Prepared remarks
Ladies and gentlemen, thank you for standing by. Welcome to the Fox Corporation Fourth Quarter Fiscal Year 2025 Earnings Conference Call. As a reminder, this conference is being recorded. I will now turn the conference over to Chief Investor Relations Officer, Ms. Gabrielle Brown. Please go ahead, Ms. Brown.
Thank you, Carly. Good morning, and welcome to our fiscal 2025 fourth quarter earnings call. Joining me on the call today are Lachlan Murdoch, Executive Chair and Chief Executive Officer; John Nallen, Chief Operating Officer; and Steve Tomsic, our Chief Financial Officer. First, Lachlan and Steve will give some prepared remarks on the most recent quarter, and 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, and 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 the 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. And with that, I'm pleased to turn the call over to Lachlan.
Thank you for joining us this morning as we discuss our fourth quarter and full year earnings results. Fiscal 2025 was another outstanding year for FOX, demonstrating our operational and financial strength across all businesses and marking our best year yet. We achieved a remarkable financial performance with 17% revenue growth to $16 billion, 26% EBITDA growth to $3.6 billion, adjusted EPS growth of 39% to $4.78 per share, and free cash flow growth of 100% to $3 billion, all of which set records for FOX. We also generated record political advertising revenue exceeding $400 million across the FOX platforms. Our broadcast of Super Bowl LIX broke viewership and advertising records, becoming the most watched telecast in U.S. history and generating over $800 million in gross advertising revenue. Engagement at FOX News led to a record audience share, reaching over 70% of the cable news audience at times during the year.
Our fiscal 2025 results were supported by a 26% increase in total advertising revenue to $7 billion. The momentum we reported in the first three quarters continued into the fourth quarter, with 7% growth over last year, despite the challenges posed by last year’s UEFA Euro and Copa America tournaments. Looking ahead to fiscal '26, the overall advertising market for FOX remains healthy and robust, as demonstrated by our recently concluded upfront where we achieved record-setting double-digit volume and strong pricing growth across our portfolio. The strength of our brands and our ability to engage audiences at scale across our platforms is exceptional, especially at FOX News, which remained the most watched cable network in total day and prime time. In the fourth quarter, total day audience increased 25% in total viewers and 31% in the demo, maintaining over 60% share of the cable news audience.
For the second consecutive quarter, FOX News was the second most watched network in Monday through Friday prime, trailing only one broadcast network. Beyond linear news, FOX News Digital achieved new records for engagement during the quarter, reaching over 1.5 billion YouTube views and over 3.7 billion social media video views, our highest levels ever. Engagement trends have started strong in this new year, with FOX News finishing as the highest-rated television network in America for July, significantly bolstered by must-watch programming. FOX Sports continued to assert its dominance, finishing first among all networks in live sports, fueled by a remarkable lineup of events, including an exciting Major League Baseball postseason, the launch of FOX COLLEGE FOOTBALL FRIDAYS, and the NFL on Fox. Our first showing of the Indianapolis 500 also saw tremendous success, averaging over 7 million viewers, up 41% from last year and marking the highest viewership in 17 years.
Live sports remain incredibly powerful, and our sports portfolio is increasingly sought after by advertisers and viewers alike. We expect this trend to continue as we move into autumn, welcoming back postseason baseball, the NFL, and College Football on FOX. Beginning August 30, FOX's Big Noon Saturday will kick off with a highly anticipated rematch between Texas and Ohio State. You will soon be able to enjoy our entire sports portfolio, alongside our news and entertainment programming, on FOX One, our direct-to-consumer streaming platform, launching across the U.S. on August 21 for $19.99 per month. While aimed at the cordless market, current pay TV subscribers will also have access to FOX One. We will offer bundling opportunities that align with our objectives. In fiscal 2025, Tubi achieved significant milestones, including being the most streamed Super Bowl ever, surpassing 100 million monthly active users, generating over $1.1 billion in revenue, and reaching a record 2.2% share of total U.S. television viewing.
Tubi's strong momentum continued into the fourth quarter with 17% growth in total view time and a 32% revenue increase, supported by favorable developments in our direct response and partner channels. Tubi's unique audience is attractive to advertisers looking to engage with the cordless market, leading to a year-on-year volume growth of over 35% during this year's upfronts while maintaining stable rates in a competitive connected TV market. Fiscal 2025 was a solid year for FOX, showcasing the effectiveness of our unique strategy, and there is more to come. We have always aimed to connect with our viewers in ways that suit them best. While we still favor the traditional cable bundle for its exceptional consumer value, Tubi addresses a vast market hungry for free premium content, and FOX One will cater to those seeking a paid targeted offering across FOX brands. These key elements of our distribution strategy provide us with the opportunity to reach the largest possible audience and will support our growth moving forward.
As we enter fiscal 2026, we have strong operational and financial momentum and anticipate another exciting year involving the launch of FOX One, renewing a portion of our distribution revenue, a healthy advertising landscape, and the FOX broadcast of the FIFA Men's World Cup later this fiscal year. To reinforce our confidence in our business trajectory, we are announcing a $5 billion increase to our share repurchase authorization. With our balance sheet stronger than ever, we plan to continue repurchasing shares while also investing in organic growth and remaining flexible to invest thoughtfully in new business opportunities.
Thanks, Lachlan, and good morning, everyone. With a strong fourth quarter, capping off and shaping up to be a strong year, FOX delivered record financial results in fiscal '25, with record total company revenues of over $16 billion, growing 17% year-over-year and record adjusted EBITDA of $3.6 billion, growing an impressive 26% year-over-year, converting to record free cash flow of $3 billion. Advertising revenues across the company were up 26%, with strong growth at both our Television and Cable Network Programming segments. This growth was driven by both our banner year of events, including record-breaking advertising revenues for both Super Bowl LIX and the Presidential election cycle as well as strength in our underlying core, highlighted by accelerating Tubi growth, robust news pricing and engagement growth, and very healthy advertiser demand for our sports programming. We successfully completed renewals with distributors, representing approximately one-quarter of our overall affiliate revenues this year, with the financial benefits of these renewals driving 5% growth in total company affiliate fee revenues, led by 7% growth at the Television segment.
Total company other revenues were up 47% year-over-year, driven by higher sports sublicensing revenues at our Cable Network segment. As we have previously mentioned, this growth in revenue was largely offset by a corresponding increase in rights costs with no material impact on year-over-year overall EBITDA growth. Total company expenses increased 14%, largely due to higher sports rights amortization and production costs, including costs associated with Super Bowl LIX and the sublicensing revenues I just mentioned. Net income attributable to stockholders was $2.3 billion or $4.91 per share, up versus the $1.5 billion or $3.13 per share reported in fiscal '24. Excluding noncore items, full year adjusted net income was $2.2 billion, and adjusted EPS was $4.78 per share, up 39% year-over-year. Turning to our fiscal fourth quarter, FOX delivered another quarter of impressive results, highlighted by a 6% increase in total revenues and 21% growth in adjusted EBITDA.
Our advertising revenues increased 7%, led by continued growth at Tubi and strong engagement and pricing at News. Total company affiliate fee revenues grew 3% over the prior year quarter, once again demonstrating the strength of our brands and focused portfolio of channels. Other revenues grew 33%, driven by higher content revenues. Net income attributable to FOX stockholders was $717 million or $1.57 per share as compared to the $319 million or $0.68 per share reported in the prior year period. Excluding noncore items, adjusted net income was $581 million, and adjusted EPS was $1.27, up 41% compared to the $0.90 per share recorded in the prior year. Now let's turn to the Q4 performance of our operating segments, starting with the Cable Network Programming segment, which delivered 7% revenue growth and 6% EBITDA growth. Cable advertising revenues grew 15% over the prior year, driven by the strength in FOX News engagement and supported by healthy national and direct response pricing.
Cable affiliate fee revenues grew 2% over the prior year period, as pricing gains from our affiliate renewals outpaced the impact from net subscriber declines, which were consistent with the prior quarter at under 7%. Cable other revenues grew 39%, led by higher Fox Nation subscribers. Revenue growth at the Cable segment was partially offset by a 7% increase in expenses, primarily attributable to an increase in sports rights amortization and production costs. Turning to our Television segment, which delivered 6% revenue growth. Advertising revenues at Television grew 3% over the prior year, led by continued growth at Tubi, which more than offset the tough comparison against the UEFA European championships and CONMEBOL Copa America in the prior year. Television affiliate fee revenues increased 4% in the quarter, as healthy growth in fees across both FOX owned and affiliated stations more than offset the impact from industry subscriber declines.
Television other revenues were up 34% year-over-year, primarily due to higher content revenues tied to our entertainment production studios. Expenses at the Television segment decreased 5%, primarily reflecting the absence of the prior year broadcast of the UEFA Euros. All in, EBITDA at our TV segment was $308 million, an increase of over 100% as compared to the prior year quarter. Turning to cash flow, where we generated robust quarterly free cash flow of nearly $1.4 billion. This strong quarterly free cash flow delivery is consistent with the seasonality of our working capital cycle, where the first half of our fiscal year reflects the concentration of payments for sports rights and the buildup of advertising-related receivables, both of which reverse in the second half of our fiscal year. Before we get to capital allocation and balance sheet, it is worth noting some key items for this coming fiscal year.
From an affiliate revenue perspective, in fiscal 2026, we have another relatively light year of renewals, with approximately one-quarter of our total company distribution revenues up for renewal. In fiscal '26, we expect to continue to invest in our digital-led growth initiatives. The excellent progress we have made at Tubi reinforces our confidence in Tubi's path to profitability, and its obvious asset value underscores the opportunity to drive ROI from our digital investments more broadly. Tubi delivered moderate improvement in profitability in fiscal '25, in line with the expectations we laid out at the start of the year, and we anticipate a more substantial improvement in Tubi profitability in fiscal '26, which will be weighted toward the second half of the year. This total improvement will support our initial incremental investment in new opportunities, including LatAm sports and, more notably, the launch of FOX One, which will be more concentrated in the first half of our fiscal year, as we launch this offering this month.
From a cyclical event perspective, we look forward to our broadcast of the 2026 FIFA Men's World Cup, which will span our fiscal fourth quarter of '26 and first quarter of '27. We are encouraged by the momentum we are already generating and expect this North American World Cup to drive strong results for FOX. And finally, as we look at free cash flow, the strong working capital tailwind from the Super Bowl in fiscal '25 will give way to working capital timing headwinds from the World Cup, where rights payments for the tournament will land in fiscal '26, while advertising receivables will be collected early in fiscal '27. In terms of capital allocation, in fiscal '25, we repurchased an additional $1 billion through our share buyback program and made approximate $245 million in dividend payments. As Lachlan mentioned, underscoring our commitment to return capital to shareholders, today, we announced both an incremental buyback authorization of $5 billion and an increase in our semiannual dividend to $0.28 per share.
With the payment of this dividend and taking into account share repurchase activity since year-end, we will have cumulatively returned $8.5 billion of capital to our shareholders since the spin. This includes $6.65 billion of share repurchases, representing 31% of our total shares outstanding since the launch of the buyback program in November 2019. This is all supported by the strength of our balance sheet where we ended the quarter with approximately $5.4 billion in cash and $6.6 billion in debt.
Thank you, Steve. And now we will be happy to take questions from the investment community.
Questions and answers
We have a question from Ben Swinburne with Morgan Stanley.
I'm going to ask Steve a question because I can't ask Lachlan a question. I'd be cruel. Hope you feel better. Steve, you gave us a lot of good color thinking about fiscal '26. I know you're not going to guide. I'm sure you also know that consensus is expecting like, I think, a 10% decline in EBITDA. Obviously, you lap political on the Super Bowl. But I don't know if your revenue trends have been this strong in a long time. So I'm just wondering if there's any way you can help us think about fiscal '26, maybe a little more specifically. One way might be just to talk about the sort of net drag on EBITDA from investment. If you sort of put it all together, all the puts and takes, that digital drag in '26 versus '25 or anything else you can tell us to help us think about your expectations for EBITDA in the year ahead.
Sure, Ben. Thank you for having Lachlan join us. There's a lot to consider for 2026. As we develop our plans for that year, we start with the strong foundation of the business's underlying momentum, especially regarding audience engagement and advertising demand in our sports and news sectors. From the affiliate revenue side, this upcoming fiscal year is rather modest, as only a quarter of our contracts are up for renewal. Our performance will largely depend on subscriber trends throughout the year. Looking ahead, there are several factors that will influence our results. We will face political challenges, particularly affecting the TV segment due to our stations, which will be most significant in the first and second quarters. For context, our stations generated $270 million in political revenue in the first half of fiscal 2025, so we anticipate competition there. The Super Bowl in the third quarter will negatively impact our ad revenues, even though it might balance out from an EBITDA standpoint.
In the latter part of the year, we have high expectations for FIFA in the fourth quarter and the first quarter of the next fiscal year. On the other hand, we expect a significant MLB season in the first and second quarters of fiscal 2025, hoping for a successful postseason, though that remains uncertain. Regarding our digital growth, at the beginning of fiscal 2024, we projected an EBITDA deficit of around $350 million to fund our digital initiatives. We anticipated that this investment requirement would decrease in fiscal 2025, and it has largely due to Tubi's improved profitability. So as we consider fiscal 2026, we expect Tubi to see considerable improvements in the latter half of our fiscal year, while we will also invest in areas like Latin America and Fox One in the first two quarters. Bringing all of this together, on a conservative basis, I would expect our overall investment strategy to trend back towards that $350 million level.
We have a question from John Hodulik with UBS.
I don't know if this is for Lachlan or maybe Steve can handle it, but just an update on the cable advertising trends and the efforts to sort of expand the advertising base and the receptivity you're getting from advertisers there. And then maybe, Steve, can you just follow up on the LatAm comments? Just what's the strategy there? I don't know if you can give us a sense of how much spending, but just what the plan is and the potential growth opportunities in LatAm.
Thanks, John. Regarding cable advertising trends, we will discuss this further later. There’s been significant positive momentum at FOX News, with strong advertising performance in both the upfront market and direct response. This success is primarily due to our impressive ratings. In the fourth quarter, our ratings for the P2+ demographic increased by about 25% across total day and prime time, with the 25 to 54 demographic performing even better, showing a 31% increase in total day and a 34% increase in prime time. This rating strength has contributed directly to a 25% rise in our advertising revenue. Looking ahead, we should note that last year we experienced a significant ratings boost due to notable events, but we have managed to sustain those ratings. However, the comparison will become more challenging moving forward. That said, as we start this first quarter, our share has slightly increased against our competitors.
In the total day P2+ demographic, we hold 64% of the cable news audience, while MSNBC has 21% and CNN has 15%. The primetime numbers are similar, and we are confident about maintaining our audience share and high ratings, which will translate into advertising revenue. Regarding Latin America, we are very optimistic about our acquisition of Caliente TV, a streaming service in Mexico. The FOX brand remains very strong in Mexico and Latin America, and we view this as an opportunity to grow with a modest investment in those markets. Steve, do you want to add anything?
In the quarter, Latin America has presented us with two aspects. We have successfully secured some sports rights there, which have influenced our profit and loss this fiscal year and this quarter, resulting in expenses in the low to mid-10s. Additionally, we recently acquired Caliente TV, providing us with a strong advantage as it already has an SVOD platform and distribution agreements in place. We anticipate some investment spending this fiscal year, but as we ramp up monetization, we expect to see those investments pay off.
We have a question from Michael Morris with Guggenheim.
Two, if I could, please. First, I just wanted to ask on Tubi. Appreciate the color and the strength you're seeing there. You're outpacing the broader CTV market pretty meaningfully. So I'd love to hear any detail on why you think you've been able to do that and how you feel about the ability to continue to beat the market in the coming year. And then just bigger picture. There's been some press reports that ESPN and NFL might enter an agreement that would give the NFL an ownership stake in ESPN. And I'm curious if you could comment at all on what that might mean for FOX Sports and your relationship with NFL or sports leagues more broadly.
Thank you, Mike. First, regarding Tubi, you are right. Tubi is performing well in the CTV market for several reasons we've mentioned before, including our core and ad technologies. Our library has now grown to over 300,000 movies and television titles, making it by far the largest in the country. Two-thirds of our users are outside the traditional cable bundle, making them cordless, which poses a challenge for advertisers. As a result, Tubi's engagement with users is extremely valuable and sought after by our clients. All these factors combine to make it an exciting product that we are pleased to see grow, and we expect this growth to continue. In the fourth quarter, we reported a 17% increase in total viewing time alongside a 32% revenue growth, marking our highest growth rate among all segments. Tubi now contributes approximately 25% of our upfront committed revenue, making it a substantial part of our business.
Compared to our competitors, we reach more cordless viewers. Furthermore, the Tubi audience tends to be younger, which we noticed during our Super Bowl broadcast earlier this year. The median age of viewers was 38, significantly younger and more female than the broadcast audience, with 40% of the audience aged between 18 and 34. Tubi played a key role in helping us achieve a record 128 million viewers for the Super Bowl, a feat that would not have been possible without Tubi's simulcasting. We are very excited about Tubi's prospects moving forward. Regarding the NFL and the speculated investment in ESPN, we have a strong relationship with the NFL. We value their support for our broadcast and cable networks, and we look forward to further strengthening our relationship as we progress.
We have a question from Michael Ng with Goldman Sachs.
I just wanted to follow up with Steve on the comments around the collective investments for fiscal '26. I think that implies at least $100 million to maybe $150 million of additional investments in LatAm and Fox One next year, just given the $50 million to $75 million improvement this year and the comments you made about Tubi profits further improving next year. I just wanted to ask, is that kind of like the ballpark of the incremental investment levels that we're talking about? And maybe you can just help frame some of the expected returns on those investments, whether that be for LatAm or FOX One subscribers to just give a little bit more transparency there.
Thanks, Mike. To address your calculations regarding our investments, when we analyze the overall impact on the profit and loss statement, our digital growth investments, which include Tubi along with initiatives like Nation and weather, total just under $300 million for fiscal year '25. As these businesses mature and improve, we plan to reinvest some of those gains into new projects, particularly FOX One and Latin America, which will help us reach the $350 million target. We will evaluate how to allocate this over the year. Regarding the expected return, Tubi serves as the best reference point since we have been investing there and are witnessing growth alongside opportunities for further investment. We're now at a stage where we can drive growth while seeing significant profitability improvements, which has been the trend over the past 3 to 4 years. I expect both Latin America and FOX One to follow a similar trajectory in terms of their investment profiles.
Can I just respond without using numbers? Part of your question has a non-numerical answer, specifically regarding FOX One, since it is the larger part of our new investment. It's essential to note that none of the funding for FOX One is directed towards original or exclusive programming for that platform. FOX One will include all of our current FOX content along with Fox Nation content in a tiered format. However, this does not involve any additional spending that is significant or long-term. Therefore, the new expenses related to FOX One, aside from some overhead and modest technology costs, primarily consist of marketing and launch expenses for FOX One. It's also crucial to remember that our expectations for subscribers to FOX One are modest, so our marketing expenditure is relatively low compared to our competitors, and we can adjust it based on how FOX One performs with respect to our modest goals. This context is important when considering the initial costs of launching FOX One, as well as the long-term sustainability and profitability potential of the business.
We have a question from Jessica Reif Ehrlich with Bank of America Securities.
I guess the first question is about your balance sheet. Even if you proceed with the newly announced buyback, you still have flexibility. The industry is clearly looking at mergers and acquisitions this year or next. How will FOX engage in this? Your investment needs, as you've outlined, are quite modest at $350 million. I'm curious if it seems like changes might occur as soon as next week. Also, regarding Latin America, I want to revisit something you mentioned about advertising from a broader perspective. You are clearly outperforming the market, and you've provided some insights into Tubi and FOX News. Overall, what are you observing in television?
Yes, Jessica. I apologize for coughing at the start of your question. Your first question was about our overall participation in M&A activities. The short answer is that we do not have any announcements to make at this time. We consider a wide range of opportunities, but we maintain a very high internal standard for how we use our capital. Consequently, we disregard any opportunity that we believe would not be a sensible use of our and our shareholders' capital. We are continually on the lookout for opportunities, but we haven't yet identified anything that meets our criteria for inorganic growth. Therefore, our current focus is on organic growth. Regarding the overall advertising market, sales across our business are very strong. We've previously discussed how the ad market we experience differs from what others in the sector may encounter. Our focus on specific segments—particularly live news, live sports, and our free streaming platform, Tubi—has put us in a fortunate position.
National ad sales have shown significant strength, driven largely by the pharmaceutical, financial services, and consumer packaged goods sectors. This was especially evident in the upfronts, where we experienced double-digit volume increases and solid pricing growth across all our businesses. We previously noted that FOX Sports achieved record-breaking upfront results, excluding the Super Bowl impact, with over $2 billion committed. Tubi also experienced a 35% volume increase while maintaining stable pricing. It's important to highlight the stable pricing on Tubi because the CTV market is highly competitive, yet Tubi has managed to compete effectively and gain a strong foothold. Even though the market is tough, it will continue to benefit from advertising dollars moving away from linear cable programming into digital formats, news, and sports. Our sports upfront sales were impressive and remain robust.
While this is just a single data point, we recorded extraordinary revenue for the Major League All-Star game, where demand exceeded supply for our advertising spots. The NFL and College Football are performing well, and there's significant demand for the FIFA World Cup coming later this year. As for news, we've noted that direct response pricing is up by 30%, while scatter pricing in news has risen by 54% compared to upfront pricing. Overall, things look very positive. The local advertising market is more mixed; there have been gains driven by the pharmaceutical sector, but these are countered by challenges in the telecom and restaurant sectors. Lastly, on the entertainment front, we see healthy growth with double-digit increases in scatter pricing. Overall, the advertising market is strong and is driving our momentum forward.
We have a question from Steven Cahall with Wells Fargo.
So first, Lachlan, sorry to make you speak, but you did mention that there could be some bundles coming for FOX One. I was just wondering how you think about different partners there. One partner has probably the most sports rights. There are some others who could be kind of complementary to your afternoon NFL package. And also how you think about sort of integrating apps versus just having them be sort of more pricing bundles for consumers. And then over on the TV side of things. The FCC has been much more vocal around, I think, what it's kind of expecting in terms of reverse comp and splits between networks and affiliates. Do you think things have changed in this outlook for your network business and your relationship with affiliates? And is there any meaningful financial impact we need to think about for the next couple of years from that?
Thanks, Steve. To begin with your question about FOX One and bundling, we plan to bundle FOX One with other services, and it will also be available as a standalone service for $19.99. When creating bundles, our goal is to provide consumers with the most convenient package of content and channels that they want to subscribe to. We aim to deliver valuable bundles while keeping FOX One focused on the cordless audience. Balancing these two objectives can be challenging. We want to ensure our content is easily accessible to our consumers and viewers, whether bundled with other services or not. You will see on the 21st that FOX One isn't merely a separate bundle of channels. Its user interface is innovative, highly personalized, and utilizes clever technology to offer something truly unique in the marketplace. We view FOX One as a combination of all our brands and content, presented through a modern and important user interface that is cutting edge.
Regarding the FCC and our affiliates, we are pleased that the new FCC leadership is supportive of local stations and competitive in their approach. This has introduced many fresh ideas to the regulatory environment, which we appreciate. We believe this will not negatively impact our affiliate relationships; in fact, it may enhance them. To connect the two topics, FOX One will uniquely integrate both our FOX content and our local affiliates' content. Our aim is for FOX One subscribers to access local sports and news, not only from our owned stations but also from our affiliate stations on the app. We are excited about this and are committed to supporting our local affiliate groups and independent stations, as it's an important position for us in the market.
Great. At this point, we're out of time. But if you have any further questions, please give me or Charlie Costanzo a call. Thanks again for joining us today.
Thank you.
Thanks, everyone. Thank you.
Ladies and gentlemen, that does conclude the Fox Corporation fourth quarter fiscal year 2025 earnings conference call. Thank you.