Business Context and Reporting Period
Company: Fox Corporation (FOX)
Filing Type: Form 10-Q (Unaudited)
Reporting Period: Quarter and six months ended December 31, 2024 (Fiscal 2025 Q2)
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) | 3 Months Ended Dec 31, 2024 | 6 Months Ended Dec 31, 2024 |
|---|---|---|
| Total Revenues | $5,078 | $8,642 |
| Net Income (Attributable to Stockholders) | $373 | $1,200 |
| Diluted EPS | $0.81 | $2.59 |
| Adjusted EBITDA | $781 | $1,829 |
| Cash and Cash Equivalents | $3,322 | $3,322 |
| Total Borrowings | $7,200 | $7,200 |
| Net Cash Used in Operating Activities | N/A | $(204) |
Material Changes vs. Prior Period
- Revenue Growth: Revenues increased 20% ($844 million) for the quarter and 16% ($1.2 billion) for the six months compared to the prior year. Growth was driven by higher affiliate fees, political advertising revenue (2024 elections), and sports programming (MLB postseason, NFL pricing).
- Profitability Surge: Net income attributable to stockholders rose 242% for the quarter ($373M vs $109M) and 133% for the six months ($1.2B vs $516M). This was significantly aided by a $314 million gain in "Non-operating other, net" (primarily fair value gains on equity investments) compared to a $205 million loss in the prior year.
- Segment Performance:
- Cable Network Programming: Revenues up 31% (quarter) and 24% (six months); EBITDA up 16% and 20% respectively.
- Television: Revenues up 16% (quarter) and 14% (six months); EBITDA improved from a loss of $138M to a profit of $205M in the quarter.
- Restructuring Costs: "Restructuring, impairment and other corporate matters" increased significantly to $170 million for the quarter (vs $18M prior year) and $196 million for the six months (vs $9M prior year). This includes costs related to the discontinuation of the Venu Sports joint venture and legal settlements.
Outlook, Risks, and Unusual Items
- Venu Sports Discontinuation: On January 10, 2025, Fox, Disney, and WBD announced the decision to discontinue the Venu Sports joint venture. Fox expensed previously capitalized costs and recorded an $80 million portion of a $220 million settlement payment to FuboTV in the quarter ended December 31, 2024.
- Legal Contingencies:
- Smartmatic Lawsuit: Ongoing defamation lawsuit seeking $2.7 billion. Trial not expected until mid-to-late 2025. Loss is not considered probable or estimable.
- Derivative Litigation: Stockholder derivative suits regarding election fraud coverage were not dismissed by the Chancery Court in December 2024.
- U.K. Newspaper Matters: Liability recorded at $70 million as of December 31, 2024.
- Capital Allocation: The company repurchased approximately 12 million shares for $500 million during the six months ended December 31, 2024. Approximately $900 million remains under the current repurchase authorization. A semi-annual dividend of $0.27 per share was declared subsequent to the period end.
- Liquidity: The company maintains $3.3 billion in cash and an unused $1.0 billion revolving credit facility. Credit ratings remain investment grade (Baa2/BBB).
Investor Verification Checklist
- Non-GAAP Reconciliation: Verify the impact of the $314 million non-operating gain on equity investments (Flutter Entertainment) on net income versus core operating performance.
- Venu Sports Impact: Confirm the full extent of capitalized costs expensed and the finality of the $80 million settlement payment.
- Legal Exposure: Monitor the status of the Smartmatic lawsuit and the derivative litigation regarding election coverage, as potential liabilities are currently unquantified.
- Subscriber Trends: Review the offsetting factors in affiliate fee revenue (higher rates vs. lower subscriber counts) to assess long-term linear TV trends.
- Debt Maturity: Note the $600 million senior notes due in April 2025 and ensure refinancing or repayment plans are clear.