Fox Corporation Class A Common Stock 2026 Q4 Earnings Call

Thank you, Paulie. Good morning and welcome to our fiscal 2026 fourth quarter earnings call. Joining me on the call today are Lachlan Murdoch, Executive Chair and Chief Executive Officer, John Nallen, President and Chief Operating Officer, and Steve Tomsic, our Chief Financial Officer. First, Lachlan and Steve will give some prepared remarks on the most recent quarter. Then we'll take questions from the investment community. Please note that this call may include forward-looking statements regarding Fox Corporation's financial performance and operating results. These statements are based on management's current expectations. Actual results could differ from what is stated as a result of certain factors identified on today's call and in the company's SEC filings. Additionally, this call will include certain non-GAAP financial measures, including adjusted EPS and adjusted EBITDA, or EBITDA as we refer to it on this call.

Reconciliations of non-GAAP financial measures are included in our earnings release and our SEC filings, which are available in the investor relations section of our website. We also refer to free cash flow, which we define as net cash provided by operating activities less capital expenditures. With that, I'm pleased to turn the call over to Lachlan.

Thank you, Gabby. Thank you all for joining us today. Our fiscal 2026 was a notable year for Fox. We successfully launched our direct-to-consumer streaming service, FOX One, broadcast the FIFA Men's World Cup to record audiences in the U.S., continue to keep America informed through a dynamic and fast-moving news cycle, enhance Tubi's position as a leading streaming service. Announce the next chapter in Fox's digital evolution with our pending acquisition of Roku. These milestones were underpinned by a year of record financial performance. Revenue grew by 5% to over $17 billion, driven by record advertising and distribution revenue, while EBITDA grew 8% to a record $3.9 billion. These are excellent results, made even more impressive by comparison to the especially strong prior year, which benefited from the Super Bowl and the presidential election. We closed the year with outstanding top and bottom-line momentum.

Our fiscal fourth quarter total revenue increased 28% to $4.2 billion, and EBITDA improved 27% to $1.2 billion. On the distribution side, revenue in the fourth quarter increased 5%, supported in part by the strong momentum of FOX One, which continues to exceed our expectations. Advertising revenue during the quarter was notably strong, increasing 78%, with growth fueled by continued strength of Tubi, healthy advertising trends across the broader Fox portfolio, and our broadcast of the first stages of the 2026 FIFA Men's World Cup. At a time when audiences are increasingly fragmented, the World Cup demonstrated the unique power of Fox to deliver live premium sports that bring people together at scale. I am proud of what the team achieved through the broadcast of the entire World Cup across the entirety of Fox.

As we have shown time and again, we excel at mobilizing the whole company to deliver outstanding experiences for viewers, advertisers, and distributors. What is not explicit on screen or in the financial results is the intense amount of skillful work, preparation, promotion, production, marketing, and ad sales that goes on behind the scenes. We had thousands of colleagues directly involved in the production of all of our programming over the course of the tournament. We deployed all of our platforms, including the stations, the network, Fox Sports, Fox News, FOX One, Tubi, and our other digital assets to proactively drive record-breaking broadcasts from Fox. From the flawless simulcast of the opening matches on Tubi right through to the historic final, we brought the 104 matches and shoulder programming to American homes and watch parties like no other World Cup before.

The success of the World Cup led Fox to top all networks in live event sports consumption in fiscal 2026. A remarkable achievement, given that the next highest-rated broadcast network benefited from both the Super Bowl and the Winter Olympics. The tournament also proved to be a customer acquisition opportunity for FOX One, driving incremental subscriber acquisition and strong retention rates that surpassed our expectations. Importantly, through FOX One, we continue to see minimal cannibalization of our traditional pay TV business, reinforcing our strategy of targeting the cordless population, which has delivered meaningful additional distribution revenue across the company. We are a nimble, purposeful company, expert at delivering complex events at scale. We'll demonstrate this expertise again as we begin another broadcast season of the NFL on Fox starting next month. In advance of the season, we've had a recent, thorough, and productive discussions with the league.

As a result, we will not be making any amendments to our existing contractual relationship, which extends to the completion of the 2029 season. We'll be ready to engage with the NFL on the opt-out seasons and beyond at a date closer to the 2030 season, which has been the customary timetable. While our sports calendar had the most attention in the quarter, Fox News remained a leader in live news, finishing the quarter and the year as both the most-watched cable network in total day and in prime time, while continuing to reinforce its leadership position with market share levels well ahead of all of its competitors combined. This robust audience engagement, combined with the addition of another 400 new advertisers to the platform during the year, helped drive record revenue at Fox News Media in both the fourth quarter and the fiscal year.

Tubi delivered its most streamed and highest revenue quarter ever. Fourth-quarter revenue growth accelerated to 35%, fueled by a 17% increase in total viewing time. Tubi's World Cup hub attracted over 20 million viewers across the tournament, while additionally, the simulcast of two early-round matches generated two of the highest traffic days in the platform's history, in addition to promoting the tournament in the broadest way possible. That momentum helped Tubi close the fiscal year with 110 million monthly active users. Tubi and FOX One are the result of a successful strategy and skilled execution. Our pending acquisition of Roku is an extension of these. This transaction will bolster our position in connected TV distribution and advertising, which have compelling long-term growth profiles.

Fox has deep digital resources and skills, most notably seen in our consumer-facing products such as Tubi, FOX One, FOX Nation, and Fox News and Fox Sports Digital. We have developed these businesses across their growth path to become important digital brands. For example, when we acquired Tubi in its early stages, we have turned it into a leading streaming platform with 10 times the revenue from when we started. The addition of Roku to Fox will expand our digital footprint and offerings even further. Roku brings us streaming at scale through its open, partner-friendly platform that makes it a leading TV streaming platform in the U.S. Together, Fox and Roku combine premium live content, deep market relationships, scale distribution, and leading platform capabilities, including subscriptions, to respond to the evolving needs of consumers and advertisers.

I know I speak for Anthony in saying that we are eager to get that transaction closed and for our teams to get started. While we are only in the early approval process, the transaction is on track, and we expect closing in the first half calendar 2027. We have had an outstanding fiscal 2026, and fiscal 2027 is also off to an excellent start. The success of the World Cup, combined with the early stages of the midterm political cycle, has driven continued advertising momentum across our national, local, and digital portfolio during our fiscal first quarter. The healthy advertising environment we saw throughout fiscal 2026 has carried into the new year, culminating in one of the strongest upfronts in our history, with double-digit growth in volume.

These results underscore the strength of the Fox portfolio and our unmatched ability to deliver premium, highly engaged audiences at scale across linear, digital, and streaming platforms while also delivering sustained growth and shareholder value. I'll now turn it over to Steve to discuss the financials.

Thanks, Lachlan, and good morning, everyone. Fox has just delivered an exceptionally strong fiscal 2026, highlighted by record annual revenue of over $17 billion and record EBITDA of $3.9 billion. Advertising revenue across the company grew 7%, which is particularly noteworthy when measured against last year's Super Bowl LIX and presidential election cycle. This growth was led by our broadcast of the 2026 FIFA Men's World Cup, along with continued growth at Tubi. Despite it being a relatively light year of renewals, distribution revenue increased 4%, led by 5% growth at our cable segment. Content and other revenue was up 4%, primarily due to higher sports sublicensing revenue at our cable segment. Total expenses increased 4%, mainly a result of World Cup rights and production costs, Fox One first-year costs, and higher digital content costs.

Net income attributable to stockholders was $1.7 billion or $3.84 per share as compared to the $2.3 billion or $4.91 per share reported in fiscal 2025. Excluding non-core items, full-year adjusted net income was $2.4 billion and adjusted EPS was $5.42 per share, up 13% compared to the $4.78 per share reported in the prior year. Our financial delivery has been strong throughout fiscal 2026, and we ended the year with tremendous momentum with our fiscal fourth quarter results headlined by 28% growth in total revenue and 27% growth in EBITDA. This was driven by a 78% increase in advertising revenue, primarily a result of this year's broadcast of the World Cup and accelerating growth at Tubi. Distribution revenue grew 5%, once again demonstrating the strength of our brands and focused portfolio of channels.