Fox Corporation met Wall Street expectations on Wednesday after posting net income of $321 million, or adjusted earnings per share of 48 cents, on total revenue of $4.61 billion for its second quarter of 2023.
The company’s performance reflected the secular decline in cable TV, offset by the company’s ability to boost its affiliate fees, and the continuing importance of live news and sports to Fox’s business. Analysts surveyed by Refinitiv were expecting earnings of 48 cents per share on total revenue of $4.58 billion.
The Cable Network Programming segment reported revenue of of $1.63 billion, compared to the $1.64 billion reported in the prior year quarter, while the Television segment posted revenue of $2.93 billion, an increase of $175 million or 6% from the prior year quarter.
Overall affiliate fee revenues increased 1% thanks to 6% growth in the company’s Television segment. Advertising revenues increased 4%, primarily reflecting the impact of the FIFA Men’s World Cup (“World Cup”) and strong NFL results at FOX Sports, higher political advertising revenues at the FOX Television Stations and continued growth at Tubi, Fox’s FAST service, partially offset by the absence of Thursday Night Football. Other revenues increased 13%, primarily due to the impact of the consolidation of entertainment production companies at the Television segment and higher FOX Nation subscription revenues.
“A compelling fall sports schedule, combined with an active midterm political news cycle, showcased the
power and relevance of the FOX platform in our fiscal second quarter,” Fox CEO Lachlan Murdoch said in a statement. “Whether measured in terms of engagement, monetization or profitability, our focused strategy of live news and sports programming, coupled with our growing digital initiatives, continues to deliver.”
The latest quarterly results come about two weeks after Rupert and Lachlan Murdoch withdrew a proposal for a combination with News Corporation, calling the move “not optimal for shareholders.” The decision followed investor pushback from several firms, including T. Rowe Price, Irenic Capital Management and London-based Independent Franchise Partners.
Discussions between the two media companies began back in October, nine years after they were split into separate entities, with each company’s board of directors creating a special committee to explore a potential combination. As a result of the withdrawal, those committees have been dissolved.
“I have said in the past that I think scale provides flexibility and that it’s important to be prepared when opportunities present results,” Murdoch told analysts on the company’s earnings call Wednesday. “The rationale behind considering a combination with News Corp. was about that. Scale, flexibility, synergies, opportunities, great IP and above all creating value for all shareholders.”
In addition to delivering the improved quarterly results, Fox boosted its stock repurchase program by an additional $3 billion to $7 billion. The company intends to enter into an accelerated share repurchase transaction to repurchase $1 billion of Class A common stock and an additional $450 million of common stock during the remainder of fiscal 2023. To date, the company has repurchased approximately $2.2 billion of Class A common stock and approximately $935 million of Class B common stock.
Fox stock climbed 1.8% in pre-market trading Wednesday following the earnings release.