Ladies and gentlemen, thank you for joining us for the Fox Corporation Second Quarter 2022 Earnings Conference Call. This conference is being recorded. I would now like to turn the call over to Chief Investor Relations Officer, Mr. Joe Dorrego. Please proceed, sir.

Thank you, Operator. Good morning and welcome to our fiscal 2022 second 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.

Thanks, Joe. Good afternoon, and good morning, everyone. We are pleased to be with you today to discuss another truly remarkable quarter for Fox Corporation. In our fiscal second quarter, we delivered 9% revenue growth and 2% EBITDA growth, even while continuing to invest in our digital initiatives. These results demonstrate our ability to expand our emerging digital businesses while focusing on delivering overall growth for our shareholders. This strategy has been unwavering and disciplined, and we have not been convinced to deviate into areas where we cannot be a leader. Our financial results in the quarter benefited from healthy affiliate revenue growth and what continues to be, at least for FOX, a robust advertising marketplace. Our advertising revenue grew 6% versus the prior year quarter, which is notable when you consider that last year included a record net political advertising revenue of nearly $250 million. From a national advertising sales perspective, we have seen robust CPM growth and broad-based demand across most advertiser categories. This is clear evidence that our portfolio of leadership brands, which over-index in sports and news, continues to deliver live audiences at scale that our advertising partners seek. To understand the scale of our reach across the U.S., you only need to look to our NFC Championship game a week ago where at peak, we had 55 million viewers tuned into the game. The overall market trends and local advertising also remain positive for us, as we achieved double-digit base advertising revenue growth in the quarter when excluding political revenue. Perhaps even more important to note, our local advertising revenues have now fully recovered from the impact of COVID and are up over pre-pandemic levels. While we continue to see softness in the local automotive category caused by the ongoing supply chain delays, this has been more than offset by growth in nearly all other categories, led by sports betting. We have already written over 50% more local sports betting revenue at this point of the fiscal year than we did across all of fiscal '21. We have seen the same local trends continuing thus far into the third quarter. Overall, our operating businesses are performing well, underscoring our unique strategy and differentiated position. Let me touch on some of the highlights. The FOX News Channel celebrated its 25th anniversary this past October by reinforcing its exceptional ratings leadership. On the same call last year, we were fielding questions about whether FOX News had peaked. For the 20th consecutive year, FOX News is the leader in cable news across the board in total viewers and the 25 to 54 demographic for both total day and primetime. Calendar '21 also marked the 6th consecutive year FOX News led all of basic cable in total day and primetime viewership. FOX News leads by a wide margin, commanding a 55% share of total day cable news viewership this past quarter. FOX News's share of the younger demographic was even higher at 57%, marking its second highest quarterly share of the younger demo on record. FOX News's audience was also the most politically diverse, with more Independents and Democrats tuning into the network than to our competitors. Our unmatched programming lineup continues to drive these great ratings results and bring a blue-chip roster of advertisers to the channel and its digital extensions. For example, in aggregate across all of cable news, this past quarter FOX News delivered 14 of the top 15 programs. We simply could not be better placed as we look forward to the mid-term election cycle later this year. Meanwhile, the momentum continued at FOX Nation, which increased its net subscribers in the quarter by over 30% versus the September quarter, supported by strong fresh content to help drive higher subscriber numbers and very low churn. Additionally, FOX Weather, which is breaking through a crowded field of established incumbents, is off to a great start. And its growth will continue in the current quarter as we expand the distribution of the FOX Weather live video streams across multiple platforms, including YouTube TV, Amazon News, Roku, and Fubo. At FOX Sports, we also had a strong quarter led by our NFL and College Football coverage. Over the last 12 months, FOX Sports had more telecasts across the top 100 programs than any other network, let alone any other network's sports division. And of the total minutes of NFL and College Football that Americans watch during the 2021 regular season, about a third were viewed on FOX. I commented on the postseason a moment ago, and by any measure, it was a great series of games for us and for the NFL. Audiences and advertisers embraced the postseason, which kept a record-setting revenue full season for us at FOX and a non-Super Bowl year. Demonstrating that growth and demand, we had 21 advertisers placed in this year's NFC Championship game that were not present a year ago. The results from this season underscore the value and importance of our long-term partnership with the NFL, which will continue for at least the next 12 years. College Football also showed equally impressive results. FOX's BIG NOON SATURDAY window grew by 15% over the 2019 season, and with an average viewership of over 5.8 million, it has become the number one window in all of College Football. To put the success of our College Football strategy in proper context, in 2016, FOX's last season, prior to having the Big Ten rights, our share of College Football viewership was just 7%. Today, we have grown this threefold to a 22% share. We continue to leverage our leading sports franchises into adjacent opportunities and are pleased with progress at FOX Sports Super 6, which ended the year with more than 6 million users, up more than 20% over the prior year. In addition, this coming April, we will launch the USFL, a new innovative spring football league, which FOX will control. And again, our strategy to invest in our flagship brands and serve our loyal audiences has enabled us to realize new and exciting digital growth opportunities, and nowhere is this more apparent than at Tubi. While some companies are focused on multibillion-dollar content investments in search of streaming subscription growth, Tubi has maintained its unrelenting focus on advertising video on demand with a strategic and measured investment approach. This approach has yielded solid momentum across all key revenue and performance indicators. Q2 represented the best performing quarter ever, and December its best performing month, in which the quarter alone achieved 54 of its top 100 revenue days, 55 of its top 100 viewer days, and 50 of its top 100 total view time or TVT days. Tubi exceeded 3.6 billion hours streamed in calendar 2021, marking a 40% increase in TVT over the prior year, due in large part to the breadth of its library now at more than 41,000 titles, a quickly expanding linear news and sports offering with more than 100 channels, its high return on investment in licensed content and original releases, and its world-class technology. We chose to acquire and now operate Tubi with a single goal of winning in AVOD. There are no competing priorities internally, and no revenue transfer from other assets in our portfolio. That is to say, Tubi revenue is truly incremental to us. As Steve will discuss in a moment, our focus portfolio of leadership assets and emerging digital businesses is delivering consistent growth in a thoughtful and disciplined manner. Taken as a whole, we have the most valuable news franchise in the country, if not the world, the leading live sports franchise, and a top broadcast network reinforced by a strategic portfolio of local stations, all of which have digital extensions to their businesses. And in the 3 years since we formed Fox Corporation, we have used this collective platform to develop a rapidly growing AVOD streaming business and create optionality within the sports betting ecosystem. We feel we are in a strong position and could not be more excited for the months ahead as we prepare for what should be an active and exceptional fiscal 2023 for FOX. With that, I will turn it over to Steve to take you through the quarter in more detail.

Thanks, Lachlan, and good morning, everyone. We delivered another strong quarter with total company revenues growing 9% year-over-year, once again highlighted by revenue growth across all our operating segments. Total company affiliate revenues grew 11% against the prior quarter, reflecting healthy increases with the FOX Cable Networks and Television segments. The rate of subscriber declines held steady in the quarter with trailing 12-month industry subscriber losses continuing to run below 5%. Notwithstanding the tough comparison against our record political advertising revenues in the prior quarter, our total company advertising revenues grew by 6%. As Lachlan mentioned, we've benefited from the premium pricing our core brands were able to extract from a healthy marketplace, continued growth at Tubi, and a full season of College Football following the disruptions caused by COVID in the prior year. Taking a step back from the comparability challenges versus fiscal '21, FOX's total advertising revenues are now running a healthy 12% ahead of Q2 fiscal '20, which was pre-COVID and unaffected by political advertising revenues. This is before taking into account the contribution of Tubi to our current day advertising revenues, which takes the reported growth rate up to 20%. Meanwhile, total company other revenues increased 20% supported by a full College Football season that drove higher sports sublicensing revenues at the Cable segment, following the disruptions caused by COVID last year. Adjusted EBITDA increased 2% to $310 million, as the revenue increases were partially offset by higher operating expenses associated with normalized sports and entertainment programming schedules, contractual sports rights escalators, and the digital investments we discussed on previous calls at FOX News Media and Tubi. The net loss attributable to stockholders of $85 million or $0.15 per share varies from the net income attributable to stockholders of $224 million or $0.37 per share in the prior year quarter, primarily due to the change in fair value of the company's investments in Flutter, which we recognize another net. Excluding the impact of this and other non-core items, adjusted EPS of $0.13 in the current year quarter was down modestly when compared to the $0.16 reported in the prior quarter, primarily due to the high depreciation and amortization resulting from our new broadcast facility coming online late last fiscal year. Now let's turn to our business segment results, beginning with Cable Networks. Cable revenues increased 10% year-over-year with 12% growth in cable affiliate revenues. As a reminder, the reported 12% growth includes the impact of distribution credits we accrued for last year as a result of canceled College Football games due to COVID. Excluding the impact of the distribution credits, underlying cable affiliate revenues increased low single digits in the December quarter, reflecting contractual pricing gains across our portfolio of networks, even without the benefit of any meaningful renewals this year. Cable advertising revenues grew 3%, primarily as a result of continued pricing strength across the portfolio, led by FOX News Media and additional MLB playoff games at the National Sports Networks. Despite the difficult comparison to last year's election cycle, FOX News Media actually expanded its linear advertising revenues in the quarter, a testament to the clear leadership position of the channel. Cable other revenues increased by $26 million led by higher sports sublicensing revenues, which were impacted by COVID last year, as well as continued subscription momentum at FOX Nation. Cable EBITDA increased 17% over the prior year, reflecting healthy revenue growth, partially offset by higher programming costs associated with contractual rights escalators and normalized schedules at the National Sports Networks. We also increased our digital investment at FOX News Media, including expanded programming and marketing at FOX Nation and the launch of FOX Weather. At Television, we delivered 8% revenue growth in the quarter. This was led by a 10% increase in television affiliate revenues, reflecting double-digit rate increases for both our direct retransmission revenues at our owned and operated stations, and programming fees from non-owned station affiliates. We also delivered advertising revenue growth of 6% despite the absence of the record political advertising revenues we generated in the prior year. This growth reflects continued pricing strength at the FOX Network, where our FOX Sports lineup, led by the NFL, College Football, and the World Series, delivered record Q2 advertising revenues for our network sports business. We also continue to see strong momentum at Tubi with revenues up by over 40% in the quarter, and a meaningful rebound in the base market at the FOX Television stations. As Lachlan mentioned, supply chain constraints had no real observable impact on our portfolio, with softness in the local automotive demand more than offset by the growth in other categories, including sports betting. Television other revenues increased $31 million, primarily reflecting higher content revenues of FOX Entertainment as well as the acquisitions of MarVista and TMZ. EBITDA at our Television segment was down $88 million against the prior period, primarily as a result of higher programming costs associated with a normalized entertainment schedule and sports price escalators at the FOX Network, and the planned ramp-up of digital investment at Tubi. Turning now to free cash flow, where we recorded a deficit in the quarter of $753 million, which reflects the normal working capital cycle of the business with the concentration of payments for sports rights and the buildup of advertising-related receivables in the first half of our fiscal year. We continue to be active with respect to capital returns to our shareholders, with a further $300 million of additional buybacks since the start of the December quarter. We remain committed to utilizing our full buyback authorization of $4 billion, of which we have now cumulatively repurchased $2.15 billion, representing over 10% of our total shares outstanding since the launch of the buyback program in November 2019. From a balance sheet perspective, we finished the quarter with $4.26 billion in cash and $7.95 billion in debt. Subsequent to quarter-end, we used cash on hand to repay a $750 million January bond to maturity. Our ability to deliver another successful quarter despite the continued uncertainty of COVID and difficult comparisons against the prior year political cycle gives us confidence in the remainder of our fiscal '22. As previously discussed, with only approximately 5% of our total company affiliate revenues up for renewal this fiscal year, we expect affiliate revenue growth will moderate in the back half of the year. However, the demonstrated strength of our focus portfolio positions us well for our next major renewal cycle, which begins in fiscal '23 and where we have approximately 70% of our total company affiliate revenues due for renewal across fiscal '23 and '24. We plan to continue investing in our digital assets given our success today. Now that we are at the midpoint of our fiscal year, we anticipate that our total net EBITDA and investment in our digital initiatives, along with the expected impact of the inaugural season of the USFL, will land towards the lower end of the $200 million to $300 million range that we've previously outlined. As Lachlan mentioned, we anticipate a strong fiscal '23 with the financial tailwinds from Super Bowl 57, the early exit of Thursday Night Football, November's midterm elections, and the start of our next major distribution renewal cycle. And with that, I'll hand it back to Joe.

Thank you, Steve. And now we'd be happy to take questions from the investment community.

And our first question comes from Robert Fishman with MoffettNathanson. Please go ahead.

Hi. Good morning. I've one or two quick ones on sports betting, if I can. As sports betting continues to be legalized across more states, can you discuss how you're thinking about growing FOX Bet from here, while balancing the Flutter and FanDuel relationship? And then maybe if you can just expand on your prepared comments about the local advertising benefits as these states continue to be legalized, including maybe any early data after the January launch in New York. That'd be very helpful. Thank you.

Thank you, Robert. We are currently involved in our arbitration concerning the structure of our option into FanDuel, and we anticipate that this arbitration will conclude around the middle of the calendar year, likely in the summer. Unfortunately, we can't provide much more detail at this time. However, regarding our operations at FOX Bet, especially with FOX Bet Super 6, we are very satisfied with our ability to engage sports viewers from FOX Sports into FOX Bet Super 6 and subsequently into FOX Bet where it is operational. This strategy has proven effective as we continue to move forward. Our only concern is that we have only launched in four states, and we are eager to expand significantly as we develop FOX Bet further. On the positive side, in terms of our traditional business through local television stations, FOX Sports wagering revenue is currently our fastest-growing category and is greatly contributing to revenue increases across our station group where wagering is permitted. We are seeing over 100% growth in sports wagering today, so we are very pleased with both the FOX Bet operations and our advertising revenue.

Thank you. Operator, we can go to the next question.

We have a question from John Hodulik with UBS. Please go ahead.

Thank you. I have two quick questions. First, can you update us on the digital dilution expected to be between 200 million to 300 million for the year? I believe you mentioned that it would be more concentrated in the latter half of the year. If you could provide an update on our progress so far, that would be appreciated. Secondly, can you share any details on the recent licensing extension you completed with Hulu, specifically regarding its size or financial impact, and whether we can expect anything further from that?

We're at the lower end of the range in the 200 million to 300 million, I'm going to let Steve answer that.

Yes. So, John, we said so far we're sort of approaching nine digits on that investment. So, we'd expect to have a little bit more back-loaded in the second half. But as I've pointed out in the prepared remarks, I think, likely to be closer to 200 million than 300 million for the full year. From a pricing perspective on those digital investments, probably the most focus of that investment in the back half of the year will generally be around 2 weeks. So that's what you should expect to see in the TV segment in the second half. As for the Hulu output deal, it's a good one, but it's relatively small. It's an output deal for Hulu to stream episodes of FOX unscripted and animated series. So, it's things like, I Can See Your Voice, The Masked Singer, The Masked Dancer, in case you missed that, and animated comedy from Bento Box HouseBroken. So, I think it's something we're very happy with and happy to continue our really positive relationship with Hulu.

Operator, we can go to the next question.

Thank you. Our next question comes from Doug Mitchelson with Credit Suisse. Please go ahead.

Thank you very much. We had pretty strong results this quarter. I'd like to follow up on the first question regarding your investment in sports wagering, which you've been involved in for nearly two years now. Lachlan, you mentioned the potential for sports betting in your prepared comments. Under what conditions would FOX consider increasing its investment in sports betting? With $4.3 billion in cash on the balance sheet, I’m talking about boosting your investment by billions. Additionally, I'm interested in your thoughts on the upcoming upfront. You've mentioned that the ad market is strong, which must be encouraging. How integrated is Tubi into ad sales compared to FOX? Regarding the NFL, it seems like it was a good season for everyone, but some others might have seen slightly better ratings growth than you. Will that affect your relative share in NFL advertising? Any insights you have on the upfront would be appreciated. Thank you.

Thank you, Doug. Regarding the first question, we view sports betting more in terms of the value of our existing investment in sports broadcasting rather than simply investing in sports betting itself. As the leading sports broadcasting business in the country, our new 12-year agreement with the NFL ensures we will engage with fans over that time period. Our focus is on the future monetization of that engagement with viewers and sports fans. We already have a multibillion-dollar stake in connecting with sports fans. We consider how they will spend their time, engage with second screens, and prepare for big sports weekends. As more states legalize sports wagering, it will be a significant part of that experience. We see this as mutually beneficial, as it will increase fan engagement with us and their favorite teams, ultimately leading to more viewership of FOX Sports. We also evaluate the sports wagering ecosystem, looking at our ownership stakes in Flutter, our option in FanDuel, our joint venture in FOX Bet, and our successful FOX Bet Super 6 strategy. We plan to continue to enhance these initiatives and invest in the space as new opportunities arise. Steve, do you have anything to add?

I think that in terms of deploying capital, the optionality we have with the option structures gives us time to see how the markets develop before we actually need to deploy that capital.

Yes. Yes. And we are limited in structure to some extent because of the licensing rules. I think I said in the last call, we're actively exploring getting licensed not to operate a book, but actually to potentially maximize the value that we can capture in this space. So, it's something that we continue to explore. In terms of the upfront, as an overall comment, I think you're seeing across the marketplace a softness in entertainment and scripted entertainment ratings, not just for us but for all the broadcasters. And you're seeing, due to that softness, major advertisers and marketers start to look at where they can capture their consumers in other places, and where they're flowing to is live news and live sport, and to a large extent digital, which we're utilizing incredibly well. So, when we think about the upfront, it will be early May when we formally go into that selling season, but between now and then, we will have a majority of our conversations and with our partners, we will be selling our entire portfolio of assets. So, we'll be selling the entertainment network, news, sports, and Tubi in a very integrated fashion, really designed to capture our marketing partners’ advertising dollars in the most efficient way. I think we are uniquely positioned because of our leadership across news, sports, and digital with Tubi.

Operator, we can go to the next question.

Our next question comes from Jessica Reif Ehrlich with BofA Securities. Please go ahead.

Hi, everybody. I have two questions. First on USFL. Can you give us some color on your rollout, the cost, your partners, like what will it look like over the next couple of years? And the second question is, as great as the second quarter is or was, fiscal '23 looks even better. I mean, you've got clearly strong advertising with the Super Bowl political, Tubi is growing. You said you're going to renew the affiliate cycle beginning next year, sports betting is growing, and hopefully there'll be more states coming on. So, as the offsets, like digital investment peak this year or just peak next year? Are there other things we should be thinking about? Thanks.

Hi, Jessica. I'm not sure I can answer the second question as well as you did. Let me start by saying that we are excited about fiscal '23. Over the next two years, we have two-thirds of our affiliate renewals coming up. The smaller renewals we've had this year are setting a strong benchmark for what we anticipate in the upcoming renewals. We expect our advertising revenue, particularly with the political cycle, to reach new records. Four years ago, we achieved $180 million in political advertising, and I believe we will surpass that and set new records in this mid-term election. We are well-prepared for significant success. I can't recall if you mentioned it in your question, but Thursday Night Football was an investment for us, and with its move to Amazon, I think they will handle it well. Additionally, we benefit from significant savings by not having Thursday Night Football. We had a strong quarter and an excellent year, and I expect next year to be even better. Regarding the USFL, we are looking forward to the new league. I want to commend the NFL for being great partners and assisting us in structuring the USFL. The rules of play are closer to the NFL than college football, as we've made slight adjustments to enhance the game's excitement. We believe this gives us the best chance for a broad platform and maximum viewership at launch. By bringing in outside investors to the league, we've effectively secured funding for the USFL for at least the next two to three years. From a risk standpoint, I think we have approached this in an ambitious yet disciplined manner. Is there anything else?

So, Jessica, as I've mentioned in the remarks, within the $200 million to $300 million that we called out for the year, USFL will be part of that and it'll be a sort of low to mid tens of millions of dollars EBITDA negative for us this year.

Operator, we have time for one more question.

Thank you. That question will come from the line of Michael Morris with Guggenheim. Please go ahead.

Thank you. Good morning. Two questions for me. First, a bit more strategic, Lachlan. Do you see a path to perhaps a superfan streaming sports business that could complement the linear service that you have that features your marquee games? Maybe something similar to ESPN with ESPN Plus, is that an approach that you would consider taking? Or do you feel it's already sort of an overdeveloped, or another reason not to do something like that? And then my second question, a bit more tactical, maybe looking at the TV segment, I believe last spring you guys sized the EBITDA drag from Thursday Night Football in the range of $350 million to $400 million. Curious if there are any updated thoughts on that estimate, how that savings may be redeployed versus falling to the bottom line in the near-term? And I guess bigger picture, I know that will go into the re-up Sunday contract going forward. But you also have the renewal cycle coming, so I guess maybe just thinking long-term, how do you expect that savings to impact the business? Thanks.

Thank you, Michael. I'll let Steve address the second question about the savings. However, for the first question, our focus this morning is primarily on broadcast television and how we generate revenue from our investments in sports and our sports partnerships. This is mainly achieved through our collaborations with cable operators, satellite TV providers, and local affiliates. While there are some differences with opinion and shoulder programming, we believe that the optimal way to monetize our investment in live sports continues to be through our partnerships with affiliates and distributors. That's where our attention is directed today. Now, I'll pass it over to Steve to discuss the savings question.

Yes, Mike, so the $350 million to $400 million is still a good number for us for next year in terms of net EBITDA impact of losing Thursday Night Football. That includes the reinvestment in the slot. So, whatever we decide to put into that time slot in the schedule is in that $350 million to $400 million. It's net to us, and it's a good guide to us next year. Obviously, part of that gets absorbed the following year with the increased rights fees from the new NFL contract. But all other things being equal, you should see that $350 million to $400 million flow to the bottom line next year.

At this point, we're 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.

Thanks, everyone.

Thank you.

Take care. Bye.

Ladies and gentlemen, that does conclude our conference for today. We thank you for your participation and for using AT&T Executive Teleconference. You may now disconnect.