NEW
YORK, Feb. 7, 2024 /PRNewswire/ -- Fox
Corporation (Nasdaq: FOXA, FOX; "FOX" or the "Company") today
reported financial results for the three months ended December 31, 2023.
The Company reported total quarterly revenues of $4.23 billion as compared to the
$4.61 billion reported in the
prior year quarter. Affiliate fee revenues increased 4%, driven by
10% growth at the Television segment. Advertising revenues
decreased 20%, primarily due to the absence of the FIFA Men's
World Cup ("Men's World Cup") at FOX Sports,
lower political advertising revenues at the FOX Television Stations
due to the absence of the 2022 midterm elections, and the impact of
elevated supply in the direct response marketplace, lower ratings
and higher preemptions associated with breaking news coverage at
FOX News Media. Other revenues increased 14%, primarily due to
higher sports sublicensing revenues at the national sports
networks, partially offset by lower content revenues at the
entertainment production companies as a result of industry guild
labor disputes.
The Company reported quarterly net income of $115 million as compared to the $321 million reported in the prior year quarter.
The variance includes the change in fair value of the Company's
investments recognized in Other, net. Net income attributable to
Fox Corporation stockholders was $109
million ($0.23 per share) as
compared to the $313 million
($0.58 per share) reported in the
prior year quarter. Adjusted net income attributable to Fox
Corporation stockholders1 was $165 million ($0.34
per share) as compared to the $259
million ($0.48 per share)
reported in the prior year quarter.
Quarterly Adjusted EBITDA2 was $350 million as compared to the $531 million reported in the prior year quarter,
reflecting the revenue impacts described above, partially offset by
lower expenses. Expenses decreased in the quarter, primarily due to
lower entertainment and sports programming rights amortization and
production costs, led by fewer hours of original scripted
programming and the absence of the Men's World Cup,
partially offset by the renewed NFL contract.
Commenting on the results, Executive Chair and Chief Executive
Officer Lachlan Murdoch said:
"At the halfway point in our fiscal year, our
results demonstrate the strength and durability of our core brands
and their ability to deliver solid audiences across our portfolio.
FOX Sports continues to benefit from the power of live sports
programming and FOX News has maintained its leadership in cable
news, while Tubi has been resilient in an increasingly competitive
market. Combining this steadfast portfolio of assets with a
best-in-class balance sheet underpins our ability to deliver value
for our shareholders."
REVIEW OF OPERATING
RESULTS
|
|
|
Three Months
Ended
December 31,
|
|
Six Months Ended
December 31,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
$
Millions
|
Revenues by
Component:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Affiliate
fee
|
$ 1,787
|
|
$ 1,712
|
|
$ 3,527
|
|
$ 3,423
|
Advertising
|
2,002
|
|
2,503
|
|
3,202
|
|
3,723
|
Other
|
445
|
|
390
|
|
712
|
|
651
|
Total
revenues
|
$ 4,234
|
|
$ 4,605
|
|
$ 7,441
|
|
$ 7,797
|
|
|
|
|
|
|
|
|
Segment
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cable Network
Programming
|
$ 1,658
|
|
$ 1,632
|
|
$ 3,045
|
|
$ 3,063
|
Television
|
2,542
|
|
2,934
|
|
4,322
|
|
4,648
|
Other, Corporate and
Eliminations
|
34
|
|
39
|
|
74
|
|
86
|
Total
revenues
|
$ 4,234
|
|
$ 4,605
|
|
$ 7,441
|
|
$ 7,797
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cable Network
Programming
|
$
564
|
|
$
353
|
|
$ 1,171
|
|
$ 1,095
|
Television
|
(138)
|
|
256
|
|
213
|
|
665
|
Other, Corporate and
Eliminations
|
(76)
|
|
(78)
|
|
(165)
|
|
(137)
|
Adjusted
EBITDA3
|
$
350
|
|
$
531
|
|
$ 1,219
|
|
$ 1,623
|
|
|
|
|
|
|
|
|
Depreciation and
amortization:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cable Network
Programming
|
$
19
|
|
$
17
|
|
$
37
|
|
$
34
|
Television
|
28
|
|
30
|
|
57
|
|
59
|
Other, Corporate and
Eliminations
|
50
|
|
56
|
|
99
|
|
109
|
Total depreciation
and amortization
|
$
97
|
|
$
103
|
|
$
193
|
|
$
202
|
CABLE NETWORK
PROGRAMMING
|
|
|
Three Months
Ended
December 31,
|
|
Six Months Ended
December 31,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
$
Millions
|
Revenues
|
|
|
|
|
|
|
|
Affiliate
fee
|
$ 1,031
|
|
$ 1,026
|
|
$ 2,036
|
|
$ 2,055
|
Advertising
|
348
|
|
451
|
|
638
|
|
767
|
Other
|
279
|
|
155
|
|
371
|
|
241
|
Total
revenues
|
1,658
|
|
1,632
|
|
3,045
|
|
3,063
|
Operating
expenses
|
(942)
|
|
(1,097)
|
|
(1,591)
|
|
(1,661)
|
Selling, general and
administrative
|
(156)
|
|
(186)
|
|
(291)
|
|
(315)
|
Amortization of cable
distribution investments
|
4
|
|
4
|
|
8
|
|
8
|
Segment
EBITDA
|
$
564
|
|
$
353
|
|
$ 1,171
|
|
$ 1,095
|
Cable Network Programming reported quarterly segment revenues of
$1.66 billion, an increase of
$26 million or 2% from the amount
reported in the prior year quarter. Affiliate fee revenues
increased $5 million as contractual price increases were
partially offset by the impact of net subscriber declines.
Advertising revenues were $348 million as compared to the
$451 million reported in the prior year quarter, primarily due
to the impact of elevated supply in the direct response
marketplace, lower ratings and higher preemptions associated with
breaking news coverage at FOX News Media, and the absence of the
Men's World Cup at the national sports networks. Other
revenues increased $124 million or
80%, primarily due to higher sports sublicensing revenues at the
national sports networks.
Cable Network Programming reported quarterly segment EBITDA of
$564 million, an increase of
$211 million or 60% from the amount reported in the prior year
quarter, primarily due to lower sports programming rights
amortization and production costs, including the absence of the
Men's World Cup, and lower legal, programming and production
costs at FOX News Media.
TELEVISION
|
|
|
Three Months
Ended
December 31,
|
|
Six Months Ended
December 31,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
$
Millions
|
Revenues
|
|
|
|
|
|
|
|
Advertising
|
$ 1,654
|
|
$ 2,052
|
|
$ 2,564
|
|
$ 2,957
|
Affiliate
fee
|
756
|
|
686
|
|
1,491
|
|
1,368
|
Other
|
132
|
|
196
|
|
267
|
|
323
|
Total
revenues
|
2,542
|
|
2,934
|
|
4,322
|
|
4,648
|
Operating
expenses
|
(2,440)
|
|
(2,415)
|
|
(3,638)
|
|
(3,486)
|
Selling, general and
administrative
|
(240)
|
|
(263)
|
|
(471)
|
|
(497)
|
Segment
EBITDA
|
$
(138)
|
|
$
256
|
|
$
213
|
|
$
665
|
Television reported quarterly segment revenues of $2.54 billion as compared to the
$2.93 billion reported in the
prior year quarter. Advertising revenues were $1.65 billion as compared to the
$2.05 billion reported in the
prior year quarter, primarily due to the absence of the Men's
World Cup at FOX Sports and lower political advertising
revenues at the FOX Television Stations, partially offset by
continued growth at Tubi. Affiliate fee revenues increased
$70 million or 10%, led by higher
rates at both the Company's owned and operated stations and
third-party FOX affiliates. Other revenues were $132 million as compared to the $196 million reported in the prior year quarter,
primarily due to lower content revenues at the entertainment
production companies as a result of industry guild labor
disputes.
Television reported a quarterly segment EBITDA loss of
$138 million, as compared to an
EBITDA contribution of $256 million
in the prior year quarter, primarily from the revenue impacts
described above. Expenses were consistent with the prior year
quarter as higher sports programming rights amortization, led by
the renewed NFL contract, was partially offset by the absence of
the Men's World Cup at FOX Sports. Additionally, there were
lower costs due to fewer hours of original scripted programming at
FOX Entertainment as a result of industry guild labor disputes.
DIVIDEND
The Company has declared a dividend of $0.26 per Class A and Class B share. This
dividend is payable on March 26, 2024
with a record date for determining dividend entitlements of
March 6, 2024.
SHARE REPURCHASE PROGRAM
As of December 31, 2023, the
Company has repurchased approximately $4.1
billion of its Class A common stock and approximately
$1.0 billion of its Class B common
stock, with a remaining authorization of up to $1.9 billion.
DEBT MATURITY
In January 2024, $1.25 billion of 4.030% senior notes matured and
were repaid in full.
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING
STATEMENTS
This press release contains "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of
1995. Words such as "may," "will," "should," "likely,"
"anticipates," "expects," "intends," "plans," "projects,"
"believes," "estimates," "outlook" and similar expressions are used
to identify these forward-looking statements. These statements are
based on management's current expectations and beliefs and are
subject to uncertainty and changes in circumstances. Actual results
may vary materially from those expressed or implied by the
statements in this press release due to changes in economic,
business, competitive, technological, strategic and/or regulatory
factors and other factors affecting the operation of the Company's
businesses. More detailed information about these factors is
contained in the documents the Company has filed with or furnished
to the Securities and Exchange Commission, including the Company's
Annual Report on Form 10-K and subsequent Quarterly Reports on Form
10-Q.
Statements in this press release speak only as of the date they
were made, and the Company undertakes no duty to update or release
any revisions to any forward-looking statement made in this press
release or to report any events or circumstances after the date of
this press release or to reflect the occurrence of unanticipated
events or to conform such statements to actual results or changes
in the Company's expectations, except as required by law.
To access a copy of this press release through the Internet,
access Fox Corporation's corporate website located at
http://www.foxcorporation.com.
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
|
|
Three Months
Ended
December 31,
|
|
Six Months Ended
December 31,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
$ Millions, except
per share amounts
|
|
|
|
|
|
|
|
|
Revenues
|
$ 4,234
|
|
$ 4,605
|
|
$ 7,441
|
|
$ 7,797
|
|
|
|
|
|
|
|
|
Operating
expenses
|
(3,393)
|
|
(3,528)
|
|
(5,255)
|
|
(5,184)
|
Selling, general and
administrative
|
(495)
|
|
(550)
|
|
(975)
|
|
(998)
|
Depreciation and
amortization
|
(97)
|
|
(103)
|
|
(193)
|
|
(202)
|
Interest expense,
net
|
(72)
|
|
(60)
|
|
(114)
|
|
(128)
|
Other,
net4
|
(46)
|
|
73
|
|
(212)
|
|
(3)
|
Income before income
tax expense
|
131
|
|
437
|
|
692
|
|
1,282
|
Income tax
expense
|
(16)
|
|
(116)
|
|
(162)
|
|
(348)
|
Net
income
|
115
|
|
321
|
|
530
|
|
934
|
Less: Net income
attributable to noncontrolling interests
|
(6)
|
|
(8)
|
|
(14)
|
|
(16)
|
Net income
attributable to Fox Corporation stockholders
|
$
109
|
|
$
313
|
|
$
516
|
|
$
918
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares:
|
482
|
|
543
|
|
488
|
|
547
|
|
|
|
|
|
|
|
|
Net income
attributable to Fox Corporation stockholders
per
share:
|
$ 0.23
|
|
$ 0.58
|
|
$ 1.06
|
|
$ 1.68
|
CONSOLIDATED BALANCE
SHEETS
|
|
|
December 31,
2023
|
|
June 30,
2023
|
|
$
Millions
|
Assets:
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
4,122
|
|
$
4,272
|
Receivables,
net
|
3,001
|
|
2,177
|
Inventories,
net
|
1,038
|
|
543
|
Other
|
340
|
|
265
|
Total current
assets
|
8,501
|
|
7,257
|
|
|
|
|
Non-current
assets:
|
|
|
|
Property, plant and
equipment, net
|
1,676
|
|
1,708
|
Intangible assets,
net
|
3,061
|
|
3,084
|
Goodwill
|
3,559
|
|
3,559
|
Deferred tax
assets
|
3,065
|
|
3,090
|
Other non-current
assets
|
2,984
|
|
3,168
|
Total
assets
|
$
22,846
|
|
$
21,866
|
|
|
|
|
Liabilities and
Equity:
|
|
|
|
Current
liabilities:
|
|
|
|
Borrowings
|
$
1,250
|
|
$
1,249
|
Accounts payable,
accrued expenses and other current liabilities
|
2,457
|
|
2,514
|
Total current
liabilities
|
3,707
|
|
3,763
|
|
|
|
|
Non-current
liabilities:
|
|
|
|
Borrowings
|
7,195
|
|
5,961
|
Other
liabilities
|
1,376
|
|
1,484
|
Redeemable
noncontrolling interests
|
243
|
|
213
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
Equity:
|
|
|
|
Class A common stock,
$0.01 par value
|
3
|
|
3
|
Class B common stock,
$0.01 par value
|
2
|
|
2
|
Additional paid-in
capital
|
7,879
|
|
8,253
|
Retained
earnings
|
2,514
|
|
2,269
|
Accumulated other
comprehensive loss
|
(146)
|
|
(149)
|
Total Fox Corporation
stockholders' equity
|
10,252
|
|
10,378
|
Noncontrolling
interests
|
73
|
|
67
|
Total
equity
|
10,325
|
|
10,445
|
Total liabilities
and equity
|
$
22,846
|
|
$
21,866
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
|
Six Months Ended
December 31,
|
|
2023
|
|
2022
|
|
$
Millions
|
Operating
Activities:
|
|
|
|
Net income
|
$
530
|
|
$
934
|
Adjustments to
reconcile net income to cash used in operating
activities
|
|
|
|
Depreciation and
amortization
|
193
|
|
202
|
Amortization of cable
distribution investments
|
8
|
|
8
|
Equity-based
compensation
|
48
|
|
32
|
Other, net
|
212
|
|
3
|
Deferred income
taxes
|
29
|
|
152
|
Change in operating
assets and liabilities, net of acquisitions and
dispositions
|
|
|
|
Receivables and other
assets
|
(853)
|
|
(952)
|
Inventories net of
programming payable
|
(405)
|
|
(420)
|
Accounts payable and
accrued expenses
|
(180)
|
|
(152)
|
Other changes,
net
|
(117)
|
|
(68)
|
Net cash used in
operating activities
|
(535)
|
|
(261)
|
|
|
|
|
Investing
Activities:
|
|
|
|
Property, plant and
equipment
|
(150)
|
|
(153)
|
Purchase of
investments
|
(6)
|
|
(50)
|
Other investing
activities, net
|
13
|
|
(18)
|
Net cash used in
investing activities
|
(143)
|
|
(221)
|
|
|
|
|
Financing
Activities:
|
|
|
|
Borrowings
|
1,232
|
|
—
|
Repurchase of
shares
|
(500)
|
|
(500)
|
Dividends paid and
distributions
|
(142)
|
|
(155)
|
Sale of subsidiary
noncontrolling interest
|
—
|
|
25
|
Other financing
activities, net
|
(62)
|
|
(30)
|
Net cash provided by
(used in) financing activities
|
528
|
|
(660)
|
|
|
|
|
Net decrease in cash
and cash equivalents
|
(150)
|
|
(1,142)
|
Cash and cash
equivalents, beginning of year
|
4,272
|
|
5,200
|
Cash and cash
equivalents, end of period
|
$
4,122
|
|
$
4,058
|
NOTE 1 – ADJUSTED NET INCOME AND ADJUSTED EPS
The Company uses net income and earnings per share ("EPS")
attributable to Fox Corporation stockholders excluding net income
effects of Impairment and restructuring charges, adjustments to
Equity (losses) earnings of affiliates, Other, net, and tax
provision adjustments ("Adjusted Net Income" and "Adjusted EPS"
respectively) to evaluate the performance of the Company's
operations exclusive of certain items that impact the comparability
of results from period to period.
Adjusted Net Income and Adjusted EPS may not be comparable to
similarly titled measures reported by other companies. Adjusted Net
Income and Adjusted EPS are not measures of performance under GAAP
and should be considered in addition to, and not as substitutes
for, net income attributable to Fox Corporation stockholders and
EPS as reported in accordance with GAAP. However, management uses
these measures in comparing the Company's historical performance
and believes that they provide meaningful and comparable
information to management, investors and equity analysts to assist
in their analysis of the Company's performance relative to prior
periods and the Company's competitors.
The following table reconciles net income and EPS attributable
to Fox Corporation stockholders to Adjusted Net Income and Adjusted
EPS for the three months ended December 31,
2023 and 2022:
|
Three Months
Ended
|
|
December 31,
2023
|
|
December 31,
2022
|
|
Income
|
|
EPS
|
|
Income
|
|
EPS
|
|
$ Millions, except
per share data
|
Net
income
|
$
115
|
|
|
|
$
321
|
|
|
Less: Net income
attributable to noncontrolling interests
|
(6)
|
|
|
|
(8)
|
|
|
Net income
attributable to Fox Corporation stockholders
|
$
109
|
|
$
0.23
|
|
$
313
|
|
$
0.58
|
|
|
|
|
|
|
|
|
Other,
net5
|
47
|
|
0.10
|
|
(72)
|
|
(0.13)
|
|
|
|
|
|
|
|
|
Tax
provision
|
9
|
|
0.02
|
|
18
|
|
0.03
|
|
|
|
|
|
|
|
|
Rounding
|
—
|
|
(0.01)
|
|
—
|
|
—
|
|
|
|
|
|
|
|
|
As
adjusted
|
$
165
|
|
$
0.34
|
|
$
259
|
|
$
0.48
|
NOTE 2 – ADJUSTED EBITDA
Adjusted EBITDA is defined as Revenues less Operating expenses
and Selling, general and administrative expenses. Adjusted EBITDA
does not include: Amortization of cable distribution investments,
Depreciation and amortization, Impairment and restructuring
charges, Interest expense, net, Other, net and Income tax
expense.
Management believes that information about Adjusted EBITDA
assists all users of the Company's Unaudited Consolidated Financial
Statements by allowing them to evaluate changes in the operating
results of the Company's portfolio of businesses separate from
non-operational factors that affect net income, thus providing
insight into both operations and the other factors that affect
reported results. Adjusted EBITDA provides management, investors
and equity analysts a measure to analyze the operating performance
of the Company's business and its enterprise value against
historical data and competitors' data, although historical results,
including Adjusted EBITDA, may not be indicative of future results
(as operating performance is highly contingent on many factors,
including customer tastes and preferences).
Adjusted EBITDA is considered a non-GAAP financial measure and
should be considered in addition to, not as a substitute for, net
income, cash flow and other measures of financial performance
reported in accordance with GAAP. In addition, this measure does
not reflect cash available to fund requirements and excludes items,
such as depreciation and amortization and impairment charges, which
are significant components in assessing the Company's financial
performance. Adjusted EBITDA may not be comparable to similarly
titled measures reported by other companies.
The following table reconciles net income to Adjusted EBITDA for
the three and six months ended December 31,
2023 and 2022:
|
Three Months
Ended
December 31,
|
|
Six Months Ended
December 31,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
$
Millions
|
Net
income
|
$
115
|
|
$
321
|
|
$
530
|
|
$
934
|
Add:
|
|
|
|
|
|
|
|
Amortization of cable
distribution investments
|
4
|
|
4
|
|
8
|
|
8
|
Depreciation and
amortization
|
97
|
|
103
|
|
193
|
|
202
|
Interest expense,
net
|
72
|
|
60
|
|
114
|
|
128
|
Other,
net6
|
46
|
|
(73)
|
|
212
|
|
3
|
Income tax
expense
|
16
|
|
116
|
|
162
|
|
348
|
Adjusted
EBITDA
|
$
350
|
|
$
531
|
|
$ 1,219
|
|
$ 1,623
|
|
|
|
|
|
|
|
|
|
|
1
|
Excludes net income
effects of Impairment and restructuring charges, adjustments to
Equity (losses) earnings of affiliates, Other, net and tax
provision adjustments. See Note 1 for a description of adjusted net
income and adjusted earnings per share attributable to Fox
Corporation stockholders, which are considered non-GAAP financial
measures, and a reconciliation of reported net income and earnings
per share attributable to Fox Corporation stockholders to adjusted
net income and adjusted earnings per share attributable to Fox
Corporation stockholders.
|
|
|
2
|
Adjusted EBITDA is
considered a non-GAAP financial measure. See Note 2 for a
description of Adjusted EBITDA and a reconciliation of net income
to Adjusted EBITDA.
|
|
|
3
|
Adjusted EBITDA is
considered a non-GAAP financial measure. See Note 2 for a
description of Adjusted EBITDA and a reconciliation of net income
to Adjusted EBITDA.
|
|
|
4
|
Other, net presented
above includes Equity earnings (losses) of affiliates.
|
|
|
5
|
Other, net presented
above excludes Equity earnings (losses) of affiliates.
|
|
|
6
|
Other, net presented
above includes Equity earnings (losses) of affiliates.
|
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SOURCE Fox Corporation