Fox chief financial officer Steven Tomsic doesn’t expect Comcast’s cable network portfolio spinoff to have a meaningful impact on the company’s business from a competitive standpoint.
“I don’t think it changes the competitive basis or the basis of competition for us as Fox,” Tomsic said during UBS’ Global Media and Communications Conference on Monday. “If I look at it, it seems to be a nod to two things that we have already achieved as Fox. So it seems to be a nod towards focus and simplification, which is what we did five and a half years ago when we split the company and Disney took two thirds of the assets, and we were left with what we have as Fox Corporation today.”
“The other nod is, I think, that the special position broadcast has with Comcast electing to continue to retain that as part of a bigger company. And so we continue to believe in the power of broadcast, but we think that we’ve already got leadership positions in broadcasting, sports and news, and so I think the base of competition, from a Fox perspective, whether it’s just the entity that gets spun or if that then leads to further transactions, doesn’t change much for us in terms of our direction of travel.”
Analysts and industry executives previously told TheWrap that a Comcast cable network spinoff could be an opportunity to create a roll-up vehicle for other companies’ distressed linear TV assets suffering from cord-cutting as consumers shift to streaming. But Fox CEO Lachlan Murdoch has previously said that the company is not interested in spinning off its assets.
“From my perspective, I don’t see how we could ever do that. Breaking apart the business would be very difficult, both from a cost point of view and promotional point of view,” Murdoch said at the time. He went on to note that Fox drives a “tremendous amount of synergy across all of our platforms,” which include Fox News, the entertainment arm of the company, Fox Sports and Tubi.
In addition to the spinoff, Tomsic addressed Venu Sports, which was blocked from launching after a judge granted a preliminary injunction to Fubo. Fox, Warner Bros. Discovery and Disney have filed an appeal of the injunction.
“We’ll have hopefully more to say on that in the first quarter of calendar [20]25,” Tomsic said. “We’ll see where our appeal of that preliminary injunction goes. But I think the design of it was quite clear for us, which is attacking the people outside of the bundle, which is becoming a tens and tens of millions of subscriber opportunity for us.”
When asked if Fox would consider its own DTC bundle based on current portfolio of assets in the event Venu doesn’t launch, Tomsic said the company doesn’t want to just create another offering similar to what’s already available.
“We want it to be something different. So when we look at it, if you look at some of the more successful recent versions of the bundle, like YouTube TV or Hulu live, they’re priced in the sort of 70, 80 bucks a month and they’ve had pretty reasonable pickup, pretty reasonable success,” he said. “I don’t think they necessarily have delivered a product that is responsive to what consumers really want.”
“If you want to ask a consumer to spend 80 bucks a month on video at large, it probably wouldn’t be all the linear channels you see cut down and then you just take the lower price. It’d be a combination of taking the best you get from linear, which is largely sports and news which is where we play, combined with other services. And I think with general entertainment, the primacy of general entertainment is switched towards SVOD services,” he continued. “So if you could come up with a bundle of our services which we think sits better in bundles with other services, then we’re all ears towards that. DTC might be part of that story, but we firmly believe in the power of the bundle, and we think that that’s the way the consumers want to consume, and it’s the way the consumers get best value from video services.”
Tomsic also addressed the growth opportunity for Tubi, which is now a $1 billion per year in revenue business, compared to $150 million per year when it was acquired four years ago.
“That’s fantastic, but we still see enormous upside in being able to improve fill rates, which are depending on any given week or month or in the mid 30%, we look at our CPMs, which are in the mid-teens, and see opportunities to drive that better,” Tomsic said. “We think that even though the monetization has been fantastic, we still see a lot of headroom to drive improvement in that monetization.”
Despite the growth in revenue, Tubi reported a deficit of close to $240 million for the fiscal year, Tomsic said.
“It’s completely on us to drive better profitability out of Tubi. But we’re going to play the balance between not wanting to stifle top line growth, but eventually wanting to get to not only break-even for Tubi, but reasonable deliverance of margins. And I think we’ve said in the past, we expect it to be in the 20% to 30% range over time,” he said. “But it is that balancing act of getting making sure that we don’t stifle that top line growth while over time, delivering that bottom line turnaround.”
