Thursday, April 18, 2024

FOX REPORTS FIRST QUARTER FISCAL 2024 REVENUES OF $3.21 BILLION, NET INCOME OF $415 MILLION, AND ADJUSTED EBITDA OF $869 MILLION

NEW YORK, Nov. 2, 2023 /PRNewswire/ — Fox Corporation (Nasdaq: FOXA, FOX; “FOX” or the “Company”) today reported financial results for the three months ended September 30, 2023.

The Company reported total quarterly revenues of $3.21 billion as compared to the $3.19 billion reported in the prior year quarter. Affiliate fee revenues increased 2%, driven by 8% growth at the Television segment. Advertising revenues decreased 2% as the broadcast of the FIFA Women’s World Cup (Women’s World Cup”) at FOX Sports and continued growth at Tubi were more than offset by comparably lower political advertising revenues at the FOX Television Stations and the impact of elevated supply in the direct response marketplace at FOX News Media. Other revenues increased 2%.

The Company reported quarterly net income of $415 million as compared to the $613 million reported in the prior year quarter. The variance includes the change in fair value of the Company’s investments recognized in Other, net. Net Income attributable to Fox Corporation stockholders was $407 million ($0.82 per share) as compared to the $605 million ($1.10 per share) reported in the prior year quarter. Adjusted net income attributable to Fox Corporation stockholders1 was $537 million ($1.09 per share) as compared to the $670 million ($1.21 per share) reported in the prior year quarter.

Quarterly Adjusted EBITDA2 was $869 million as compared to the $1.09 billion reported in the prior year quarter. Expenses increased in the quarter, primarily due to higher sports programming rights amortization and production costs, including the broadcast of the Women’s World Cup and the renewed NFL contract, as well as higher expenses associated with digital investments.

Commenting on the results, Executive Chair and Chief Executive Officer Lachlan Murdoch said:

“Our Fiscal 2024 is off to a solid start against a backdrop of an active news cycle and robust sports schedule. Live content matters and nobody does live better than FOX. In the first quarter, we saw increased engagement at FOX Sports, driven by our broadcast of the FIFA Women’s World Cup and the start of college football, and at Tubi, which continues to drive impressive growth in viewing in an increasingly crowded marketplace. Taken as a whole, FOX continues to leverage the strength of its leadership brands while driving meaningful growth across our digital assets.”

REVIEW OF OPERATING RESULTS



Three Months Ended
September 30,


2023


2022


$ Millions

Revenues by Component:








Affiliate fee

$     1,740


$     1,711

Advertising

1,200


1,220

Other

267


261

Total revenues

$     3,207


$     3,192





Segment Revenues:








Cable Network Programming

$     1,387


$     1,431

Television

1,780


1,714

Other, Corporate and Eliminations

40


47

Total revenues

$     3,207


$     3,192





Adjusted EBITDA:








Cable Network Programming

$         607


$         742

Television

351


409

Other, Corporate and Eliminations

(89)


(59)

Adjusted EBITDA3

$         869


$     1,092





Depreciation and amortization:








Cable Network Programming

$           18


$           17

Television

29


29

Other, Corporate and Eliminations

49


53

Total depreciation and amortization

$           96


$           99

CABLE NETWORK PROGRAMMING



Three Months Ended
September 30,


2023


2022


$ Millions

Revenues




Affiliate fee

$     1,005


$     1,029

Advertising

290


316

Other

92


86

Total revenues

1,387


1,431

Operating expenses

(649)


(564)

Selling, general and administrative

(135)


(129)

Amortization of cable distribution investments

4


4

Segment EBITDA

$         607


$         742

Cable Network Programming reported quarterly segment revenues of $1.39 billion as compared to the $1.43 billion reported in the prior year quarter. Affiliate fee revenues were $1.01 billion as compared to the $1.03 billion reported in the prior year quarter, as contractual price increases were more than offset by the impact of net subscriber declines. Advertising revenues were $290 million as compared to the $316 million reported in the prior year quarter, as the continued impact of elevated supply in the direct response marketplace and lower ratings were partially offset by higher national pricing at FOX News Media and the broadcast of the Women’s World Cup at the national sports networks. Other revenues increased $6 million or 7%, primarily due to the timing of sports sublicensing revenues at the national sports networks.

Cable Network Programming reported quarterly segment EBITDA of $607 million as compared to the $742 million reported in the prior year quarter. Expenses increased in the quarter, primarily due to higher sports programming rights amortization and production costs driven by the broadcast of the Women’s World Cup.

TELEVISION



Three Months Ended
September 30,


2023


2022


$ Millions

Revenues




Advertising

$          910


$          905

Affiliate fee

735


682

Other

135


127

Total revenues

1,780


1,714

Operating expenses

(1,198)


(1,071)

Selling, general and administrative

(231)


(234)

Segment EBITDA

$          351


$          409

Television reported quarterly segment revenues of $1.78 billion, an increase of $66 million or 4% from the amount reported in the prior year quarter. Advertising revenues increased $5 million or 1%, as the broadcast of the Women’s World Cup at FOX Sports and continued growth at Tubi were partially offset by lower political advertising revenues at the FOX Television Stations and lower ratings at the FOX Network. Affiliate fee revenues increased $53 million or 8%, led by higher rates at both the Company’s owned and operated stations and third-party FOX affiliates. Other revenues increased $8 million or 6%, primarily due to the timing of participation revenues at the entertainment production companies.

Television reported quarterly segment EBITDA of $351 million, as compared to the $409 million reported in the prior year quarter. Expenses increased in the quarter, primarily due to higher sports programming rights amortization and production costs, including the broadcast of the Women’s World Cup and the renewed NFL contract, as well as higher expenses associated with digital investments.

SHARE REPURCHASE PROGRAM

As of September 30, 2023, the Company has repurchased approximately $3.9 billion of its Class A common stock and approximately $1 billion of its Class B common stock, with a remaining authorization of up to $2.1 billion.

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “may,” “will,” “should,” “likely,” “anticipates,” “expects,” “intends,” “plans,” “projects,” “believes,” “estimates,” “outlook” and similar expressions are used to identify these forward-looking statements. These statements are based on management’s current expectations and beliefs and are subject to uncertainty and changes in circumstances. Actual results may vary materially from those expressed or implied by the statements in this press release due to changes in economic, business, competitive, technological, strategic and/or regulatory factors and other factors affecting the operation of the Company’s businesses. More detailed information about these factors is contained in the documents the Company has filed with or furnished to the Securities and Exchange Commission, including the Company’s Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q.

Statements in this press release speak only as of the date they were made, and the Company undertakes no duty to update or release any revisions to any forward-looking statement made in this press release or to report any events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events or to conform such statements to actual results or changes in the Company’s expectations, except as required by law.

To access a copy of this press release through the Internet, access Fox Corporation’s corporate website located at http://www.foxcorporation.com

CONSOLIDATED STATEMENTS OF OPERATIONS 



Three Months Ended
September 30,


2023


2022


$ Millions, except per
share amounts





Revenues

$     3,207


$     3,192





Operating expenses

(1,862)


(1,656)

Selling, general and administrative

(480)


(448)

Depreciation and amortization

(96)


(99)

Interest expense, net

(42)


(68)

Other, net4

(166)


(76)

Income before income tax expense

561


845

Income tax expense

(146)


(232)

Net income

415


613

Less: Net income attributable to noncontrolling interests

(8)


(8)

Net income attributable to Fox Corporation stockholders

$         407


$         605









Weighted average shares:

494


552





Net income attributable to Fox Corporation stockholders per share:

$       0.82


$       1.10

CONSOLIDATED BALANCE SHEETS



September 30,
2023


June 30,
2023


$ Millions

Assets:




Current assets:




Cash and cash equivalents

$            3,829


$            4,272

Receivables, net

2,420


2,177

Inventories, net

751


543

Other

239


265

Total current assets

7,239


7,257





Non-current assets:




Property, plant and equipment, net

1,683


1,708

Intangible assets, net

3,072


3,084

Goodwill

3,557


3,559

Deferred tax assets

3,042


3,090

Other non-current assets

3,056


3,168

Total assets

$         21,649


$         21,866





Liabilities and Equity:




Current Liabilities:




Borrowings

$            1,250


$            1,249

Accounts payable, accrued expenses and other current liabilities

2,339


2,514

Total current liabilities

3,589


3,763





Non-current liabilities:




Borrowings

5,962


5,961

Other liabilities

1,419


1,484

Redeemable noncontrolling interests

228


213

Commitments and contingencies








Equity:




Class A common stock, $0.01 par value

3


3

Class B common stock, $0.01 par value

2


2

Additional paid-in capital

7,991


8,253

Retained earnings

2,539


2,269

Accumulated other comprehensive loss

(151)


(149)

Total Fox Corporation stockholders’ equity

10,384


10,378

Noncontrolling interests

67


67

Total equity

10,451


10,445

Total liabilities and equity

$         21,649


$         21,866

CONSOLIDATED STATEMENTS OF CASH FLOWS



Three Months Ended
September 30,


2023


2022


$ Millions

Operating Activities:




Net income

$            415


$            613

Adjustments to reconcile net income to cash provided by operating activities




Depreciation and amortization

96


99

Amortization of cable distribution investments

4


4

Equity-based compensation

24


7

Other, net

166


76

Deferred income taxes

47


104

Change in operating assets and liabilities, net of acquisitions and dispositions




Receivables and other assets

(284)


(260)

Inventories net of programming payable

(253)


(333)

Accounts payable and accrued expenses

(187)


(127)

Other changes, net

(27)


87

Net cash provided by operating activities

1


270





Investing Activities:




Property, plant and equipment

(71)


(74)

Purchase of investments


(31)

Other investing activities, net

13


(13)

Net cash used in investing activities

(58)


(118)





Financing Activities:




Repurchase of shares

(250)


(250)

Dividends paid and distributions

(135)


(147)

Sale of subsidiary noncontrolling interest


25

Other financing activities, net

(1)


(30)

Net cash used in financing activities

(386)


(402)





Net decrease in cash and cash equivalents

(443)


(250)

Cash and cash equivalents, beginning of year

4,272


5,200

Cash and cash equivalents, end of period

$         3,829


$         4,950

NOTE 1 – ADJUSTED NET INCOME AND ADJUSTED EPS

The Company uses net income and earnings per share (“EPS”) attributable to Fox Corporation stockholders excluding net income effects of Impairment and restructuring charges, adjustments to Equity (losses) earnings of affiliates, Other, net, and tax provision adjustments (“Adjusted Net Income” and “Adjusted EPS” respectively) to evaluate the performance of the Company’s operations exclusive of certain items that impact the comparability of results from period to period.

Adjusted Net Income and Adjusted EPS may not be comparable to similarly titled measures reported by other companies. Adjusted Net Income and Adjusted EPS are not measures of performance under GAAP and should be considered in addition to, and not as substitutes for, net income attributable to Fox Corporation stockholders and EPS as reported in accordance with GAAP. However, management uses these measures in comparing the Company’s historical performance and believes that they provide meaningful and comparable information to management, investors and equity analysts to assist in their analysis of the Company’s performance relative to prior periods and the Company’s competitors.

The following table reconciles net income and EPS attributable to Fox Corporation stockholders to Adjusted Net Income and Adjusted EPS for the three months ended September 30, 2023 and 2022:


Three Months Ended


September 30, 2023


September 30, 2022


Income


EPS


Income


EPS


$ Millions, except per share data

Net income

$         415




$         613



Less: Net income attributable to noncontrolling interests

(8)




(8)



Net income attributable to Fox Corporation stockholders

$         407


$       0.82


$         605


$       1.10









Other, net5

167


0.34


77


0.14









Tax provision

(37)


(0.07)


(12)


(0.02)









Rounding




(0.01)









As adjusted

$         537


$       1.09


$         670


$       1.21

NOTE 2 – ADJUSTED EBITDA

Adjusted EBITDA is defined as Revenues less Operating expenses and Selling, general and administrative expenses. Adjusted EBITDA does not include: Amortization of cable distribution investments, Depreciation and amortization, Impairment and restructuring charges, Interest expense, net, Other, net and Income tax expense.

Management believes that information about Adjusted EBITDA assists all users of the Company’s Unaudited Consolidated Financial Statements by allowing them to evaluate changes in the operating results of the Company’s portfolio of businesses separate from non-operational factors that affect net income, thus providing insight into both operations and the other factors that affect reported results. Adjusted EBITDA provides management, investors and equity analysts a measure to analyze the operating performance of the Company’s business and its enterprise value against historical data and competitors’ data, although historical results, including Adjusted EBITDA, may not be indicative of future results (as operating performance is highly contingent on many factors, including customer tastes and preferences).

Adjusted EBITDA is considered a non-GAAP financial measure and should be considered in addition to, not as a substitute for, net income, cash flow and other measures of financial performance reported in accordance with GAAP. In addition, this measure does not reflect cash available to fund requirements and excludes items, such as depreciation and amortization and impairment charges, which are significant components in assessing the Company’s financial performance. Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies.

The following table reconciles net income to Adjusted EBITDA for the three months ended September 30, 2023 and 2022:


Three Months Ended
September 30,


2023


2022


$ Millions

Net Income

$         415


$         613

Add:




Amortization of cable distribution investments

4


4

Depreciation and amortization

96


99

Interest expense, net

42


68

Other, net6

166


76

Income tax expense

146


232

Adjusted EBITDA

$         869


$     1,092

1 Excludes net income effects of Impairment and restructuring charges, adjustments to Equity (losses) earnings of affiliates, Other, net and tax provision adjustments. See Note 1 for a description of adjusted net income and adjusted earnings per share attributable to Fox Corporation stockholders, which are considered non-GAAP financial measures, and a reconciliation of reported net income and earnings per share attributable to Fox Corporation stockholders to adjusted net income and adjusted earnings per share attributable to Fox Corporation stockholders.
2 Adjusted EBITDA is considered a non-GAAP financial measure. See Note 2 for a description of Adjusted EBITDA and a reconciliation of net income to Adjusted EBITDA.
3 Adjusted EBITDA is considered a non-GAAP financial measure. See Note 2 for a description of Adjusted EBITDA and a reconciliation of net income to Adjusted EBITDA.
4 Other, net presented above includes Equity earnings (losses) of affiliates.
5 Other, net presented above excludes Equity earnings (losses) of affiliates.
6 Other, net presented above includes Equity earnings (losses) of affiliates.

SOURCE Fox Corporation

Originally published at https://www.prnewswire.com/news-releases/fox-reports-first-quarter-fiscal-2024-revenues-of-3-21-billion-net-income-of-415-million-and-adjusted-ebitda-of-869-million-301975654.html
Some images courtesy of https://pixabay.com

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