Fox Corporation (NASDAQ:FOX) has reported its financial results for the fiscal year ended June 30, 2024. The company achieved annual net income of $1.239 billion, annual revenue of $14.913 billion, annual operating cash flow of $1.8 billion, and annual free cash flow of $1.443 billion.
Financials
In the latest quarter, the company reported total revenues of $3.447 billion, a decrease of 16% compared to the prior year period. This decline was primarily driven by lower advertising and other revenues, partially offset by higher affiliate fee revenue. Segment EBITDA, the company's primary measure of operating performance, increased 7% to $891 million.
Cable Network Programming
The Cable Network Programming segment generated revenues of $1.472 billion, down 6% year-over-year, while EBITDA increased 3% to $819 million. The decrease in revenues was due to lower advertising and other revenues, partially offset by higher affiliate fee revenue. The improvement in EBITDA was driven by lower expenses, primarily due to the timing of sports programming rights amortization and lower costs at FOX News.
Television
The Television segment reported revenues of $1.938 billion, down 22% compared to the prior year quarter. However, EBITDA increased 24% to $145 million. The decrease in revenues was primarily attributable to lower advertising revenue, which was impacted by the absence of the Super Bowl and fewer NFL playoff games. The increase in EBITDA was driven by lower expenses, including reduced sports and entertainment programming costs.
Other, Corporate and Eliminations
The Other, Corporate and Eliminations segment, which includes the FOX Studio Lot, Credible, and corporate overhead, reported revenues of $37 million and EBITDA of negative $73 million.
Liquidity
Fox Corporation maintains a strong balance sheet, ending the quarter with $3.8 billion in cash and cash equivalents and $7.2 billion in gross debt. The company's robust financial position provides flexibility to pursue strategic initiatives and return capital to shareholders.
During the quarter, the company repurchased $300 million of its Class A common stock, bringing the total cumulative buyback activity since the program's inception in 2019 to $5.4 billion, or 26% of the company's total shares outstanding. Additionally, the company paid a semi-annual dividend of $0.26 per share on both its Class A and Class B common stock.
Business Overview
Fox Corporation is a diversified media and entertainment company, operating in three primary segments: Cable Network Programming, Television, and Other, Corporate and Eliminations. The company's portfolio of iconic brands, including FOX News, FOX Sports, and Tubi, positions it as a leader in news, sports, and entertainment content.
In the Cable Network Programming segment, the company's flagship network, FOX News, continued to solidify its position as the most-watched cable news network, further strengthening its leadership across various dayparts. The segment's EBITDA growth was driven by lower expenses, partially offset by declines in advertising and other revenues.
The Television segment benefited from higher affiliate fee revenues, which offset the impact of lower advertising revenues due to the absence of the Super Bowl and fewer NFL playoff games. The segment's EBITDA growth was supported by reduced programming costs, including the impact of the industry labor disputes.
Outlook
Looking ahead, the company is optimistic about its prospects. Lachlan Murdoch, the company's Executive Chair and Chief Executive Officer, highlighted the strength of the company's brands and the advantages of its strategy, noting that "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."
The company is also excited about the launch of its new sports-focused digital distribution platform, a joint venture with Disney and Warner Bros. Discovery. Murdoch described the platform as "an incredibly exciting product" and expressed confidence in its potential to serve the growing segment of sports fans outside the traditional TV bundle.
Risks and Challenges
While Fox Corporation has demonstrated resilience, the company faces several risks and challenges inherent to the media industry. These include evolving consumer preferences and the shift towards digital platforms, increased competition from streaming services, and potential regulatory changes that could impact the company's operations.
Additionally, the company's reliance on sports programming rights and the cyclical nature of political advertising revenues introduce volatility to its financial performance. The company must also navigate the ongoing industry-wide labor disputes and their potential impact on content production.
Conclusion
Fox Corporation's financial performance, underpinned by the strength of its iconic brands and strategic initiatives, positions the company to navigate the evolving media landscape. The company's robust balance sheet, disciplined capital allocation, and focus on delivering must-watch content across its platforms suggest a promising outlook for long-term shareholder value creation.