Ladies and gentlemen, thank you for standing by. Welcome to the Fox Corporation Fourth Quarter Fiscal Year 2025 Earnings Conference Call. As a reminder, this conference is being recorded. I will now turn the conference over to Chief Investor Relations Officer, Ms. Gabrielle Brown. Please go ahead, Ms. Brown.

Thank you, Carly. Good morning, and welcome to our fiscal 2025 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 EPS and adjusted EBITDA, or EBITDA as we refer to it on this call. Reconciliations of non-GAAP financial measures are included in the earnings release and our SEC filings, which are available in the Investor Relations section of our website. We also refer to free cash flow, which we define as net cash provided by operating activities, less capital expenditures. And with that, I'm pleased to turn the call over to Lachlan.

Thank you, Gabi. I want to apologize in advance for my coughing due to the end of a cold, and I appreciate you and Steve for being here with me. Thank you all for joining us this morning to discuss our fourth quarter and full year earnings results. Fiscal 2025 was a remarkable year for FOX, demonstrating our operational and financial strength across all businesses, achieving our best year yet. We experienced significant financial success with a 17% increase in revenue to $16 billion, a 26% rise in EBITDA to $3.6 billion, a 39% increase in adjusted EPS to $4.78 per share, and a 100% growth in free cash flow to $3 billion, setting records for FOX. We also achieved a record in political advertising revenue of over $400 million across FOX platforms. The broadcast of Super Bowl LIX shattered viewership and advertising records, making it the most watched telecast in U.S. history, with over $800 million in gross advertising revenue. Engagement at FOX News resulted in a record audience share, reaching over 70% of the cable news audience at times during the year. Our strong fiscal 2025 results were supported by a 26% increase in total advertising revenue to $7 billion. The momentum we reported in the first three quarters continued strongly into the fourth quarter, with a 7% increase over the previous year despite challenging comparisons from last year's UEFA Euro and Copa America soccer tournaments. Looking ahead to fiscal '26, the overall advertising market for FOX remains healthy and vibrant, as demonstrated by our recently completed upfront, which saw record double-digit volume and solid pricing growth across our portfolio. The strength of our brands and our ability to reach engaged audiences at scale across our platforms is exceptionally strong, particularly evident with FOX News. FOX News finished the fiscal year as the leading cable network in total day and prime time. In the fourth quarter, total day audience grew by 25% in total viewers and 31% in the demo, capturing over 60% of the cable news audience. For the second consecutive quarter, FOX News ranked as the second most watched network Monday through Friday in prime time across all television, just behind one broadcast network. Not only is linear news performing well, but FOX News Digital also set new engagement records during the quarter, achieving over 1.5 billion YouTube views and over 3.7 billion social media video views, both record highs. Engagement trends are off to a promising start in the first quarter of this new year, with FOX News becoming the highest rated television network in America for July, bolstered by popular programming like Jesse Watters Primetime and Gutfeld!, the top late-night show on television. FOX Sports once again established its position, finishing first among all networks in live sports. This engagement was driven by an impressive lineup of events, including an exciting Major League Baseball postseason, the launch of FOX COLLEGE FOOTBALL FRIDAYS, the NFL on Fox, and the record-breaking Super Bowl LIX. Although our fourth quarter had a lighter sports schedule, FOX's inaugural presentation of the Indianapolis 500 was a resounding success, averaging over 7 million viewers, a 41% increase over last year, and the highest viewership for the race in 17 years. The appeal of live sports remains unparalleled, and our sports portfolio is increasingly sought after by both advertisers and viewers. We anticipate this trend to continue as we head into autumn, welcoming back postseason baseball, the NFL, and College Football on FOX. FOX's Big Noon Saturday will kick off on August 30, featuring a highly anticipated rematch of last season's college football playoffs semi-final between Texas and Ohio State. By then, you will be able to stream our entire sports portfolio, alongside our news and entertainment programming, on FOX One, our direct-to-consumer streaming platform, set to launch across the U.S. on August 21 for $19.99 per month. While FOX One will be promoted to the cordless market, current pay TV subscribers will also have access to it through authenticated channels. We will provide bundling opportunities that align with our objectives. As we've mentioned before, our goals for FOX One subscribers are modest, and our investments in this initiative will align with our long-term goals. Speaking of the cordless market, Tubi had numerous achievements in fiscal 2025, including becoming the most streamed Super Bowl in history, exceeding 100 million monthly active users, generating over $1.1 billion in revenue, and achieving an all-time high of 2.2% share of total U.S. television viewing. The positive momentum seen at Tubi this fiscal year continued into the fourth quarter, with a 17% increase in total view time and growth in our direct response and partner channels, driving a 32% increase in revenue during the quarter. Tubi's unique audience appeals to advertisers seeking to reach the cordless market, as reflected in this year's upfront results showing over 35% year-on-year volume growth while maintaining stable rates in a competitive connected TV landscape. Fiscal 2025 was a solid year for FOX, clearly illustrating the effectiveness of our distinct strategy, and we have more developments to look forward to. Throughout these calls, we have consistently stated our goal to engage with viewers wherever they prefer. The traditional cable bundle remains our favored distribution channel as it offers excellent value to consumers. Tubi, with two-thirds of its users outside of the bundle, caters to a substantial market eager for free premium content, and soon FOX One will address another significant audience segment seeking a paid targeted offering that encompasses all FOX brands. These components of our distribution strategy allow us to reach the largest possible audience and will support our growth in the coming years. We enter fiscal 2026 with strong operational and financial momentum across our company, and we are excited about the upcoming year, which will see the launch of FOX One in just a few weeks, the renewal of one-fourth of our distribution revenue, a healthy advertising environment, and the FOX broadcast of the FIFA Men's World Cup later this fiscal year. In line with our confidence in the direction of the business, we are announcing a $5 billion increase to our share repurchase authorization this morning. With our balance sheet stronger than ever, we plan to continue repurchasing shares while also investing organically and retaining flexibility to thoughtfully invest in new business ventures.

Thanks, Lachlan, and good morning, everyone. With a strong fourth quarter, capping off and shaping up to be a strong year, FOX delivered record financial results in fiscal '25, with record total company revenues of over $16 billion, growing 17% year-over-year and record adjusted EBITDA of $3.6 billion, growing an impressive 26% year-over-year, converting to record free cash flow of $3 billion. Advertising revenues across the company were up 26%, with strong growth at both our Television and Cable Network Programming segments. This growth was driven by both our banner year of events, including record-breaking advertising revenues for both Super Bowl LIX and the Presidential election cycle, as well as strength in our underlying core, highlighted by accelerating Tubi growth, robust news pricing and engagement growth and very healthy advertiser demand for our sports programming. We successfully completed renewals with distributors, representing approximately 1/4 of our overall affiliate revenues this year, with the financial benefits of these renewals driving 5% growth in total company affiliate fee revenues, led by 7% growth at the Television segment. Total company other revenues were up 47% year-over-year, driven by higher sports sublicensing revenues at our Cable Network segment. As we have previously mentioned, this growth in revenue was largely offset by a corresponding increase in rights costs with no material impact on year-over-year overall EBITDA growth. Total company expenses increased 14%, largely due to higher sports rights amortization and production costs, including costs associated with Super Bowl LIX and the sublicensing revenues I just mentioned. Net income attributable to stockholders was $2.3 billion or $4.91 per share, up versus the $1.5 billion or $3.13 per share reported in fiscal '24. Excluding non-core items, full year adjusted net income was $2.2 billion, and adjusted EPS was $4.78 per share, up 39% year-over-year. Turning to our fiscal fourth quarter, FOX delivered another quarter of impressive results, highlighted by a 6% increase in total revenues and 21% growth in adjusted EBITDA. Our advertising revenues increased 7%, led by continued growth at Tubi and strong engagement and pricing at News. Total company affiliate fee revenues grew 3% over the prior year quarter, once again demonstrating the strength of our brands and focused portfolio of channels. Other revenues grew 33%, driven by higher content revenues. Net income attributable to FOX stockholders was $717 million or $1.57 per share as compared to the $319 million or $0.68 per share reported in the prior year period. Excluding non-core items, adjusted net income was $581 million, and adjusted EPS was $1.27, up 41% compared to the $0.90 per share recorded in the prior year. Now let's turn to the Q4 performance of our operating segments, starting with the Cable Network Programming segment, which delivered 7% revenue growth and 6% EBITDA growth. Cable advertising revenues grew 15% over the prior year, driven by the strength in FOX News engagement and supported by healthy national and direct response pricing. Cable affiliate fee revenues grew 2% over the prior year period, as pricing gains from our affiliate renewals outpaced the impact from net subscriber declines, which were consistent with the prior quarter at under 7%. Cable other revenues grew 39%, led by higher Fox Nation subscribers. Revenue growth at the Cable segment was partially offset by a 7% increase in expenses, primarily attributable to an increase in sports rights amortization and production costs. Turning to our Television segment, which delivered 6% revenue growth. Advertising revenues at Television grew 3% over the prior year, led by continued growth at Tubi, which more than offset the tough comparison against the UEFA European championships and CONMEBOL Copa America in the prior year. Television affiliate fee revenues increased 4% in the quarter, as healthy growth in fees across both FOX owned and affiliated stations more than offset the impact from industry subscriber declines. Television other revenues were up 34% year-over-year, primarily due to higher content revenues tied to our entertainment production studios. Expenses at the Television segment decreased 5%, primarily reflecting the absence of the prior year broadcast of the UEFA Euros. All in, EBITDA at our TV segment was $308 million, an increase of over 100% as compared to the prior year quarter. Turning to cash flow, where we generated robust quarterly free cash flow of nearly $1.4 billion. This strong quarterly free cash flow delivery is consistent with the seasonality of our working capital cycle, where the first half of our fiscal year reflects the concentration of payments for sports rights and buildup of advertising-related receivables, both of which reverse in the second half of our fiscal year. Before we get to capital allocation and balance sheet, it is worth noting some key items for this coming fiscal year. From an affiliate revenue perspective, in fiscal 2026, we have another relatively light year of renewals, with approximately 1/4 of our total company distribution revenues up for renewal. In fiscal '26, we expect to continue to invest in our digital-led growth initiatives. The excellent progress we have made at Tubi reinforces our confidence in Tubi's path to profitability, and its obvious asset value underscores the opportunity to drive ROI from our digital investments more broadly. Tubi delivered moderate improvement in profitability in fiscal '25, in line with the expectations we laid out at the start of the year, and we anticipate a more substantial improvement in Tubi profitability in fiscal '26, which will be weighted toward the second half of the year. This total improvement will support our initial incremental investment in new opportunities, including Latin America sports and, more notably, the launch of FOX One, which will be more concentrated in the first half of our fiscal year, as we launch this offering this month. From a cyclical event perspective, we look forward to our broadcast of the 2026 FIFA Men's World Cup, which will span our fiscal fourth quarter of '26 and first quarter of '27. We are encouraged by the momentum we are already generating and expect this North American World Cup to drive strong results for FOX. And finally, as we look at free cash flow, the strong working capital tailwind from the Super Bowl in fiscal '25 will give way to working capital timing headwinds from the World Cup, where rights payments for the tournament will land in fiscal '26, while advertising receivables will be collected early in fiscal '27. In terms of capital allocation, in fiscal '25, we repurchased an additional $1 billion through our share buyback program and made approximate $245 million in dividend payments. As Lachlan mentioned, underscoring our commitment to returning capital to shareholders, today, we announced both an incremental buyback authorization of $5 billion and an increase in our semiannual dividend to $0.28 per share. With the payment of this dividend and taking into account share repurchase activity since year-end, we will have cumulatively returned $8.5 billion of capital to our shareholders since the spin. This includes $6.65 billion of share repurchases, representing 31% 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 we ended the quarter with approximately $5.4 billion in cash and $6.6 billion in debt.

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

We have a question from Ben Swinburne with Morgan Stanley.

I'm going to ask Steve a question because I can't ask Lachlan a question. I hope you feel better. Steve, you gave us a lot of good color thinking about fiscal '26. I know you're not going to guide. I'm sure you also know that consensus is expecting like, I think, a 10% decline in EBITDA. Obviously, you lap political on the Super Bowl. But I don't know if your revenue trends have been this strong in a long time. So I'm just wondering if there's any way you can help us think about fiscal '26, maybe a little more specifically. One way might be just to talk about the sort of net drag on EBITDA from investment. If you sort of put it all together, all the puts and takes, that digital drag in '26 versus '25 or anything else you can tell us to help us think about your expectations for EBITDA in the year ahead.

Thank you, Ben. I appreciate you giving Lachlan some time. There are many factors to consider for 2026. As we develop our plans for that year, we’re starting from a solid foundation, particularly in audience engagement and advertising demand for our sports and news sectors. In terms of affiliate revenue, it will be somewhat limited in the upcoming fiscal year, with only a quarter of our contracts up for renewal. Therefore, our results will largely depend on subscriber trends throughout the year. Looking ahead, there are significant cyclical events that will impact our results. We expect political challenges, especially affecting the TV segment from our stations, particularly in the first half of the year. For context, our stations generated $270 million in political revenue during the first half of fiscal 2025, which we will have to contend with. Additionally, we have the Super Bowl in the third quarter, which will negatively affect ad revenue, but will be more neutral from an EBITDA standpoint. Towards the end of the year, we have high hopes for FIFA in the fourth quarter and the first quarter of the following fiscal year. We also have substantial MLB games in the first half of fiscal 2025, and we’re hoping for another successful postseason, although that remains uncertain. Regarding our digital growth, we previously mentioned a $350 million EBITDA deficit planned to support our digital initiatives at the start of fiscal 2024. We had anticipated that this investment would decrease in fiscal 2025, and it has, thanks in part to Tubi’s improved profitability. As we look toward fiscal 2026, we expect Tubi to show significant improvement in the latter half of the year. In the first and second quarters, we will focus on investments in Latin America and Fox One. When considering all these factors, on a conservative basis, we might expect our investment portfolio to return to that $350 million level.

I don't know if this is for Lachlan or maybe Steve can handle it, but just an update on the cable advertising trends and the efforts to sort of expand the advertising base and the receptivity you're getting from advertisers there. And then maybe, Steve, can you just follow up on the LatAm comments? Just what's the strategy there? I don't know if you can give us a sense of how much spending, but just what the plan is and the potential growth opportunities in LatAm.

Thanks, John. Regarding cable advertising trends, we'll discuss this in more detail later. Someone asked about the overall advertising market, but to focus on the positive momentum at FOX News, advertising is performing very well from both an upfront and CPM perspective, as well as direct response. This success is clearly driven by strong ratings. In the fourth quarter, our P2+ ratings increased by about 25% in both total day and prime time, and even more so in the critical demo of 25 to 54, where total day was up 31% and prime time increased by approximately 34%. This rating strength has directly contributed to a 25% rise in our advertising revenue. Looking ahead to the upcoming quarters, we should note that last year, during this time, there was a major surge in ratings following the Butler assassination attempt on July 13 against then candidate Trump, and Biden's subsequent withdrawal from the race a couple of weeks later, on July 21. We've managed to maintain that uplift in ratings since then, although the comparisons will become more challenging. That said, as we enter this first quarter, our audience share has seen a slight increase against our competitors. For total day P2+, we've reached 64% of the cable news audience share compared to MSNBC's 21% and CNN's 15%. The prime time numbers are similar. We're optimistic about maintaining our share and elevated ratings, which will positively impact our advertising revenue. On the Latin America front, Steve can elaborate on the numbers, but we're very excited about acquiring Caliente TV, our streaming service in Mexico. The FOX brand remains very strong in both Mexico and Latin America, and we view this as a great opportunity for growth with a modest investment in those markets. Steve, would you like to add anything?

Yes. In the quarter, Latin America is serving two purposes for us. We have organically acquired some sports rights there, which affected the profit and loss this fiscal year and in this quarter, leading to expenses in the low to mid-10s. Additionally, we recently acquired Caliente TV, which provides us with a strong foundation as it already has a streaming platform and distribution agreements in place. We anticipate some investment spending throughout this current fiscal year, but once we achieve full monetization, we expect to see a return on that investment.

Two, if I could, please. First, I just wanted to ask on Tubi. Appreciate the color and the strength you're seeing there. You're outpacing the broader CTV market pretty meaningfully. So I'd love to hear any detail on why you think you've been able to do that and how you feel about the ability to continue to beat the market in the coming year. And then just bigger picture. There's been some press reports that ESPN and NFL might enter an agreement that would give the NFL an ownership stake in ESPN. And I'm curious if you could comment at all on what that might mean for FOX Sports and your relationship with NFL or sports leagues more broadly.

Thanks, Mike. Regarding Tubi, it is performing strongly in the CTV market for several reasons we’ve previously discussed, including our core and ad technology. We have expanded our library to over 300,000 movies and television titles, making it the largest library of its kind in the country. Around two-thirds of our users are not tied to traditional cable, making them cordless. This presents a challenge for advertisers, which enhances the value of Tubi’s engagement with users and makes it highly attractive to our clients. All these factors combine to create a remarkable and promising product that we are pleased to see growing and expect will continue to grow. In the last quarter, we reported a 17% growth in total viewing time and 32% revenue growth, the highest among our segments. Tubi currently accounts for about 25% of our upfront committed revenue, highlighting its significance to our business. Compared to our competitors, we reach a larger number of cordless viewers. Furthermore, the Tubi audience skews younger, as evidenced by our Super Bowl broadcast, where the median age was 38, showing a notably younger and more female demographic than the traditional broadcast audience, with 40% aged between 18 and 34. Tubi played a vital role in achieving a record 128 million viewers for the Super Bowl, which would have been difficult to attain without its streaming simulcast. We are very enthusiastic about Tubi’s potential moving forward. Regarding the potential investment in ESPN by the NFL, we have a strong relationship with the NFL and appreciate their support for our broadcast and cable networks. We look forward to deepening our collaboration with them in the future.

I just wanted to follow up with Steve on the comments around the collective investments for fiscal '26. I think that implies at least $100 million to maybe $150 million of additional investments in LatAm and Fox One next year, just given the $50 million to $75 million improvement this year and the comments you made about Tubi profits further improving next year. I just wanted to ask, is that kind of like the ballpark of the incremental investment levels that we're talking about? And maybe you can just help frame some of the expected returns on those investments, whether that be for LatAm or FOX One subscribers to just give a little bit more transparency there.

Thanks, Mike. To summarize your calculations regarding our investments, when we look at the overall performance across the P&L, particularly our digital growth initiatives like Tubi and others such as Nation and Weather, we expect to invest slightly under $300 million for fiscal '25. As these growth areas mature, we'll reinvest some of that back into new initiatives, especially FOX One and Latin America, aiming to reach the $350 million mark. We'll determine the specifics on how this will unfold throughout the year. Regarding the return profile, Tubi serves as our best example. We've consistently invested in Tubi, which has shown growth and opportunities for further development, and now we observe significant improvements in profitability over the past three to four years. For our two new investments, Latin America and FOX One, you should anticipate a similar trajectory.

Can I answer that without getting too technical? Part of your question can be addressed simply in relation to FOX One, as it represents the largest portion of our new investment. It's crucial to note that none of the investment in FOX One is directed towards original or exclusive programming for that platform. FOX One will include all our existing FOX content along with Fox Nation content in a tiered format. However, this does not involve any additional significant spending. The new expenditure for FOX One, aside from some overhead and modest technology costs, mostly involves marketing and launch expenses. We have modest subscriber expectations for FOX One, so our marketing budget is also relatively modest compared to our competitors, and we can adjust it based on how things are progressing and whether we are meeting our goals. This context is important when considering both the initial costs of launching FOX One and the future sustainability and profitability of that business.

The first question is about your balance sheet. Even with your recently announced buyback, you still retain flexibility. Clearly, the industry is expected to engage in mergers and acquisitions this year or next. How will FOX be involved? Your investment requirements, as you mentioned, are quite modest at $350 million. It seems like something may happen soon, potentially as early as next week. Additionally, regarding Latin America and advertising, you're clearly outperforming the market. You provided some insights on Tubi and FOX News. Overall, what trends are you observing in television?

Yes, I apologize, Jessica. At the start of your question, I coughed. Your first question is about M&A activities and how we participate in them, but the short answer is we don't have any announcements to make. We evaluate various opportunities and maintain a high internal standard for how we use our capital. Naturally, we dismiss any options that don't align with what we view as a sensible use of our and our shareholders' capital. We're always on the lookout for opportunities, but we haven't discovered anything that meets our benchmarks for inorganic growth. Therefore, we're currently focused on organic growth. Regarding the overall advertising market, ad sales across the business are very strong. We've previously discussed how our view of the ad market differs from that of others, mainly due to our focus on segments like live news, live sports, and our successful free streaming platform Tubi. National ad sales are robust, led by the pharmaceutical, financial services, and consumer packaged goods categories. This was evident during the upfront, where we experienced double-digit volume increases and strong pricing growth across our businesses. FOX Sports had a record-breaking upfront, with commitments exceeding $2 billion, excluding the Super Bowl impact. Tubi recorded a 35% volume increase with stable pricing, which is notable considering the highly competitive CTV market. Despite the competition, Tubi is performing well. While the CTV market is competitive, it will continue to benefit from advertising revenue shifting from linear cable entertainment to digital platforms, news, and sports. We see a strong influx of advertising dollars into this market. Our sports upfront was very strong and remains healthy. It's worth noting that we achieved record revenue for the Major League All-Star game, with demand significantly exceeding supply. The NFL and College Football are also performing well, and we are optimistic about the strong demand for the FIFA World Cup later this year. In news, direct response pricing has risen by 30%, while scatter pricing has increased by 54% over the upfront. Overall, the local market is mixed; while we see gains in pharmaceuticals, they are offset by challenges in telecom and restaurants. Lastly, entertainment is doing well with double-digit increases in scatter pricing. Overall, the advertising market remains robust and is driving our growth forward.

So first, Lachlan, sorry to make you speak, but you did mention that there could be some bundles coming for FOX One. I was just wondering how you think about different partners there. One partner has probably the most sports rights. There are some others who could be kind of complementary to your afternoon NFL package. And also how you think about sort of integrating apps versus just having them be sort of more pricing bundles for consumers. And then over on the TV side of things. The FCC has been much more vocal around, I think, what it's kind of expecting in terms of reverse comp and splits between networks and affiliates. Do you think things have changed in this outlook for your network business and your relationship with affiliates? And is there any meaningful financial impact we need to think about for the next couple of years from that?

Thanks, Steve. Let me start with the discussion about FOX One and bundling. We will bundle FOX One with other services as part of our marketing and launch plans, but it will also be available as a standalone service for $19.99. We are aware of two important factors regarding the bundles. One is providing consumers with the most convenient package of our content and channels that they want to subscribe to. We aim to create the most valuable bundles possible to assist them. At the same time, we want to maintain FOX One as a targeted service aimed at the cordless audience. These two objectives can sometimes conflict, so our goal is to remain focused while also ensuring our consumers and viewers have easy access to our content, whether in conjunction with other services or alone. When you see FOX One on the 21st, it will be clear that we do not view this service as merely comparable to a standard bundle of channels. The FOX One user interface is innovative, highly personalized, and utilizes advanced technology to deliver something truly unique in the market. FOX One combines all our brands and content within a distinctive and cutting-edge user interface. Regarding the FCC and our affiliates, we are very pleased with the current FCC leadership, which supports local stations and promotes competition, bringing fresh ideas to the regulatory environment. We believe this will not affect our affiliate relationships negatively; in fact, it might enhance them. To connect both topics, FOX One will uniquely integrate both our FOX content and our local affiliates’ content. Our aspiration is that FOX One subscribers will receive local sports and news not only from our owned stations but also from our affiliate stations through the app. We are excited about supporting our local affiliate groups and independent stations, which is an important position for us in the marketplace.

Great. At this point, we're out of time. But if you have any further questions, please give me or Charlie Costanzo a call. Thanks again for joining us today.

Thank you.

Thanks, everyone. Thank you.

Ladies and gentlemen, that does conclude the Fox Corporation fourth quarter fiscal year 2025 earnings conference call. Thank you.