Fox Corp. chief financial officer Steve Tomsic predicts the ad revenue from his company’s Tubi streaming service will soon surpass the ad revenue generated from its linear Fox broadcast entertainment network.
Tomsic told the Deutsche Bank Media, Internet and Telecom Conference on Tuesday during a virtual session that Tubi was expected to generate around $300 million in advertising revenue during Fox Corp.’s current fiscal year. “And over time, you’ll see the curves cross where the advertising revenue we earn on Tubi will exceed the advertising revenue we generate on the broadcast entertainment network,” Tomsic predicted.
He was quick to point out the broadcast network’s advertising revenue he cited excluded live sports ad sales, and was relegated to the entertainment networks. And Tomsic reiterated Fox Corp. expected with Tubi to prevail with its ad-supported streaming focus in a crowded subscription streaming arena dominated by Netflix where viewers pay a premium to watch TV fare without advertising.
To drive future growth for Tubi, Tomsic said his company was focused on total viewing time, which has grown, as that will feed into higher advertising revenue over time. Currently, Tubi relies on revenue sharing deals with programming partners.
Going forward, Tomsic said Tubi would license more movie and TV series product, and eventually create original series for the streaming service. “But I stress it’s going to be cost-effective,” he added.
Given viewer consumption on Tubi, Tomsic said originals would not be produced at the budget levels set for scripted series on rival platforms like Netflix and Hulu. Instead, he forecast Tubi would produce “cheap and cheerful titles” for the AVOD platform.
On the expenditure side, Tomsic said programming investment for Tubi would increase after costs and revenues for the streaming platform had been largely equal. “That’s not the intention of the business. We intend to absolutely invest in the growth of the business and you should expect us to take on deficits in the back half of the fiscal year as well as into future years,” he told investors.
Tomsic also said Fox Corp. would invest in more non-news programming for its Fox News Channel property on expanding digital platforms. That will include history and lifestyle programming, and more “high profile news programming” like Fox News primetime host Tucker Carlson developing new video projects for the channel’s Fox Nation streaming service.
“Just with the announcement of that, we’ve seen take up levels and consumption levels for Fox Nation go up,” Tomsic reported. Fox Nation initially launched as a hub for conservative commentary and a place for Fox super fans, but has more recently shifted its focus toward lifestyle programming, including cooking shows, travel programming and even scripted Christmas movies.