we have achieved with our groundbreaking Amazon Prime channels partnership. Kudos to everyone at Amazon, from Andrew Jassy down, for their tremendous and brilliant support of the service. You all have done just a tremendous job. Unsurprisingly, in terms of engagement, we have a balanced mix on Fox One with news driving audience and reach during the week and sports events doing the same over the weekend. Across all forms of distribution, interest and engagement in Fox's portfolio of live sports is increasing. Fox Sports kicked off the fall season with solid momentum. The NFL on Fox is off to a great start, averaging almost 22 million viewers in September, a 12% increase over last season, and Fox's best start to an NFL season ever. And Fox's Americans Game of the Week ranked as TV's number one show through the end of September, with an average of 30 million viewers. And our schedule only looks better from here, right through to the NFC Championship at the end of the season. Interest in college football continues to reach new heights as well. Through the end of September, Fox's big noon Saturday window averaged over 6 million viewers, up 22% over last season. The strong start was punctuated by nearly 17 million viewers tuning in to watch Ohio State versus Texas, the most watched week one college football game ever on any network. Like with the NFL, we head into the back half of the college season with a strong roster of Big Ten and Big 12 matchups, highlighted by the Michigan-Ohio State game and capped off by both the Big Ten and Mountain West Conference championship games. And while we thought last year's Dodgers-Yankees World Series would be a tough act to follow, Major League Baseball has once again performed well for us. Regular season ratings were up 3%, and as we go into Game 6 of a spectacular World Series, our total postseason advertising revenues will likely surpass last year's. Speaking of revenue, Tubi achieved 27% revenue growth in the first quarter, driven by an 18% increase in total view time. This overall engagement trend has continued into Q2. Our expansive content library and our differentiated user base have solidified Tubi's position as the top premium AVOD platform in the U.S. And I'm happy to say Tubi reached profitability this past quarter. It's a great milestone, a credit to the Tubi brand, to our viewer experience, and to the revenue momentum we are seeing. This will likely lead to a partial moderation in the overall net investment we expected to deploy across our digital initiatives this year. Fox News sustained a strong ratings and audience momentum throughout the quarter. Fox News once again cemented its status as the most watched cable network in total day and in prime time. Even more impressive, Fox News is the most viewed network in all television in weekday prime calendar year-to-date. This engagement and share led to the highest first quarter ad revenue in Fox News media history with higher pricing across both direct response and national advertising during the quarter. Breaking news coverage throughout the quarter also drove strong engagement at Fox News Digital, fueling growth in page views and minutes versus last year. Fox News Digital closed the quarter with over 6.5 billion social media video views, its highest total ever. The strong Q1 results we have just reported, coupled with the ongoing trends we are seeing across the company, give me great confidence in the positive outlook for Fox. This is particularly underpinned by the strength of the advertising market, our leadership position across news and sports, and by to be reaching quarterly profitability earlier than expected. Coming off a record fiscal 2025, fiscal 2026 will again highlight the uniqueness of our strategy, the quality of our assets, our ability to deliver on screen and financially, and the overall strength of our financial position. This confidence is clearly demonstrated by this morning's announcement of a $1.5 billion accelerated share repurchase transaction. Consistent with our track record, we remain committed to delivering value for our shareholders in a thoughtful and disciplined manner. And now, let me turn over to Steve for more on the results.