Ladies and gentlemen, thank you for standing by. Welcome to the Fox Corporation Third Quarter Fiscal Year 2024 Earnings Conference Call. [Operator Instructions]. As a reminder, this conference is being recorded. I'll now turn the conference over to Chief Investor Relations Officer, Ms. Gabrielle Brown. Please go ahead, Ms. Brown.

Thank you, operator. Good morning, and welcome to our fiscal 2024 3rd 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 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. And with that, I'm pleased to turn the call over to Lachlan.

Thank you, Gabby, and thanks, everyone, for joining us this morning. This quarter, FOX continued to distinguish itself from its peers delivering 7% EBITDA growth and demonstrating again the strength of our brands and the advantages of our strategy. This result is even more impressive when considering we are comping to last year's third quarter, which enjoyed a significant tailwind from Super Bowl 57. In the fiscal third quarter, total affiliate revenue fees grew 4% with positive growth at both our Television and Cable segments, driven by pricing benefits from our recent renewals. Headline advertising revenues were down during the quarter as expected, due to the absence of the Super Bowl and fewer NFL broadcast than in the prior year. If not for the difference in our NFL postseason schedule, our total advertising revenues would have increased a few percent. Overall, advertising trends at FOX are clearly moving in the right direction, both in the scatter market and in early upfront discussions. Demand for sports remains robust, while trends at FOX News are improving across the board, including the fact that we have now fully lapped the direct response market issue that had adversely impacted FOX News PR revenues. And while there wasn't much of a primary season this year, we do expect strong political advertising for national and local races as well as local ballot issues in the first half of our fiscal '25 which would largely benefit our station group. As we look to our annual upfront presentation next week, our focus on live content and must-watch events, such as the coming presidential election cycle and next year's Super Bowl combined with Tobi's position as the most watched free TV and movie streaming service will favor our enviable position with advertisers across the FOX portfolio. Operationally, FOX News…

Thanks, Lachlan, and good morning, everyone. FOX's strategy continues to deliver solid results. Even with the comparison to our blockbuster NFL schedule of the prior year, we posted total revenues of $3.45 billion and grew adjusted EBITDA by 7% to $891 million. Total company affiliate fee revenues grew 4% over the prior year with growth at both our Television and Cable segments, supported by a recent cycle of affiliate renewals. Reflecting the event-driven nature of our business, advertising revenues on a headline basis were down 34% as we compare against last year's broadcast of the Super Bowl, along with 2 less NFL playoff broadcasts in the current year quarter. As Lachlan just mentioned, if not for the impact of these NFL schedule items, total company advertising revenues would have grown low single digits. Total company other revenues were down 22% versus the prior year primarily the result of the timing of sports of licensing revenues, which were more weighted towards our fiscal second quarter this year. Total company expenses fell 21% year-over-year primarily a result of the NFL postseason schedule differences I just mentioned. Net income attributable to stockholders of $666 million or $1.40 per share compared to the net loss of $54 million or negative $0.10 per share reported in the prior year period. This year-over-year variance reflects the growth in EBITDA as well as the absence of last year's FOX News Media litigation charge and a current quarter book gain on the merger transaction of the USFL which is now being deconsolidated in connection with the formation of the United Football League. Excluding these and other non-core items, adjusted EPS was $1.09, up 16% against last year's $0.94. Now let's turn to our segment results. At Cable, revenues were $1.47 billion, down 6% from the prior year quarter,…

Great. Thanks, Steve. And now we will be happy to take questions from the investment community.

[Operator Instructions]. Your first question comes from the line of John Hodulik from UBS. Please go ahead.

Thank you, and good morning everyone. Strong growth again at Tubi. I guess a couple of questions on that. I mean, first, what's driving the growth in TVT? Any color you guys can provide on CPMs? Disney yesterday gave you a little color on some weakness in connected TV CPMs and then three, any color you can provide on dilution at Tubi and maybe how you guys view future profitability of that business? Thanks.

Thanks very much, John. So, let me -- I'll start. I'm not quite sure what I understand what you mean by dilution at Tubi, but let me start with the other two. The growth of Tubi continues to be incredibly strong. I think TVT growth comes from both new subscribers or new viewers finding the platform. As you'd be aware, we've very efficiently be marketing the platform to bring more people to it, and it's becoming a wider and wider known and loved brand in the marketplace. And the reason for that is we have -- we've talked about it on calls before, with 250,000 movies and television series, on the platform. And now over 250 in fact, I think, around 270 live fast channels on the platform, it really does offer a tremendous product for everyone who's utilizing it. But it's very interesting because of all those fast channels and all those 2,000 movies and TV series, 90% of the viewing comes on demand. And this is very important because when the viewing comes on demand and it's proactively on demand as opposed to passively sort of sitting back and watching our fast channel, that's much more valuable to advertisers. And it certainly is something that we're going to make a big deal about at our upfront presentations next week. So, because of that, we are very confident we can hold our CPMs at Tubi. We're already very efficient with our CPMs. I think some of our competitors priced themselves when they entered the AVOD market over the past 12 months to 18 months are very high, and we're seeing the marketplace then having to drop CPMs as new entrants add supply to the market. So that's affecting the market overall. It certainly has an impact on the market for advertising for Tubi. But from a CPM point of view, it's not really going to be a big impact to us. I should just say, though, that next quarter, we are going to be facing difficult comps in the fourth quarter. I think if you remember, this time last year, Tubi was up 47%, in revenue, and that's going to be a very difficult comp for us next quarter. So, there will be some headwinds for the whole marketplace, but from a comp point of view for Tubi as well in the next quarter. So that's just a slight word of caution.

Your next question comes from the line of Robert Fishman from Moffett. Please go ahead.

Good morning, everyone. Given all the press about the NBA negotiations underway, just curious if you can think a little bit as far as your broader sports rights go? And how do you think about the value of FOX Broadcast Network as you negotiate those future sports, right? And then the flip side of that is you feel like you're at a competitive disadvantage without your own SVOD service to compete for future rights? And then if I can, just separately, given all the M&A discussion in the industry, what are your latest thoughts on monetizing some of your strategic noncore assets like your FanDuel option and Studio Lot? Thank you.

Thanks, Roger. So, with the MBI, obviously, I can't sort of comment on other people's sort of negotiations and where that may or may end up. And in terms of how we think about it affecting the value of the FOX Network and our sports portfolio. We're very happy with our sports portfolio. We obviously look at -- but packages as they come up but we see them as a portfolio or a bouquet of sports rights that we have, and we feel very strong with the current portfolio that we have, which is one of the reasons why we didn't pursue the MBA in this round of negotiations. But I think it does go to the value of broadcast television because sports leagues still need reaches the -- is still incredibly important for them, for them to drive their fan bases, for them to get the maximum amount of viewership to their games and matches. And so, the value of the FOX Network and frankly, our strategically kind of our position station group to any sports league only increases over time is what we're seeing. And therefore, I don't think coming of second part of your question, I don't think we are strategically disadvantaged with not having a subscription video-on-demand service because we found in the past, we can partner with others. Well, frankly, the leagues to tend to partner with others, we can take the rights where we can broadcast to the most amount of Americans possible and they can allocate rights to SVODs as needed. But they're never going to be able to live entirely without a broadcast network and the broadcast distribution.

Yes. So, Robert, just in terms of the M&A picture, our posture on sort of what near-term noncore assets, like we're strong believers in the sports betting market in this country. We read with interest you all not to put $1 billion-dollar value on it. And so, it is now our intention is to see through and eventually exercise. And then the Studio Lot, we think, is a long-term asset for us. We have development plans for that. And so, we don't any change in posture around early monetization of those assets. We think they are incredibly valuable for the long term.

And I'd just remind you, it's not only the value of the option, but also the equity that we have in Flutter, which is today worth over $900 million.

Your next question comes from the line of Ben Swinburne from Morgan Stanley. Please go ahead.

Thanks. Good morning. Just sort of a question around kind of your products coming to market, the streaming JV and also maybe how Tubi might fit in, any more you can share with us on sort of what you think is really differentiated about the product? We haven't seen it yet, you have. And I noticed in the Disney deck yesterday that it says that a definitive agreement hasn't been signed yet. So, I didn't know if there was something holding it up or if that meant anything or any update on sort of the go-forward plan and then I'm wondering Tubi with its reach as an app-based service, is that an opportunity for maybe bundling the JV product or merchandising and in some way, you have a pretty interesting direct customer relationship with Tubi. I know it's a different kind of product offering. But I was curious if you thought about leveraging that asset or those two assets together to create more value for the company.

Thanks very much, Ben. So first of all, as I said, I've got actually in the room behind me, I've got the beta version of the streaming app and I don't think we've announced the name yet, so I won't inadvertently do it on this call. I hope not yet anyway. And -- but look, it's something that we've been able to engage with, and it is really looking tremendously exciting, as I said in my comments. It's very innovative. It's designed to be entirely focused on the cord nevers, cord cutters, people who are not in the cable bundle. And we frankly can't -- won't be able to compare it to a tier of live channels. It's a very different digital-first product which I'm -- when you eventually get it and get to enjoy it, you'll understand how groundbreaking certainly in this country, it really is. In terms of the speed, everyone are running at a sort of full pace to get the product finished and delivered. Obviously, there's the fun side of it, which is like the user interface and how you use it, which has been great to use, but there's a ton of work, obviously, in engineering behind that in ingesting content from multiple partners and being able to combine that into one sort of seamless platform. So, there's a tremendous amount of work that's being done to get them -- to get us over the line this autumn but we're incredibly excited. And so, there's no -- I wouldn't read anything into a final deal terms being signed. It's just a matter of everyone running on all cylinders to get this finished. So, on Tubi, sorry, the Tubi. We don't see Tubi is a very different product. We don't see an opportunity at this stage or we haven't contemplated an opportunity at this stage to bundle the sports service with Tubi. I think it makes potentially more sense to bundle sports with other SVOD services, which you'll likely see as we go forward.

Your next question comes from the line of Jessica Ehrlich from Bank of America. Please go ahead.

A couple of questions. First, on political advertising. Lachlan, you seem pretty confident that it will come back. But I guess the question is really -- will it come back to linear the way it has in the past and what's your overall outlook. Second, on M&A, you may have the strongest balance sheet in the industry. So, I was just wondering if you could explore what opportunities you see out there. There seems to be a lot of things going on in the industry. And then finally, just a follow-up on Tubi, which has I mean such incredible momentum you've really pulled away from certainly all the other fast channels and competing with the big SVOD channels or network platforms. What does it look like over the next three years or so?

Great. Thanks, Jessica. So on -- let me start with political. We are confident -- obviously we're disappointed for multiple reasons that there wasn't a more competitive primary season. But we certainly know this is an election which both sides of politics or all sides of politics are very focused on, have raised a tremendous amount of money, and that money will flow ultimately to local television. And we are extremely confident of that. One of the reasons we're confident in addition to the amount of money that we know has been raised are just a position of our stations -- specific stations within the group and how that aligns with the political map. If you look at the tight -- so putting aside presidential election focused [ph] on a call to talk about sort of national trends and people focus on presidential. But you have to look below presidential and look at sort of Senate races. So, we have tight center races in key markets where we have big stations. And you have to remember, Jessica, these are big new stations, right? And political money tends to run alongside news on local news. And so, there's tight races in Arizona, in -- these are presented in Michigan, ceratin Pennsylvania and in Wisconsin. And also, of course, our DC station will benefit from tight race in Maryland. In addition, you've got a lot of issues on the ballot in different markets. So, Arizona, Florida, I think Maryland again all have a lot of issue money flowing into those onto the ballot. So, we think it's going to be an incredibly strong political season. We're just starting later than we had first expected. And then you traditionally have -- when you have a primary -- more contested primers. So, we'll start…

Operator, we have time for one more question.

Okay. That question comes from the line of Michael Morris from Guggenheim. Please go ahead.

Thank you. Good morning, guys. Two questions, if I could. The first one is on the JV and some of your existing distribution partners have brought up concerns. It's in some way unfair to them for you to have a sports-only JV. It seems that you would disagree by virtue of the fact that you're moving forward. So, I'd love if you could address those concerns and whether you think there will be changes in the marketplace or whether you think those concerns are unfounded. And the second question, a bit more on the model, perhaps for Steve, television profit was, I think, notably strong in the quarter, given that on a year-over-year basis, you did not have the Super Bowl or those extra playoff games. So, can you maybe unpack a little bit? We would think that those types of events would be uniquely profitable so to show profit growth as you comp those challenges. I'd be curious if you could talk about sort of the sustainability and whether maybe we're overestimating how profitable those games are. Thank you.

Thanks, Mike. Well, let me start. So, on the sports joint venture and how we certainly view it and how we discuss it with our distribution partners. I think the first thing, and this is incredibly important to us is that we are wholly and fundamentally supportive of the traditional cable television bundle. It will continue to be, for a very long time, our number one revenue stream. And we are all in to support our distributors in every way we can in that bundle and supporting their subscribers and their business. So that's -- that is absolutely a fundamental fact for us. Having said that, we've always said it's important for us to put our brands where viewers are, right? And in the universe of sports fans that don't currently take a cable bundle, that is the universe that the sports joint venture will be entirely focused on and it's frankly important to us that because we are so invested in the Cable bundle, that the sports joint venture will be very targeted and very focused on the nontraditional Pay TV viewer universe. And we think we can very cleverly and very -- in a very targeted way market to those subscribers so that we minimize any cannibalization of the traditional subscribers. And so, we're very open with our distributors. We're very open with how important they are to us and also how -- because of that importance, how we can focus the sports joint venture and the errors that needs to be focused on.

Mike, it's Steve. Just in terms of television profitability. So, quarter-to-quarter, we were up close to $30 million. The way to think about it is the single biggest event was Super Bowl, which was a high tens of million dollars EBITDA contribution last year versus this year. But then you look at it this year to offset that, we grew affiliate fee in the segment by about $70 million. And so, one for the other basically is a push, TV was a push quarter-on-quarter in terms of EBITDA deficit there. And so, then what's left is the biggest EBITDA sort of driver of contribution when you look at it from a quarter-on-quarter perspective, is the change in entertainment programming costs, which was an ongoing push towards from scripted towards unscripted to get dollar cost per hour down without harming dealership as well as the impact of the strikes. And so that's -- there's a lot of other puts and takes in there, but there are sort of the big three things that driver.

At this point, we are out of time. But if you have any further questions, please give me or Charlie Costanzo a call. Thanks so much for joining us today.

Ladies and gentlemen, that does conclude your conference call for today. Thank you for using AT&T Executive Teleconference. You may now disconnect.