Business Context and Reporting Period
Company: Fox Corporation (FOX)
Filing Type: Form 10-Q (Unaudited)
Reporting Period: Quarter and nine months ended March 31, 2025 (Fiscal Q3 2025)
Business Overview: A news, sports, and entertainment company operating primarily through two reportable segments: Cable Network Programming and Television. The company also manages Credible (consumer finance) and the FOX Studio Lot within Corporate and Other.
Key Financial Metrics
| Metric (in millions) | Q3 2025 | Q3 2024 | 9M 2025 | 9M 2024 |
|---|---|---|---|---|
| Revenues | $4,371 | $3,447 | $13,013 | $10,888 |
| Net Income (Attributable to FOX) | $346 | $666 | $1,546 | $1,182 |
| Diluted EPS | $0.75 | $1.40 | $3.35 | $2.44 |
| Operating Cash Flow (9M) | $1,811 | $941 | $1,811 | $941 |
| Cash and Equivalents | $4,815 | $4,319 | $4,815 | $4,319 |
| Total Debt (Borrowings) | $7,201 | $7,197 | $7,201 | $7,197 |
| Adjusted EBITDA | $856 | $891 | $2,685 | $2,110 |
Material Changes vs. Prior Period
- Revenue Growth: Revenues increased 27% ($924M) in Q3 and 20% ($2.1B) for the nine months ended March 31, 2025. Growth was driven by a 65% surge in advertising revenue (Q3) due to Super Bowl LIX broadcast rights and political advertising, alongside higher affiliate fees.
- Profitability Decline (Q3): Net income attributable to stockholders dropped 48% ($320M) in Q3 2025 compared to Q3 2024. This was primarily due to a $155M loss on equity securities (Flutter Entertainment) and the absence of a $167M gain on asset sales recorded in the prior year.
- Profitability Growth (9M): Net income increased 31% ($364M) for the nine-month period, driven by higher Segment EBITDA and gains on equity investments, partially offset by legal settlement costs and the discontinuation of the Venu Sports joint venture.
- Segment Performance:
- Cable Network Programming: Revenues up 11% (Q3) and 20% (9M); EBITDA up 7% (Q3) and 15% (9M).
- Television: Revenues up 40% (Q3) and 22% (9M). EBITDA decreased 59% in Q3 due to high Super Bowl production costs but increased 78% for the nine-month period.
- Restructuring Costs: Restructuring, impairment, and other corporate matters totaled $55M in Q3 and $251M for the nine months, significantly higher than the prior year due to Venu Sports write-offs and legal settlements.
Guidance, Outlook, and Risks
- Capital Allocation: The company repurchased approximately 17 million shares for $750M during the nine months ended March 31, 2025. Remaining authorization is approximately $650M. A semi-annual dividend of $0.27 per share was declared.
- Debt Maturity: $600M of senior notes matured and were repaid in full subsequent to March 31, 2025. The company maintains a $1.0 billion unused revolving credit facility.
- Strategic Changes: The company discontinued the Venu Sports joint venture with Disney and Warner Bros. Discovery in January 2025, resulting in the write-off of capitalized costs.
- Legal Contingencies:
- Smartmatic Lawsuit: A defamation lawsuit seeking $2.7B remains pending; a trial is not expected until late 2025 or early 2026. The company believes the claim is without merit.
- Derivative Litigation: Stockholder derivative suits regarding election fraud coverage are ongoing; the court denied the motion to dismiss the amended complaint in December 2024.
- U.K. Newspaper Matters: Liability for indemnity related to phone hacking matters decreased to $45M as of March 31, 2025.
- Risk Factors: Key risks include declining MVPD subscriber counts, advertising expenditure volatility, regulatory changes, and the outcome of pending litigation.
Investor Verification Checklist
- Super Bowl Impact: Verify the sustainability of advertising revenue growth post-Super Bowl LIX, which drove a significant portion of Q3 revenue.
- Equity Investment Volatility: Monitor the fair value of the Flutter Entertainment investment, which caused a $155M loss in Q3 2025 but a $164M gain in the nine-month period.
- Legal Exposure: Track the status of the Smartmatic defamation lawsuit and the derivative litigation regarding election coverage, as potential liabilities are not currently estimable.
- Subscriber Trends: Review segment disclosures for continued declines in average subscriber counts across cable networks, which offset rate increases.
- Debt Servicing: Confirm the impact of the $600M debt repayment on liquidity and future interest expense.