In a surprising turn of events, Fox Corporation has posted an unexpected increase in adjusted fiscal fourth-quarter earnings, captivating investors and analysts alike with its robust financial performance. The company reported adjusted earnings of $0.90 per share for the quarter ending June 30, up from $0.88 a year ago, exceeding the average consensus estimate of $0.81 compiled by Capital IQ.
Additionally, revenue for the quarter experienced a modest uptick of 2%, totalling $3.09 billion, slightly below Wall Street's projections of $3.1 billion, showcasing the company’s ability to adapt in a competitive industry. The overall revenue from affiliate fees, a significant source of income for the media giant, surged by 5%, largely fueled by growth within the television and cable segments, bolstered by a recent cycle of affiliate renewals as noted by Chief Financial Officer Steven Tomsic during an earnings conference call.
However, advertising revenue across the company remained flat. Tomsic pointed out that while initiatives like the "Summer of Soccer" campaign and growth in streaming service Tubi contributed positively, the overall ratings and pricing pressures faced by the Fox Network counterbalanced these gains. Tubi, Fox’s streaming service, reached impressive milestones, achieving a record of 81 million monthly active users, and saw an increase in total view time by 17%, attributed to an expanding library of content.
CEO Lachlan Murdoch emphasized Tubi's growth, indicating a strong demand for its offerings. Furthermore, audience engagement rose at the Fox News Channel during the fourth quarter, propelled by political coverage and a compelling PrimeTime lineup, bolstering the company’s position in the news segment. Looking at the full year, adjusted earnings per share experienced a slight decline, dropping to $3.43 from $3.51 the previous year.
However, this figure outperformed analysts' expectations, surpassing the Street's forecast of $3.30. Revenue for the entire fiscal year fell to $13.98 billion from $14.91 billion, also trailing Wall Street's estimates, which projected revenue of $13.99 billion. In a noteworthy move, Fox Corporation announced an increase in its semi-annual dividend to $0.27 per share from the previous $0.26, with payment scheduled for September 25, reflecting the company’s robust cash flow and commitment to returning value to shareholders.
Lachlan Murdoch assured analysts that the foundation for the upcoming fiscal year is solid, as the company is set to carry forward the momentum following fiscal 2024 into another year filled with significant events, particularly through its news and sports segments, which are expected to thrive despite prevailing economic challenges. In response to these financial results, Fox’s class A and B shares surged approximately 7% in Tuesday afternoon trading, reflecting renewed investor confidence in the company.
However, analysts at MoffettNathanson cautioned that a potential economic recession could influence the advertising cost per thousand impressions (CPM) across the industry. They noted that while Tubi may experience some impact from economic downturns, it remains largely insulated due to its lower CPMs in comparison to other streaming platforms and only accounting for a small portion of Fox's overall revenue. Regardless of the economic climate, MoffettNathanson projects that political advertising dollars will continue to flow into Fox News, asserting the significance of Fox's broadcasting sports content for advertisers.
This becomes increasingly vital in 2025, especially with the anticipation surrounding the Super Bowl broadcast, which promises to attract substantial advertising revenue. Stock prices have been buoyant, with Fox shares currently trading at $36.19, reflecting a change of +2.15, or a percent change of +6.32, showcasing strong market performance as the company navigates a landscape fraught with uncertainty..