Business Context and Reporting Period
Company: Fox Corporation (FOX)
Filing Type: Form 10-Q (Unaudited)
Reporting Period: Quarter and nine months ended March 31, 2026 (Fiscal Q3 2026)
Business Overview: A news, sports, and entertainment company operating through two reportable segments: Cable Network Programming and Television. Corporate and Other includes the newly launched FOX One streaming service, Credible, and the FOX Studio Lot.
Key Financial Metrics
| Metric (in millions) | Q3 2026 | Q3 2025 | 9M 2026 | 9M 2025 |
|---|---|---|---|---|
| Revenues | $3,994 | $4,371 | $12,914 | $13,013 |
| Net Income (Stockholders) | $166 | $346 | $994 | $1,546 |
| Diluted EPS | $0.38 | $0.75 | $2.24 | $3.35 |
| Adjusted EBITDA | $954 | $856 | $2,711 | $2,685 |
| Cash & Equivalents | $3,601 (as of Mar 31, 2026) | |||
| Total Borrowings | $6,605 (as of Mar 31, 2026) | |||
| Operating Cash Flow (9M) | $1,103 | $1,811 |
Material Changes vs. Prior Period
- Revenue Decline: Q3 revenues decreased 9% ($377M) and 9M revenues decreased 1% ($99M). The decline was driven primarily by lower advertising revenue due to the absence of Super Bowl LIX (broadcast in Feb 2025) and lower political advertising from the 2024 election cycle.
- Profitability Impact: Net income attributable to stockholders dropped 52% in Q3 and 36% over 9M. This was significantly impacted by a $499M loss in "Non-operating other, net" for Q3 2026, primarily due to a decrease in the fair value of the company's investment in Flutter Entertainment.
- Segment Performance:
- Cable Network Programming: Revenues increased 6% (Q3) and 5% (9M) driven by higher distribution rates and sports sublicensing.
- Television: Revenues decreased 19% (Q3) and 6% (9M) due to the Super Bowl absence, though Segment EBITDA improved significantly due to lower sports programming costs.
- Corporate & Other: Revenues increased due to the launch of FOX One, but EBITDA declined due to launch costs.
- Capital Allocation: The company repurchased approximately 31 million shares for $1.9 billion during the first nine months of fiscal 2026, including a $1.5 billion accelerated share repurchase (ASR) transaction.
Guidance, Outlook, and Risks
- Outlook: Management does not provide specific numerical guidance in this filing but notes that operating results for interim periods are not necessarily indicative of full-year results. The company expects to continue paying semi-annual dividends ($0.28 per share declared for Q3).
- Strategic Initiatives: Continued investment in digital growth (Tubi AVOD) and the launch of the FOX One direct-to-consumer streaming service (launched August 2025).
- Key Risks & Contingencies:
- Legal Proceedings: Ongoing litigation regarding defamation claims (e.g., Smartmatic lawsuit seeking $2.7B) and derivative lawsuits regarding election fraud coverage. Management believes losses are not probable or estimable for the Smartmatic case.
- Investment Volatility: Significant exposure to fair value changes in equity securities, specifically the investment in Flutter Entertainment, which caused substantial non-operating losses in the current period.
- Regulatory & Market: Risks related to MVPD subscriber declines, advertising market shifts, and potential changes in tax or communications laws.
Investor Verification Checklist
- Flutter Investment Valuation: Verify the magnitude and drivers of the $496M unrealized loss on equity securities in Q3 2026 and its impact on future earnings volatility.
- FOX One Economics: Monitor the trajectory of FOX One subscriber growth versus the high launch costs currently depressing Corporate & Other EBITDA.
- Advertising Recovery: Assess the sustainability of advertising revenue recovery post-Super Bowl and post-election cycles, particularly in the Television segment.
- Share Repurchase Capacity: Confirm remaining authorization ($3.5B as of March 31, 2026) and the pace of future buybacks given the $1.9B spent in the first nine months.
- Legal Exposure: Review updates on the Smartmatic defamation lawsuit and derivative litigation, as outcomes could materially affect financial condition.