Ladies and gentlemen, thank you for standing by. Welcome to the Fox Corporation Fourth Quarter 2020 Earnings Conference Call. [Operator Instructions]. I'll now turn the conference over to Chief Investor Relations Officer and Executive Vice President of Corporate Initiatives, Mr. Joe Dorrego. Please go ahead, sir.

Thank you, Noah. Hello, and welcome to our fiscal 2020 year-end earnings call. Joining me on the call today are Lachlan Murdoch, Executive Chairman 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 fiscal year and most recent quarter, and then we'll take a couple of questions from the investment community. Please note that this call may include forward-looking statements regarding Fox'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 both available in the Investor Relations section of the website. And with that, I'm pleased to turn the call over to Lachlan.

Thanks, Joe. Good afternoon, and thanks, everyone, for joining us today to discuss our fourth quarter results and to reflect on our first full fiscal year as new Fox. I know a lot of you on the phone have had a long day and have just come from another earnings call, so we will try to keep this as tight and as brief as possible. I doubt any of us consider 2020 a great calendar year. It's been extraordinarily difficult on our businesses, on our health and on our families. I'm sure it's a year we would all like to be through and done with, and we will be soon. But looking back on Fox's 2020 fiscal year is another story. Our fiscal year has been extraordinary, not because of COVID-19, but in spite of it, our 2020 fiscal year has shown off the strength of Fox, the logic of our strategy and the resilience of our business model and of our teams. To that last point, I would like to acknowledge the outstanding work and dedication of my Fox colleagues across the country. They too are extraordinary. Without them, there would be no sport, no news and no entertainment on our platforms and stations. What together we achieved last year was remarkable. I'd like to first give FOX Sports a shout out for an incredible year, which saw the brilliant broadcast of both the historic 7-game World Series and an exciting Super Bowl LIV, watched by over 100 million people. Of course, not long after the Super Bowl in Miami, sport was shut down. But the team at FOX Sports never stopped working to bring NASCAR, baseball and eventually football back into America's living rooms. On our last earnings call, I said, like the rest of America, we can't…

Thanks, Lachlan, and good afternoon. Despite the broader macroeconomic factors affecting our businesses, as Lachlan just highlighted, our first fiscal year as a stand-alone public company demonstrates that we are delivering on the strategies that we outlined at the time of the spin and that truly differentiate Fox. Let me now take you through our financial results for the fiscal year as well as the fourth quarter. I'll also take a few minutes to review the key investments we've made since the spin, before concluding with some financial markets for the months ahead. Our full year results saw total revenues increased 8% to $12.3 billion. This revenue growth was broad-based and led by affiliate revenue growth of 7% on the back of retransmission revenue increases at the television segment. We delivered this industry-leading affiliate revenue growth, despite an uptick in the rate of net subscriber declines. Using fiscal '19 as a base, we renewed 70% of total affiliate revenue in fiscal '20. Looking forward, the renewal profile in the immediate future is significantly lighter, with around 5% of total fiscal '20 affiliate revenue due for renewal in each of fiscal '21 and '22. Full year advertising revenues increased 5%, led by our broadcast of Super Bowl LIV. Partially offsetting this growth was the impact of COVID-19 in recent months. As we foreshadowed in May, the impact was most pronounced at our local television stations as well as FOX Sports due to the postponement of live events and at FOX Entertainment as new scripted programs were held back for our fall schedule. We also increased other revenues nearly 30%, primarily through the consolidation of Bento Box at the television segment beginning in August and the consolidation of Credible in our other segment beginning in October. Total full year adjusted EBITDA was…

Thank you, Steve. And now we would be happy to take a few questions from the investment community.

[Operator Instructions]. We have a question from Benjamin Swinburne with Morgan Stanley.

I will limit myself to one question. I was wondering if you guys could talk a little bit more about sports betting? You've obviously talked about The Stars Group investment, and we followed that, and that's been a very successful one. But this appears to be a market that's really booming in the states, even with COVID, and the prospects are quite optimistic. So I'm just wondering how you think about taking advantage of that opportunity even more than you already have? Are there things you're doing strategically with your partners or even on the FOX Network to sort of really lean in to sports betting to make it a bigger part of the business and a part of the story?

Thanks, Ben. So look, we -- I think we agree with you, from what it sounds like, and that we are big fans of the sports betting opportunity. Every projection is that it will be a several billion-dollar industry in the medium to long term. And everything we've seen to date not only reinforces that, but I think makes us believe it could be even larger than that. I think we feel today very well positioned both in having the joint venture in Fox Bet, which we -- as Steve mentioned, we have the option to go to 50% ownership of, depending on licensing. But we also have the 18.5% option to buy into the FanDuel. So we effectively have 2 dogs in the race, and we think that puts us in a great position. Moving forward, obviously, we have to see how the states open up from a regulatory point of view and as we move into each market. It's not necessarily the case that you'll have FanDuel and FOX Bet in all the same markets. For example, we found in FOX Bet the best markets for us, and we've just opened in Colorado, a market that have both sports betting but also gaming licenses. When you think about the funnel sort of monetize the customer -- the consumer, we'd start with a FOX Bet Super 6 as a free-to-play game. Those people, some of them will move through the funnel into our sports betting, the FOX Bet app or the FanDuel experience. And then a subset of those will actually go into our gaming environment, when there's no sports betting being played. So look, we think the opportunity is huge and is something that we'll continue to spend time on to drive -- to promote to FOX Sports and to invest in.

We have a question from Jessica Reif Ehrlich with Bank of America.

I have an advertising question. Lachlan mentioned in his opening remarks that there will be or is an upfront. Can you talk about the timing and expectations, any color you can give? Will the sales be across all of your platforms, sports, news, broadcast and Tubi? And then on FOX News, given the growth in ratings and given the expectations for strong ratings for the next few months, how -- do you feel like you're monetizing your ratings as well as -- are your ratings being monetized the way they should be? Or is there still upside from here?

Thanks, Jessica. I know there's been a lot of talk about the upfront and some discussion about it on other calls. I think the thing -- well, the first thing I'd like to say is that the sales is very active at the moment, but it's a different sort of upfront this year for everyone, right, than in past years. I would call it sort of a rolling upfront. It's not a process that has a beginning, a middle and an end. We are working, as I think I said in the last call, with all of the agency groups and each of our clients as they reengage with their -- with consumers and customers across our platforms. And so some have been much more heavily impacted by COVID-19 than others. Obviously, the categories that are affected, retail, theatrical entertainment, fast food restaurants. Obviously, travel are all highly impacted by COVID-19. So each of those clients, we're engaged with and sort of negotiating with as we go forward. I think what you'll see is as we close -- and as we have closed upfront negotiations, you'll see that going right up until really through to the beginning of the football season. And we are incredibly heartened by the strength of scatter in the market. I think scatter, across the board, is in the mid- to high teens. I think that shows the demand for marketers to get back on air in a mass market and broad way. We are selling it across all of our platforms, news, sports, entertainment and Tubi. Tubi is now integrated in most, if not all, of our upfront conversations. When we add Tubi to a sale, it increases reach by over 20% for the client and also obviously makes the demographic younger and more diverse. And Jessica, to your question on FOX News, FOX News ratings have been astronomical. We are monetizing them very well. One of the benefits of COVID-19 has been with a larger news audience. The audience has also gotten younger, and that's brought actually new advertisers that hadn't advertised on FOX News, new advertisers on to the platform. So it's a very strong positive story for FOX News.

We have a question from Michael Nathanson with MoffettNathanson.

I have two quick ones, I promise. So first question is this, what is your thinking about -- I have a terrible echo, one second. What's your thinking about Thursday Night Football returning again, given how much profits you guys made at the FOX TV business before Thursday Night? And how less are Thursday to your P&L? Second, Steve did a very good job in laying out the valuation case for your stock, and as it -- was really cheap on cash flow, asset value and any way you look at it.

Michael, we lost you on a little bit of the second part of the second question. So I'll let Steve answer that one. You came in and out a bit, but I think we got the gist of it. And about Thursday Night Football, we don't have any update for the market nor would we of the sort of the details of our negotiations with the NFL beyond what we've said already, which is they are an incredible partner with us, they have been for 25 years. And frankly, we value all of their content, and we'll update the market as our negotiation comes to a close with them. But there's no updates on Thursday Night Football or Sunday afternoon. I should say though, obviously, football and our partnership with the NFL is really that and Major League Baseball form the foundation of the brand of FOX Sports, so it's important content for us.

Yes. And Michael, I'll try and answer the question I think you're asking. I think there is an element of frustration in sort of the value attributed to the company. I think the way we sort of look at it, you've got this traditional business that is in a strong, competitive and strategic position, highly profitable, throws off a lot of cash. We don't get the sort of benefit from the cash flow generating aspects of the business, and then we've bought into various other investments, which I highlighted in my opening remarks, where it feels as though we're not even getting acquisition value for those businesses. So the extent to which we can shine torches on both aspects of the business is helpful, we think, to sort of getting the share price to a more appropriate place.

We have a question from Alexia Quadrani with JPMorgan.

My question is really on football, college and NFL. I totally understand you guys don't want to speculate whether it will come back or not. But speaking more broadly about your relationship with your distributors, I guess what sort of alternatives or sort of leeways do you have if these -- some or part of these sports are outright canceled and they don't return sort of later on in the year? I'm just curious about, is there any danger of breaching the sort of the affiliate contracts there?

Thanks, Alexia. First, I should say, we fully expect both college football and the NFL to come back in the fall. We expect to hear from our college conferences later this week in terms of a schedule for their seasons. And I think the NFL has announced coming back on September 10. So we are full speed ahead, working with the college conferences and with the NFL in ensuring a safe and consistent and full seasons for the NFL. And there's a reduction in the season for college football, so that they play within their conferences and minimize travel for their student athletes. So we expect both to come back, and we're looking forward to it.

We have a question from John Janedis with Wolfe Research.

I was hoping you guys can expand a little more on your advertising outlook. What are you seeing in terms of underlying demand? I guess what I'm saying, I'm trying to better understand to what extent you're seeing improvements in the first quarter, given your comments about sports and political relative to the fourth quarter?

So we're seeing strong demand. You've got to break it down, I suppose, for us, by vertical. There's a -- the news ratings are so far above last year's. And as I mentioned, we have new clients and new categories of clients on FOX News. So news demand is really driven by the audience and by the ratings there, so we're seeing tremendous demand in news. Obviously, it's going to be a -- continue to be an incredibly strong news cycle, I think -- and certainly through to the end of the year. There's no let up there. And I think advertisers are flocking to the certainty of those ratings and that audience. I think sports, there's a great pent-up demand for sport. We saw that in the sellouts in Major League Baseball. We saw that when we brought back NASCAR, the advertiser interest in NASCAR, and we expect to see it with football going forward as well. As we go through our upfront process, we have visibility in terms of what the clients are telling us that they expect to spend. And certainly, in news and sport, we're seeing healthy budgets there. I think entertainment is a different kettle of fish as people are waiting to see what happens in the fall season. As we explained earlier on the call, we have a relatively fresh scripted season with 2 shows that we had in the can that we hadn't aired. And we do hope to have The Masked Singer, not for mid-season, but for the fall, if possible. And that would be -- that will absolutely drive ratings and revenue there as well. When we look to the stations, the -- we're heartened to see how quickly local advertising is coming back, particularly in those smaller markets. So the bottom half of our -- I don't want to say bottom half, but the smaller half of our station group, where they have, perhaps, less sort of population density, less shutdowns due to COVID-19, and those markets are coming back well. And as I mentioned before, the markets that are really buoyed are the ones where this political revenue has started to pour in. And then the overlay of all of that is obviously scatter being very strong, which I think just goes anecdotally to the demand by advertisers and clients to get back and sort of mass marketing.

At this point, we are out of time. But if you have any further questions, please give me or Dan Carey a call. Thank you once again for joining today's call.

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