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The NFL delivered for Fox Corp. last quarter, helping to boost the company’s earnings and revenue, including $2.4 billion in advertising revenue. However, the company swung to a net loss in the quarter due to a change in fair value from the company’s investment in the betting company Flutter.
In Fox’s fiscal Q2 (which ended Dec. 31), the company had earnings of $4.44 billion and net loss of $73 million, with an adjusted earnings per share of $0.13. Wall Street consensus had been for revenue of $4.25 billion and earnings per share of $0.05.
The increased revenue was driven largely by the return of the NFL on Fox, combined with growth at the company’s streaming platform Tubi.
“It continues to be, at least for Fox, a robust advertising marketplace,” Fox CEO Lachlan Murdoch said on the company’s earnings call Wednesday morning, adding that demand and CPM (cost per thousand viewers) growth were up. Fox News and Fox Sports saw substantial growth as did the company’s local stations.
Revenue at the company’s television division was up eight percent year over year despite an unfavorable comp to the prior year, which was in the middle of the 2020 election cycle. Affiliate fee revenue totaled $1.7 billion in the quarter.
In local, sports betting was a key growth driver, Murdoch said. “Sports wagering revenue is our leading category of growth,” Murdoch said. “We have written over 50 percent more sports betting revenue in first half of this year than we saw in all of fiscal 2021.”
“Against the high bar we set in our fiscal second quarter last year, we have once again delivered revenue and Adjusted EBITDA growth in the second quarter of our 2022 fiscal year, while continuing to invest in our digital growth initiatives,” Murdoch added in a statement. “These strong results and broad-based operating momentum are underpinned by the most valuable news franchise in the country, the leading live sports franchise, our top broadcast network reinforced by a strategic stations portfolio, as well as the emerging leader in AVOD. This focused portfolio is delivering consistent growth for our shareholders in a thoughtful and disciplined manner.”
In fiscal Q1 Fox reported earnings of $3.05 billion and net income of $708 million, as well as $1.1 billion in ad revenue.
Digital investment was a significant factor in the quarter, with the company citing investment in Fox News Media’s digital offerings (which include Fox Nation and Fox Weather, which announced expanded distribution on Roku TV, YouTube TV, Xumo and Fubo this week) and investment in Tubi as key drivers of increased expenses. Sports content rights were also on the rise, with the MLB playoffs and the NFL both taking place in fiscal Q2.
“We chose to acquire and operate Tubi with the singular goal of winning in AVOD.” Murdoch said, adding that “there are no competing priorities internally.”
He also contrasted Tubi’s more measured content investment and focus on advertising with companies doing “multi-billion dollar content commitments in search of subscription growth.”
The earnings come ahead of Fox’s first-ever joint upfront event in May, when the company will sell Tubi, Fox News and Fox Sports programming alongside the Fox broadcast network.
“We will be selling our entire portfolio of assets,” Murdoch said. “We will be selling the entertainment network, news, sports, and Tubi, in a very integrated fashion, designed to capture our marketing partners’ money and advertising dollars in an efficient way.”
“What you are seeing across the marketplace is a softness in entertainment, in scripted entertainment ratings, not just for us but for all the broadcasters,” he added. “Due to that softness you are seeing major advertisers and marketers start to look at where they can capture consumers in other places. Where they are flowing to … is moving towards quite strongly is live news and live sports and, to a large extent, digital, which we are utilizing Tubi quite well.”
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