FOX — Fox Corporation

FOX Corporation Q2 2026 Earnings Call Summary

1. Key Financial Results and Metrics

• Total Revenues: $5.18 billion, up 2% year-over-year.
• Distribution Revenue: Grew 4%, with improved subscriber declines.
• Advertising Revenue: Increased by 1%, despite tough comparisons to last year's political cycle.
• Adjusted EBITDA: $692 million, down from $781 million in the prior year.
• Net Income: $229 million ($0.52 per share), compared to $373 million ($0.81 per share) in the prior year.
• Adjusted Net Income: $360 million; adjusted EPS at $0.82.
• Free Cash Flow: Deficit of $71 million, consistent with seasonal working capital cycles.
• Share Buyback: $1.8 billion repurchased year-to-date, totaling $8.4 billion since the program's inception.

2. Strategic Updates and Business Highlights

• Advertising Strength: Continued robust demand, particularly in news and sports, with Fox News Media achieving its highest second-quarter advertising revenue ever.
• Fox One Performance: Launched five months ago, showing strong consumer reception and engagement, with no significant cannibalization of traditional subscribers.
• Tubi Growth: Achieved record viewer engagement and revenue growth of 19%, with EBITDA profitability for two consecutive quarters.
• Sports Viewership: Record-breaking ad revenue from major sports events, including the MLB postseason and NFL games, with strong upcoming events like the FIFA Men's World Cup.
• Fox News Digital: Saw a 170% increase in social media views year-over-year, maintaining its leadership position in cable news.

3. Forward Guidance and Outlook

• Political Advertising: Anticipated robust political ad spending in the upcoming midterm elections, expected to benefit local station groups.
• Subscriber Growth: Aiming for low to mid-single-digit millions of Fox One subscribers over the next few years, with proactive marketing strategies for upcoming sports seasons.
• Continued Investment: Commitment to content and talent acquisition in the entertainment sector, with a focus on maintaining a balanced programming strategy.

4. Challenges and Points of Concern

• Adjusted EBITDA Decline: Despite revenue growth, higher expenses related to digital initiatives and sports programming impacted profitability.
• Subscriber Declines: While improving, the cable subscriber base still faces challenges, with a reported decline of 6.3%.
• Entertainment Revenue: Content and other revenues down 19% year-over-year, primarily due to lower entertainment production revenues.
• Competitive Pressures: The advertising market remains competitive, particularly with the emergence of new players in the streaming and digital space.

5. Notable Q&A Insights

• Advertising Market Strength: New advertisers are entering the news segment, with significant demand across categories like financial services and pharmaceuticals.
• Fox One's Positioning: Management remains optimistic about Fox One's growth and its integration into the overall business strategy, emphasizing its appeal to both sports and news audiences.
• NFL Cost Increases: While costs are expected to rise with new contracts, management believes they can offset these through strategic portfolio management.
• Skinny Bundles: Management views skinny bundles positively, believing they will benefit Fox's distribution strategy by allowing flexibility for distributors while retaining bundled offerings.
• Political Advertising Trends: Anticipated growth in political ad spending, particularly in local markets, with expectations that Tubi will capture a share of this revenue.

Overall, FOX Corporation demonstrated solid financial performance in Q2 2026, driven by strong advertising revenue and strategic initiatives, while also facing challenges related to profitability and subscriber trends. The outlook remains positive, particularly with upcoming sports events and political advertising opportunities.