Ladies and gentlemen, thank you for standing by. Welcome to the Fox Corporation Third Quarter Fiscal Year 2024 Earnings Conference Call. 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 2024 3rd 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.

Thank you, Gabby, and thanks, everyone, for joining us this morning. This quarter, FOX continued to distinguish itself from its peers, delivering 7% EBITDA growth and demonstrating again the strength of our brands and the advantages of our strategy. This result is even more impressive when considering we are comparing to last year's third quarter, which enjoyed a significant tailwind from Super Bowl 57. In the fiscal third quarter, total affiliate revenue fees grew 4% with positive growth at both our Television and Cable segments, driven by pricing benefits from our recent renewals. Headline advertising revenues were down during the quarter as expected, due to the absence of the Super Bowl and fewer NFL broadcasts than in the prior year. If not for the difference in our NFL postseason schedule, our total advertising revenues would have increased a few percent. Overall, advertising trends at FOX are clearly moving in the right direction, both in the scatter market and in early upfront discussions. Demand for sports remains robust, while trends at FOX News are improving across the board, including the fact that we have now fully lapped the direct response market issue that had adversely impacted FOX News PR revenues. And while there wasn't much of a primary season this year, we do expect strong political advertising for national and local races as well as local ballot issues in the first half of our fiscal '25, which would largely benefit our station group. As we look to our annual upfront presentation next week, our focus on live content and must-watch events, such as the coming presidential election cycle and next year's Super Bowl, combined with Tubi's position as the most watched free TV and movie streaming service, will favor our enviable position with advertisers across the FOX portfolio. Operationally, FOX News again ended the third quarter as the most watched cable network in total day and primetime. FOX News also strengthened its leadership position inside the category gaining share, commanding 50% of total viewing. These gains are underpinned by a dedicated team of journalists and staff who are focused on delivering coverage and insights on current events most relevant to our viewers. Building from our strength in primetime, we are expanding our leadership across day parts, whether that be mornings with FOX & Friends, afternoons with The Five or late nights with Gutfeld. And we expect this momentum to continue as we ramp up action coverage heading into the fall. Tubi ended the third quarter with 22% revenue growth driven by a 36% increase in total view time and 20% growth in monthly active users to just under 80 million MAUs. Our expansive content library and our differentiated user base have solidified Tubi's position as the most watched free TV and movie streaming service in the U.S. with 1.6% of total TV viewing, ahead of Peacock, MAX, The Roku Channel, Paramount+ and Pluto TV, and only marginally behind Disney+. Paramount's debut on the Nielsen Gauge in February of '23 to the most recent gauge in March of '24 saw Tubi's share of total U.S. TV viewing grow 60%, which is faster than any other streaming service over that same period. Apart from just its growing scale, Tubi is also uniquely valuable to advertisers through its reach and engagement. Over 60% of Tubi users are classified as cord cutters or cord nevers, and 90% of their viewing time is proactively on demand as opposed to passively watching a fast channel. This positions Tubi very well as an important part of the growing digital streaming advertising marketplace. We look forward to showcasing Tubi's strengths at next week's upfront. FOX Sports had an impressive quarter with strength across all areas of our portfolio. We finished the 30th anniversary of the NFL on FOX on a high note with 3 NFC playoff games on FOX averaging an incredible 45 million viewers. This was capped with the NFC Championship game growing over 56 million viewers, which is 19% higher than last year's NFC Championship game and the most watched in over a decade. This season also reinforced FOX's solid position in college sports with strong viewership from both college football and college basketball. In fact, in the current academic year, FOX remains the most watched college football, Men's College Basketball, and Women's College Basketball games across the regular season. College sports have grown to become the second biggest source of FOX viewership behind only the NFL. Total consumption of college sports on FOX has grown by over 40% through the last five years. And in the March quarter, we launched the UFL, United Football League, the result of the merger of the USFL and XFL. With this merger, the outlook for spring football is promising, and we are pleased with the results through the midpoint of the season. While the sports calendar in our upcoming fiscal fourth quarter tends to be quieter, FOX Sports is excited to present its summer of soccer, featuring over 200 hours of live soccer coverage across our platform starting with the UEFA European Football Championship on June 14 and Copa America on June 20. This summer will also feature a new schedule from FOX Entertainment, with returning favorites like Gordon Ramsay's Food Stars and exciting new shows like the 1%. This follows a successful spring slate that featured two of the top five new primetime series in Krapopolis and The Floor, with Krapopolis ranking as the number one new primetime entertainment show and The Floor as the number one game show season to date. Last quarter, we announced the formation of a new sports-focused digital distribution platform with our partners Disney and Warner Bros Discovery. We are happy to have hired a world-class CEO in Pete Distad, and he is off to a flying start. In just several weeks, the joint venture now has over 150 engineers and executives dedicated to building a unique innovative product which focuses on sports fans outside of the traditional TV bundle. We've already launched an internal data service that I have been trialing this past week, and I must say it's an incredibly exciting product, and we can't wait to launch it this fall. Today's media market is certainly dynamic, but the strength and leadership of our brands and their capacity to convert those strengths financially underscores our considered strategy. Underpinned by our best-in-class balance sheet, we ended the quarter with $3.8 billion in cash and just 1 time net leverage. We remain committed to driving long-term shareholder value creation through the thoughtful balance of managing our existing businesses, pursuing new adjacencies, and returning capital to our shareholders. And with that, I'll hand it over to Steve.

Thanks, Lachlan, and good morning, everyone. FOX's strategy continues to deliver solid results. Even with the comparison to our blockbuster NFL schedule of the prior year, we posted total revenues of $3.45 billion and grew adjusted EBITDA by 7% to $891 million. Total company affiliate fee revenues grew 4% over the prior year with growth at both our Television and Cable segments, supported by a recent cycle of affiliate renewals. Reflecting the event-driven nature of our business, advertising revenues on a headline basis were down 34% as we compare against last year's broadcast of the Super Bowl, along with 2 less NFL playoff broadcasts in the current year quarter. As Lachlan just mentioned, if not for the impact of these NFL schedule items, total company advertising revenues would have grown low single digits. Total company other revenues were down 22% versus the prior year primarily due to the timing of sports licensing revenues, which were more weighted towards our fiscal second quarter this year. Total company expenses fell 21% year-over-year, primarily a result of the NFL postseason schedule differences I just mentioned. Net income attributable to stockholders was $666 million or $1.40 per share compared to the net loss of $54 million or negative $0.10 per share reported in the prior year period. This year-over-year variance reflects the growth in EBITDA as well as the absence of last year's FOX News Media litigation charge and a current quarter book gain on the merger transaction of the USFL, which is now being deconsolidated in connection with the formation of the United Football League. Excluding these and other non-core items, adjusted EPS was $1.09, up 16% against last year's $0.94. Now let's turn to our segment results. At Cable, revenues were $1.47 billion, down 6% from the prior year quarter, while EBITDA grew 3%. Cable affiliate fee revenues were up 1%, with growth in pricing from our distribution renewals outpacing the impact of industry subscriber declines running in the mid-8% range. Cable advertising revenues fell by 6% or $20 million at the national sports networks, due to the absence of last year's Super Bowl-related programming and the World Baseball Classic. At FOX News, ad revenues were impacted by moderating direct pricing declines and lower digital traffic, partially offset by higher national pricing. Cable other revenues decreased by $89 million, primarily due to the timing of sports sublicensing revenues, which were more weighted towards our fiscal second quarter. Cable expenses were 16% lower than the prior year, primarily due to the timing of the associated sports sublicensing expenses, lower costs at FOX News, and the deconsolidation of the USFL. Despite segment revenues being down 6%, quarterly adjusted EBITDA at Cable grew 3% over the prior year quarter to reach $819 million. Turning to our Television segment, where revenues were $1.94 billion, down 22% from the prior year, while EBITDA increased 24%. TV affiliate fee revenues grew 9% over the prior year as price increases across our owned and operated as well as 30 FOX-affiliated stations more than offset the impact from subscriber declines. As mentioned previously, TV advertising revenues were impacted this quarter by the composition of our post-season NFL schedule, namely the absence of last year's Super Bowl and 2 less NFL playoff games. As a result, on a headline basis, TV advertising revenues were down 40%. TV other revenues increased by $30 million, primarily the result of the timing of deliveries from our entertainment production companies. While total TV revenues were down versus the prior year, this was more than offset by a 24% decrease in TV expenses. Expenses were lower in the quarter, primarily due to the impact of the NFL schedule, along with fewer hours of original scripted prime-time content, including the impact of the industry's labor disputes. Overall, we delivered quarterly adjusted EBITDA at the TV segment of $145 million, up 24% over the prior year quarter. Turning to cash flow, we generated strong free cash flow of $1.39 billion in the quarter, reflecting our normal seasonal cycle of collecting advertising revenues from our fall programming, coupled with our major sports rights payments being concentrated in the first half of our fiscal year. From a capital return perspective, from the commencement of the third quarter through today, we have repurchased $300 million under our share buyback program, along with returning nearly $125 million to our shareholders via our semiannual dividend payment. Our total cumulative buyback activity since the launch of the program in 2019 now amounts to $5.4 billion or 26% of our total shares outstanding, and we remain committed to fully utilizing our current $7 billion authorization. These capital return measures are supported by our robust balance sheet, where we ended the quarter with $3.8 billion in cash and $7.2 billion in gross debt. And with that, I'll turn the call back over to Gabby to open the Q&A.

Great. Thanks, Steve. And now we will be happy to take questions from the investment community.

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

Thank you, and good morning everyone. Strong growth again at Tubi. I guess a couple of questions on that. I mean, first, what's driving the growth in TVT? Any color you guys can provide on CPMs? Disney yesterday gave you a little color on some weakness in connected TV CPMs and then three, any color you can provide on dilution at Tubi and maybe how you guys view future profitability of that business? Thanks.

Thank you very much, John. I'll begin by addressing your question. I’m not entirely sure what you mean by dilution at Tubi, but let’s discuss the other two points. Tubi's growth remains exceptionally strong, driven by both new subscribers and viewers discovering the platform. We've been very effective in marketing, attracting more people, and establishing Tubi as a well-recognized and loved brand in the market. This is largely due to the extensive library we offer, with 250,000 movies and television series available, along with around 270 live fast channels. This presents a fantastic product for our users. Interestingly, despite the vast selection of fast channels and 2,000 movies and TV series, 90% of viewership is on demand. This is crucial because on-demand viewing, which is actively sought by users, is more valuable to advertisers than passive viewing of our fast channels. We intend to highlight this in our upcoming upfront presentations. Thus, we are confident in maintaining our CPMs at Tubi. We are already operating efficiently in that regard. Some competitors who recently entered the AVOD market priced themselves quite high, which has led to a decline in CPMs as the market adjusts to increased supply. This influences the advertising market overall, including for Tubi. However, we don't anticipate significant impacts on our CPM from that perspective. That said, we will face tough comparisons in the fourth quarter, as last year Tubi's revenue grew by 47%, making it a challenging benchmark for us next quarter. Therefore, we expect some headwinds for the entire market, as well as for Tubi's comparisons in the upcoming quarter. That's just a note of caution.

Your next question comes from the line of Robert Fishman from Moffett. Please go ahead.

Good morning, everyone. Given all the press about the NBA negotiations underway, just curious if you can think a little bit as far as your broader sports rights go? And how do you think about the value of FOX Broadcast Network as you negotiate those future sports rights? And then the flip side of that is you feel like you're at a competitive disadvantage without your own SVOD service to compete for future rights? And then if I can, just separately, given all the M&A discussion in the industry, what are your latest thoughts on monetizing some of your strategic non-core assets like your FanDuel option and Studio Lot? Thank you.

Thanks, Robert. So, with the NBA, obviously, I can't comment on other people's negotiations and where that may or may not end up. In terms of how we think about it affecting the value of the FOX Network and our sports portfolio, we're very happy with our sports portfolio. We obviously look at packages as they come up, but we see them as a portfolio or a bouquet of sports rights that we have, and we feel very strong with the current portfolio that we have, which is one of the reasons why we didn't pursue the NBA in this round of negotiations. But I think it does go to the value of broadcast television because sports leagues still need reach, and that remains incredibly important for them to drive their fan bases, to get the maximum amount of viewership to their games and matches. Thus, the value of the FOX Network and, frankly, our strategically important station group to any sports league only increases over time, which is what we're seeing. Therefore, I don't think we are strategically disadvantaged with not having a subscription video-on-demand service because we found in the past, we can partner with others while, frankly, the leagues tend to partner with others. We can take the rights where we can broadcast to the largest audience possible, and they can allocate rights to SVODs as needed. But they're never going to be able to exist entirely without a broadcast network and broadcast distribution.

Yes. So, Robert, just concerning the M&A picture, our posture on non-core assets is that we're strong believers in the sports betting market in this country. We read with interest you all putting a $1 billion-dollar value on it. So, it is now our intention to see it through and eventually exercise it. Regarding the Studio Lot, we see it as a long-term asset for us. We have development plans for that. Therefore, we do not see any change in posture around early monetization of those assets. We think they are incredibly valuable for the long term.

And I'd just remind you, it's not only the value of the option, but also the equity that we have in Flutter, which is today worth over $900 million.

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

Thanks. Good morning. Just a question around your products coming to market, the streaming joint venture, and also maybe how Tubi might fit in. Any more you can share with us on sort of what you think is really differentiated about the product? We haven't seen it yet; you have. And I noticed in the Disney deck yesterday that it says a definitive agreement hasn't been signed yet. So, I didn't know if there was something holding it up or if that meant anything. Any update on sort of the go-forward plan, and then I'm wondering if Tubi, with its reach as an app-based service, is that an opportunity for maybe bundling the joint venture product or merchandising in some way? You have a pretty interesting direct customer relationship with Tubi. I know it's a different kind of product offering, but I was curious if you thought about leveraging that asset or those two assets together to create more value for the company.

Thanks very much, Ben. So first of all, as I said, I've actually got the beta version of the streaming app behind me, and I don't think we've announced the name yet, so I won't inadvertently reveal it on this call. But it is looking tremendously exciting, as I said in my comments. It's very innovative. It's designed to be entirely focused on the cord nevers and cord cutters, people who are not in the cable bundle. We frankly won't be able to compare it to a tier of live channels. It's a very different digital-first product that I'm sure, when you eventually get it, you'll understand how groundbreaking it really is in this country. Concerning the timeline, everyone is running at full pace to get the product finished and delivered. Obviously, there's the fun side, which is the user interface and how you use it, which has been great to experience, but there's a ton of work, obviously, in engineering behind that in ingesting content from multiple partners and being able to combine that into one seamless platform. There is a tremendous amount of work being done to get us over the line this autumn, but we're incredibly excited. So, there's no meaning to read into final deal terms being signed. It's just a matter of everyone running on all cylinders to get this finished. So on Tubi, I should say we don't see Tubi as a very different product. We don't see an opportunity at this stage or haven't contemplated an opportunity at this stage to bundle the sports service with Tubi. I think it makes potentially more sense to bundle sports with other SVOD services, which you'll likely see as we go forward.

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

I have a couple of questions. First, regarding political advertising, Lachlan, you seem quite confident that it will return. However, my question is whether it will come back to linear in the same way it has in the past, and what is your overall outlook? Secondly, concerning mergers and acquisitions, your balance sheet appears to be the strongest in the industry, so I was curious to hear about the opportunities you see out there, especially with all the activity happening in the industry. Lastly, I wanted to follow up on Tubi, which is experiencing remarkable momentum; it seems to have outperformed all other fast channels and is now competing with major SVOD channels and network platforms. What do you envision for it over the next three years?

Thank you, Jessica. Regarding politics, we are certainly disappointed that the primary season was not more competitive. However, we believe this election will see significant financial contributions from both sides, which will ultimately benefit local television. Our confidence stems not only from the amount of money raised but also from the strategic positioning of our stations in key markets with closely contested Senate races. For example, we have major stations in Arizona, Michigan, Pennsylvania, and Wisconsin, where political funding typically aligns with local news. Additionally, our DC station will gain from a competitive race in Maryland. There are also many issues on ballots in various markets like Arizona, Florida, and Maryland, which will attract further funding. Thus, we anticipate a strong political season, despite the delayed start compared to our initial expectations. Traditionally, primaries feature more contested races, and we expect to see the benefits in the first half of our next fiscal year. Regarding M&A, I completely agree that we have an excellent balance sheet and will continue to seek promising opportunities that align with our strategic objectives. Although we have yet to identify any actionable prospects, we are monitoring the situation closely. Concerning Tubi, it continues to show growth. As it scales, comparing growth rates becomes more challenging, but we expect continued expansion. The transition of funds from traditional linear television, especially cable networks, to streaming services like AVOD and SVOD is a long-term trend that will benefit us significantly. Therefore, we remain confident in Tubi's ongoing growth, especially under Angele's leadership, as it continues to strengthen.

Operator, we have time for one more question.

Okay. That question comes from the line of Michael Morris from Guggenheim. Please go ahead.

Thank you. Good morning, guys. Two questions, if I could. The first one is on the joint venture, and some of your existing distribution partners have raised concerns. They feel it is unfair to them for you to have a sports-only joint venture. It seems that you would disagree by virtue of the fact that you are moving forward. So, I'd love if you could address those concerns and whether you think there will be changes in the marketplace or whether you think those concerns are unfounded. The second question, a bit more on the model, perhaps for Steve. Television profit was notably strong in the quarter given that on a year-over-year basis, you did not have the Super Bowl or those extra playoff games. So, can you unpack a little bit? We would think that those types of events would be uniquely profitable, so to show profit growth as you compare to those challenges, I'd be curious if you could talk about sort of the sustainability and whether maybe we're overestimating how profitable those games are. Thank you.

Thanks, Mike. Let me start. So, on the sports joint venture and how we certainly view it and discuss it with our distribution partners. First, and this is incredibly important to us, we are wholly and fundamentally supportive of the traditional cable television bundle. It will continue to be, for a very long time, our number one revenue stream. We are all in to support our distributors in every way we can in that bundle and support their subscribers and their business. That is absolutely a fundamental fact for us. Having said that, we've always said it's important to put our brands where viewers are, right? In the universe of sports fans that don't currently take a cable bundle, that is the universe that the sports joint venture will be entirely focused on, and it is frankly important to us because we are so invested in the cable bundle that the sports joint venture will be very targeted and focused on the nontraditional Pay TV viewer universe. We believe we can market carefully and in a targeted way to those subscribers to minimize any cannibalization of the traditional subscribers. Therefore, we are very open with our distributors about their importance to us and also how we can focus the sports joint venture in the areas where it needs to be focused.

Yes. In terms of television profitability, we were up close to $30 million quarter-over-quarter. The way to think about it is the Super Bowl, which had a high tens of millions dollar EBITDA contribution last year, versus this year. To offset that, we grew affiliate fees in the segment by about $70 million. So, that is a push between this year and last year. What remains is the EBITDA driver from a quarter-to-quarter perspective, which is the change in entertainment programming costs. There was an ongoing shift from scripted to unscripted content to lower the dollar cost per hour without harming viewership, as well as the impact of industry labor disputes. Those are the big three drivers.

At this point, we are out of time. However, if you have any further questions, please give me or Charlie Costanzo a call. Thanks so much for joining us today.

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