Business Context and Reporting Period
Company: Fox Corporation (FOX)
Filing Type: Form 10-Q (Unaudited)
Reporting Period: Quarter and six months ended December 31, 2025 (Fiscal 2026 Q2)
Business Overview: A news, sports, and entertainment company operating primarily 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) | Q2 2025 (3 Months) | Q2 2024 (3 Months) | YTD 2025 (6 Months) | YTD 2024 (6 Months) |
|---|---|---|---|---|
| Revenues | $5,182 | $5,078 | $8,920 | $8,642 |
| Operating Expenses | $(3,895) | $(3,776) | $(5,979) | $(5,794) |
| Net Income (GAAP) | $247 | $388 | $856 | $1,220 |
| Net Income Attributable to Fox | $229 | $373 | $828 | $1,200 |
| Diluted EPS | $0.52 | $0.81 | $1.85 | $2.59 |
| Adjusted EBITDA | $692 | $781 | $1,757 | $1,829 |
| Cash and Equivalents (End of Period) | $2,017 | $3,322 | $2,017 | $3,322 |
| Total Borrowings | $6,604 | $6,602 | $6,604 | $6,602 |
Material Changes vs. Prior Period
- Revenue Growth: Total revenues increased 2% ($104 million) for the quarter and 3% ($278 million) year-to-date. Growth was driven by higher distribution rates and advertising pricing, partially offset by lower subscriber counts and the absence of 2024 election-related political advertising.
- Profitability Decline: Net income attributable to stockholders decreased 39% ($144 million) for the quarter and 31% ($372 million) year-to-date. The primary driver was a $280 million loss on investments in equity securities (primarily Flutter Entertainment) compared to a $319 million gain in the prior year.
- Segment Performance:
- Cable Network Programming: Revenues up 5% and Segment EBITDA up 5% due to higher news/sports pricing and distribution rates.
- Television: Revenues flat/down slightly; Segment EBITDA down 30% ($62 million) due to higher sports production costs (MLB/NFL) and lower content revenue timing.
- Corporate and Other: EBITDA loss widened significantly due to marketing and content costs associated with the August 2025 launch of the FOX One streaming service.
- Cash Flow: Net cash used in operating activities increased to $799 million (vs. $204 million used prior year) due to lower political ad receipts and higher sports payments. Net cash used in financing activities surged to $2.14 billion, driven by $1.8 billion in share repurchases.
Guidance, Outlook, and Risks
- Capital Allocation: The Board authorized an additional $5 billion in stock repurchases, bringing the total authorization to $12 billion. Approximately $3.6 billion remains available as of December 31, 2025. The company completed an Accelerated Share Repurchase (ASR) of $1.5 billion in October 2025.
- Dividends: A semi-annual dividend of $0.28 per share was declared subsequent to the period end, payable March 25, 2026.
- Strategic Initiatives: FOX One, the direct-to-consumer streaming service, launched in August 2025. Costs associated with this launch are currently impacting Corporate and Other segment margins.
- Legal Contingencies:
- Smartmatic Lawsuit: A $2.7 billion defamation claim is ongoing; summary judgment motions were argued in December 2025. The company believes the claim is without merit but cannot estimate potential loss.
- FOX News Allegations: Ongoing litigation regarding sexual harassment and discrimination; management does not anticipate a material adverse effect.
- Derivative Litigation: Shareholder lawsuits regarding election fraud coverage are ongoing in Delaware Chancery Court.
- Risk Factors: Key risks include declining MVPD subscriber counts, failure to renew sports rights on favorable terms, and the competitive digital advertising landscape.
Investor Verification Checklist
- Investment Volatility: Verify the impact of the Flutter Entertainment investment valuation on future earnings, as fair value changes caused a significant swing in net income.
- Streaming Economics: Monitor the trajectory of FOX One subscriber growth versus the high initial marketing and content costs impacting the Corporate segment.
- Legal Exposure: Track the status of the Smartmatic summary judgment ruling and any potential settlement discussions.
- Shareholder Returns: Confirm the pace of the remaining $3.6 billion stock repurchase authorization and the sustainability of the dividend given the cash burn from operating activities.
- Sports Rights Renewals: Assess the cost implications of upcoming renewals for major sports properties (NFL, MLB, International Soccer) which drove operating expense increases.