Ladies and gentlemen, thank you for standing by. Welcome to the FOX Corporation Fourth Quarter Fiscal Year 2023 Earnings Conference Call. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session. As a reminder, this conference is being recorded. I'll now turn the conference over to Chief Investor Relations Officer, Ms. Gabrielle Brown. Please go ahead, Ms. Brown.

Thank you, operator. Good morning, and welcome to our fiscal 2023 fourth 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, Gabby, and thanks everyone for joining us this morning. With this morning's earnings release, we closed out a very strong fiscal 2023, fueled by successes across every aspect of our business. While Steve will cover the details of the fourth quarter in just a moment, for the full year we generated record annual revenue and EBITDA. Notably, we reported revenue growth of 7%, including 12% advertising growth, supported by major tentpole events like the midterm election, Super Bowl LVII and the FIFA Men's World Cup, as well as outstanding growth of Tubi and 3% affiliate growth led by the first one-third of our distribution renewal cycle. These results demonstrate that FOX's differentiated strategy continues to deliver engaged audiences at scale for our advertising and distribution partners across our sports and news verticals, while also driving exceptional growth across our digital businesses. In a world of increasing audience fragmentation, FOX's collective linear and digital viewership was up 8% year-over-year. The onscreen reflection of that strategy was clearly apparent throughout fiscal '23 across our networks and platforms. FOX's broadcast of Super Bowl LVII was the most watched TV show of all time. Our Thanksgiving Day game was the most watched NFL regular season game of all time and the US-England match was the most watched US Men's World Cup match of all time. FOX News maintained its lead as both a top-rated national cable news channel, as well as the top-rated network across the entire cable ecosystem and ranks as the number two national network in all of US Television. And on the streaming front, Tubi made its debut in Nielsen's The Gauge, growing total consumption in fiscal 2023 by 79%, making it the number one AVOD player with consumption levels equal to a top five cable network. Tubi's fiscal '23 was nothing short of spectacular, underpinned by growth in total view time which in turn powered revenue growth. It was a year of increased awareness and engagement for Tubi, whether that was being recognized by Nielsen as America's most watched AVOD service, its expanding content library and TBT metrics or the five Cannes Lions awards bestowed upon Tubi's Super Bowl spot. Each quarter, during the year saw successive gains at Tubi and the fiscal fourth quarter was its most impressive of all, with revenue growth of 47%, driven by strong engagement with total viewer time growing by 65%. Each month of the quarter set new records from monthly viewers. With Tubi's revenue and engagement accelerating in fiscal '23, we are looking to further strengthen Tubi's position in fiscal '24. To that end, we are very excited to welcome Anjali Sud, as the new CEO of Tubi and look forward to seeing Tubi flourish further under her leadership. At FOX News Media, we continue to lead both in ratings and engagement. The FOX News Channel ended the fourth quarter as the most watched cable network in total day for the ninth consecutive quarter, while maintaining its lead as the most watched cable news network beating CNN and MSNBC in both total viewers in the demo for both prime time and total day. FOX News debuted its tweaked prime time lineup last month. We are pleased with the initial results and are confident that our deep bench of talent will continue to set the standard for all news services as we move towards the 2024 presidential election. This past year, FOX News' leadership position was never at risk. We sustained double-digit advantages in total viewership of our nearest competitors for the entire fiscal year, even during the period where our prime time lineup was in transition. In fact, since its mid-July debut FOX News' new prime time lineup is up over 35% in total viewers and up over 40% in the 25 to 54 demographic versus the June schedule. Meanwhile, the FOX Business Network ended the quarter as the most watched business cable news network beating CNBC in total viewers during the business day for the fifth consecutive quarter. Across FOX Entertainment, we had a solid year notching multiple wins including the number one entertainment telecast with Next Level Chef, the number one new drama of 2023 with the Accused and the number one new unscripted series with Special Forces: World's Toughest Test. Our local TV stations have delivered a record midterm election sales cycle that was just shy of the last presidential cycle. We are very pleased with fiscal 2023 a year where FOX again delivered best-in-class results and further differentiated itself from its peers. We enter fiscal 2024 from a position of strength despite headwinds facing our industry and the lingering effect of some macroeconomic uncertainty. We will renew the next one-third of our distribution agreements and navigate a variable ad environment supported by solid results from the recent upfront for our unique content offering, which distinguishes itself in any marketplace. You've heard me say this many times, FOX's focus strategy is different from our peers. It's uniquely good. Nowhere is that more evident than in the current environment where FOX's leadership position is proven. In this year's upfront, we believe FOX led the market in both price and volume across our live sports and news offerings. While it's early in the quarter, underlying ad trends have shown signs of improvement over last quarter. We are seeing an uptick in scatter driven largely by sports and national news is solid. And at Tubi, we saw further momentum in both revenue and TBT growth in July. This promises to be another strong year for FOX as we wrap up the Women's World Cup in a few weeks with stellar advertising support before kicking off American football in early September with the Big Ten and the NFL. We're already seeing our live sporting events continue to break records with the Women's World Cup broadcast. The US versus the Netherlands on FOX was the most watched Women's World Cup group stage match ever on US English language television. We'll also broadcast our first UEFA European soccer championship later this year. Further, we expect that our relaunch news lineup will continue its momentum as we head into the presidential election cycle, which will also be a boon to our local stations. And, of course, we expect Tubi's growth and scale to extend even further. Underpinning all of this, we can't forget our balance sheet, which remains robust even after this year's legal costs. We ended the quarter with $4.3 billion in cash and approximately $7.2 billion in debt, giving us a net leverage ratio of roughly one-time, the best balance sheet in the business. We have said it time and time again, our mix of assets puts us in a uniquely stronger position than our peers. With this strength and our relentless focus on our core business, we are committed to delivering value for our shareholders in a thoughtful and disciplined manner as we look forward to 2024. And with that, I'll turn it over to Steve to take you through the operating details of the quarter and full year.

Thanks, Lachlan, and good morning, everyone. Fox delivered strong financial results for fiscal 2023 with total company revenue growth of 7% and record EBITDA. Advertising revenues across the company were up 12% led by a 17% increase in our television segment, made all the more impressive when comparing against revenues generated from last year's broadcast of Thursday night football. This growth was driven by a banner year of events including the record-breaking Super Bowl LVII, FIFA Men's World Cup and the midterm election cycle along with the considerable momentum we are driving at Tubi. We completed approximately one-third of our distribution renewals this year, supporting the lift in our total company affiliate fee revenues of 3%. As signaled previously, the impact from these initial renewals primarily benefited our television segment leading to an 8% increase year-over-year. Total company other revenues saw a 5% increase, the result of the full year impact of MarVista, TMZ and Studio Ramsay Global which were acquired in fiscal 2022 along with the higher FOX Nation subscription revenues. From a bottom line perspective, this robust company-wide revenue growth was the key driver of the 8% increase in full year EBITDA to $3.19 billion. Net income attributable to stockholders was $1.24 billion or $2.33 per share, up versus $1.21 billion or $2.11 per share reported in fiscal 2022. As you may recall, other net was impacted this year by charges associated with the FOX News Media litigation and the gain associated with the change in fair value of the company's investment in Flutter. Excluding this impact and other non-core items, full year adjusted net income increased 17% to $1.87 billion with adjusted EPS up 26% to $3.51 per share. Turning to our fiscal fourth quarter results, Fox delivered total company revenues of $3.03 billion which is consistent with the amount reported in Q4 fiscal 2022. Quarterly EBITDA was $735 million down from the $770 million in the prior year. This was largely due to the cyclical comparison with the prior year's midterm election and advertising impacts on our FOX News and FOX Entertainment businesses along with a modest increase in overall expenses. Total company affiliate revenues grew 3% in the quarter, as the pricing benefits from our recent renewals were partially offset by the impact of industry subscriber declines. Total company advertising revenues decreased 4%, which was primarily a result of lower political advertising revenues at our television stations, especially when compared to our record June quarter last year, along with the impact of a softer direct response marketplace of FOX News Media. The momentum we have seen at Tubi throughout the fiscal year accelerated in our fourth quarter with revenue up 47% on the back of increased engagement and stable pricing. Total company other revenues were essentially unchanged from the prior year. Growth in total company expenses was a healthy 1% and includes investments at Tubi albeit at a slower rate than Tubi's revenue growth and the expansion of the USFL as well as higher programming rights amortization and production costs at FOX Sports. Net income attributable to stockholders of $375 million or $0.74 per share was up compared to the $306 million or $0.55 per share reported in the prior year quarter. As the EBITDA movements just described along with the restructuring and other below-the-line costs were more than offset by the mark-to-market increases of our investment in Flutter. Excluding non-core items adjusted net income in the quarter increased to $443 million and adjusted EPS increased 19% to $0.88 per share. Now turning to the quarterly results of our main operating segments. At Cable networks, fourth quarter revenue saw a 3% decrease year-over-year. Cable affiliate fee revenues were down 2% in the quarter, as pricing gains from our affiliate renewals were more than offset by net subscriber declines of approximately 8%. Cable advertising revenues fell 11% largely on the back of the softer direct response marketplace at FOX News, while cable other revenues increased 7% led by revenues generated by the second season of the USFL. Quarterly adjusted EBITDA at cable was down 7% as these revenue impacts were partially offset by lower expenses, led by lower digital and use gathering costs at FOX News Media, partially offset by higher costs associated with the USFL. Our Television segment reported 4% growth in quarterly revenues. This was led by a 9% increase in Television affiliate fee revenues with healthy growth in pricing across FOX owned-and-operated and FOX-affiliated stations continuing to outpace the impact from subscriber declines. Television advertising revenues fell 1% as the strong growth at Tubi was offset by lower off-cycle political revenues and a slower rebound in the base market of the FOX Television stations and lower ratings at FOX Entertainment. Television other revenues grew 8% in the quarter, primarily a result of increased activity at our entertainment production companies. Quarterly adjusted EBITDA at our Television segment remained flat compared to the prior year quarter as the increase in revenues was offset by higher expenses where we had higher programming rights amortization and production costs at FOX Sports. Costs at Tubi were also higher than the prior year however this was outpaced by the rate of revenue growth to deliver improved EBITDA in the quarter. During the full year, we generated free cash flow, which we define as net cash provided by operating activities less CapEx of $1.4 billion inclusive of legal settlement payments. Before we get to capital allocation and balance sheet, it is worth noting some key items for fiscal 2024. We will of course be comparing to the marquee events of fiscal 2023 including the Super Bowl and the midterm election cycle, as well as transitioning to the first year of our NFL rights renewal and broadcasting our first UEFA European Championship. At the cable sports networks, we expect margins to improve in fiscal 2024 reflecting our disciplined approach to college sports rights renewals net of sublicensing income. In terms of affiliate revenue we make no predictions on industry subscriber volumes. However, as we've previously indicated, we have another third of our total company distribution revenues up for renewal this year and expect to see the benefit of those renewals towards the back half of the year skewed towards our Television segment. We expect to continue to invest in our growth initiatives. Here Tubi will be the focus of investment spend with the collective portfolio expected to deliver EBITDA in line or better than fiscal 2023. And from a cash flow perspective, we expect Fox will be subject to the new corporate alternative minimum tax beginning this fiscal year. This will not impact our P&L tax provision but will likely elevate our cash taxes in the near-term. However, we still expect to realize the full benefit of our cash tax asset over time. Returning to capital allocation. Over the course of fiscal 2023, we returned $2 billion of capital through the repurchase of 46 million Class A shares and 7.5 million Class B shares. This includes the cash impact of our previously announced $1 billion accelerated share repurchase transaction. This buyback activity was supplemented by over $260 million in dividend payments in the year. And underlining our continued commitment to shareholder returns, today we announced an increase in our semiannual dividend to $0.26 per share. With the payment of this dividend, we will have cumulatively returned over $6 billion of capital to our shareholders since the spin in 2019. This includes over $4.6 billion of share repurchases including the ASR, representing over 22% of our total shares outstanding since the launch of the buyback program in November 2019. This is all supported by the strength of our balance sheet, where as Lachlan mentioned, we ended the quarter with $4.3 billion in cash and approximately $7.2 billion in debt. Fiscal 2023 was another year of strategic focus and strong execution at Fox. That combined with the most robust balance sheet in the industry supports our ongoing commitment to capital returns as well as flexibility to pursue value accretive investments. And with that, let's turn the call back to Gabby to get started with Q&A.

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

Your first question comes from the line of Phil Cusick from JPMorgan. Please go ahead.

Hi, guys. A couple of quick ones, if I can. First, ESPN talking about looking for partners. Given your portfolio of sports rights, could a sports-centric JV make sense for FOX? And alternatively would a league investment in a peer or competitor run into legal issues? And then second, can you just give us any update on the overall ad environment including demand for linear and versus digital? Thank you.

Hi Phil, good morning. Thank you for your questions. Regarding FOX Sports and our sports portfolio, our business is quite similar to ESPN's, so we share the same strategic priorities and are likely looking at similar paths forward. Our primary focus is to protect our premium sports content and present it to consumers wherever possible. Currently, this premium content generates the most value when it's behind a paywall, within the traditional cable and satellite pay-TV landscape. We believe that the pay-TV ecosystem remains extremely valuable for our business and significantly enhances FOX Sports and its content, which will continue in the long run. As consumer preferences evolve, we will strive to present our content and brands in a way that makes the most sense for them, while ensuring it stays behind a paywall to secure full value for those rights and brands. Importantly, it's not a matter of choosing one over the other; we don't foresee a sudden switch from pay-TV to direct-to-consumer. Instead, we believe both will remain important, and consumers may choose between them. We will be well-positioned regardless of the distribution method. I can't comment on the legal implications of having league investors in a platform, but I can share that we are very satisfied with our national advertising upfront results. We were able to achieve both pricing and volume increases in key sectors such as news and sports. As you've likely heard, Tubi has seen tremendous growth this past quarter and throughout the year. Strong categories during the upfront include national automotive, travel, and pharmaceuticals. From a local perspective, excluding political factors, our year-on-year comparison shows we're pacing flat to slightly up, including some local digital revenue. Strong categories in this regard include automotive and financial services, though some areas like retail, telecom, and wagering have shown softness. Overall, we are pleased with our position and anticipate a solid second half of the year.

Your next question comes from the line of Jessica Reif from Bank of America. Please go ahead.

Thank you. Just moving back to the balance sheet. I know you've commented in your prepared remarks, but litigation aside, you really do have the strongest balance sheet. And at this point, it seems like there are attractive assets possible, attractive assets at depressed multiples. Can you give us a little bit more of your thought process in terms of what areas are interesting to you, or is it really just about returning capital to shareholders? And then on content, you mentioned the sports step-up with the NFL, but overall content spend like entertainment, are you rethinking how you're spending on entertainment both overall content spend up or down in the coming years?

Thanks very much, Jessica. On the balance sheet and Steve can chime in, but we continue to agree with you wholeheartedly that I think we have the best balance sheet in the business. It gives us tremendous flexibility moving forward in both how we return capital to shareholders, whether it's through dividends or share repurchases. I think Steve mentioned in his remarks, we repurchased $2 billion worth of shares this past year. That's probably an elevated level because as we look across the landscape, we didn't see any attractive M&A opportunities this past year that particularly caught our attention. We are always looking for businesses that fit our portfolio that will be attractive growth businesses for the business. But we take this with a dispassionate kind of view in terms of what's going to drive the best sort of long-term shareholder value. So we balance up return of capital and sort of accretive value opportunities on pretty much a daily basis. So Steve, do you want to add anything to that?

Yes. No, I think that's exactly right, Lachlan. The balance sheet that we've assembled gives us the flexibility to look at everything and we'll ultimately do what delivers the best value for shareholders. Jessica just on your content spend question. Next year is a bit of – the year-on-year change is heavily influenced by the fact that we don't have a Super Bowl running through the amortization line of our content costs. But if you look sort of through that, we would expect content spend to increase. We've got increasing rights amortization costs of the sports business. The entertainment business from a linear perspective probably holds steady, if you normalize for the strike. It will probably be down, given the strike. But then we're going to continue to invest in content at Tubi. Some of that is passive in the form of revenue share payments, but we'll also be active in terms of production and licensing costs and use as a relatively sort of low growth but continued growth in increased spend in content. So hopefully, that gives you enough color there.

Operator, next question, please.

Next question comes from the line of John Hodulik from UBS. Please go ahead.

Thanks. You guys recently announced that you'll be winding down FOX Bet. So I guess three quick ones. Sort of first, any financial implications to that? Has your view on the sort of sports betting opportunity in the US changed? And anything you could tell us about your sports betting strategy going forward? Thanks.

Thanks, John. Let me start with our strategy regarding the closure of FOX Bet. As we announced last week, Flutter exercised its right to terminate the FOX Bet joint venture, which they were fully entitled to do as they were both the operator and the primary funder of FOX Bet. Upon reaching a specific investment benchmark, they opted to focus on their leading brand, FanDuel, the top sports wagering site in America. While we were disappointed with this decision, we remain committed to operating in the sports wagering business. We anticipated this outcome, and I want to emphasize that we are very pleased with the financial results and the value we created through FOX Bet for our shareholders. It's important to remember that we did not invest any capital into FOX Bet; it was fully funded by Flutter. We had the option to acquire a 50% stake in FOX Bet if we became a licensed betting operator in the U.S. Despite not contributing cash to the venture, we achieved significant value from it. A key part of this value is the FOX Bet Super 6 brand, which is the leading free-to-play wagering platform in the U.S. and offers a strong pathway for future wagering initiatives. We foresaw this potential outcome and began transitioning away from FOX Bet, allowing us to negotiate a 18.6% option in FanDuel, the top site in the U.S. Some have estimated the value of our option in FanDuel could be as high as $2 billion, and we are very satisfied with this outcome. We wish FanDuel continued success. Additionally, we invested in Flutter, acquiring 2.5% of the business for about $400 million, which has now appreciated to over $800 million in value. Moving forward, we are now free to collaborate with any betting operators, many of whom have already reached out to us. We believe our previous performance with FOX Bet has been strong, and we are well-positioned to benefit from the growth of sports wagering in the U.S. That’s a brief overview of our current situation. Steve, would you like to discuss any financial details?

Yes. That’s a thorough financial overview. To reiterate, as Lachlan mentioned, we are not funding the business at all, so there’s no change for us in that regard. There have been some minor commercial transactions between FOX Bet and Fox, but these are immaterial in the bigger picture. Furthermore, we are now free to explore other partnerships. In that sense, it’s a balanced situation. Additionally, as Lachlan pointed out, we maintain the value of the FanDuel option, which is important to us, along with the value of our stake in the headstock. Lachlan articulated this quite well in his opening remarks.

Operator next question please.

Your next question comes from the line of Ben Swinburne from Morgan Stanley. Please go ahead.

Thanks. Good morning. Lachlan, could you elaborate on the long-term strategy for Tubi, especially regarding programming and how you envision its evolution over the next few years? Also, has there been any discussion about Tubi's impact on EBITDA? Is it still in an investment phase, and when do you anticipate it becoming profitable? Additionally, could you briefly discuss the Big Ten's expansion and its potential financial implications as the conference grows to 16 teams this season? Thank you.

Thanks, Ben. First, regarding Tubi, Anjali starts on September 1, and we're eager to see how her expertise and experience contribute to the business. With any new CEO, I expect fresh perspectives and opportunities to emerge. Looking at Tubi today, the growth in TBT has been exceptional. This rapid growth has opened up more advertising opportunities and increased revenue. TBT growth is outpacing revenue, resulting in fill rates that haven’t kept up with TBT growth, which is positive because it means we have more opportunities to sell advertising than we can currently fulfill, driven by strong viewership growth. Over time, I'd like to highlight that Tubi's viewership growth sets it apart in the AVOD market, primarily because it operates on an on-demand platform. Our viewers actively select content to watch, demonstrating their engagement. This distinction is significant compared to fast channels, where viewers might just leave a channel playing in the background. While Tubi does include a fast channel service, about 90% of our viewership comes from video-on-demand, where users intentionally choose to watch specific content. Our library continues to expand; last quarter we had 55,000 titles, and now we have 60,000, which equates to approximately 200,000 hours of movies and TV shows for our audience to enjoy. This growth will persist, and we plan to explore expanding into categories where we already excel, as well as identify areas with potential for additional monetization. Steve, would you like to discuss the EBITDA investment?

Sure. So, Ben, I’m not sure if you caught it in the opening remarks. For Tubi, the investment for the full year was in the low to mid negative 200 range, which is similar to what we had in fiscal 2022. In this quarter, we actually performed better by nearly $30 million. Looking ahead to 2024, Tubi is a standout in our growth portfolio, particularly in digital. Given the momentum we're experiencing in the business, including what we saw in Q4 and what we're observing already in July, it makes sense to continue investing in that area. Therefore, you should expect to see a similar level of net investment or potentially even an increase in fiscal 2024. However, this will be balanced by other aspects of our growth portfolio, such as national weather and USFL seeing a slight decrease in investment. We are quite excited about Tubi and firmly believe in its potential, so we will maintain our leadership position there.

And just finally on the Big Ten as regards to University of Oregon and University of Washington coming into the Big Ten conference, look, we just think these additions will only strengthen our call it football franchise across FOX Sports, but particularly our partnership and it is a partnership in the Big Ten Network. So we think it's very positive for us across the board.

Operator, we have time for one more question.

Okay. That question comes from the line of Robert Fishman from MoffettNathanson. Please go ahead.

Good evening. After seeing some of the news earlier this year with CBS and its affiliates negotiating with the vMVPDs can you just help us think about how Fox's relationship is with affiliates today? And with this backdrop, if you can talk about your confidence about continuing to grow affiliate fees despite the elevated levels of cord cutting? Thank you.

Thank you very much, Robert. Our relationship with affiliates is very strong, and we communicate with them regularly. We recognize the challenges facing broadcast television and the issues that our station group shares with them. We are aligned with them regarding both the opportunities and risks in this business. We take pride in having secured our key sports franchises in the pay-TV environment, as well as in supporting our affiliates, who are our most important distribution partners. We do not distribute our NFL games anywhere else, maintaining exclusivity for our distribution partners, which is well understood and appreciated. As a result, we believe we will continue to achieve industry-leading pricing in both pay and free markets. This pricing should help offset any declines in subscriber numbers. Overall, we feel positive about our position with our affiliates.

Great. 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.

Thank you.

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