10-QPeriod: Q1 FY2020

Fox Corp Quarterly Report for Q1 Ended Sep 30, 2019

Filed November 6, 2019For Securities:FOXAFOX

Summary

Fox Corporation (FOXA) reported its first quarterly results as a standalone public company following its separation from 21st Century Fox in March 2019. For the three months ended September 30, 2019, the company saw a 5% increase in total revenues to $2.67 billion, driven primarily by a 14% rise in affiliate fees in its Television segment and a 2% increase in its Cable Network Programming segment. However, net income attributable to Fox Corporation stockholders decreased by 17% to $499 million, impacted by higher interest expenses from a significant debt issuance in January 2019 and a decrease in unrealized gains on investments. Despite the decline in net income, the company's operational performance showed strength, with Adjusted EBITDA increasing by 12% to $856 million. This growth was propelled by robust performance in both the Cable Network Programming segment (up 8% in Segment EBITDA) and the Television segment (up 47% in Segment EBITDA), the latter benefiting from strong affiliate fee revenue and higher pricing for entertainment programming. The company also announced strategic initiatives, including a $2 billion stock repurchase program and the acquisition of a 67% stake in Credible Labs Inc., a consumer finance marketplace, signaling a focus on both shareholder returns and diversification.

Financial Highlights

46 data points
Beta

Revenue

$2.67B

Net Income

$499.00M

18.7% Net Margin

EPS (Diluted)

$0.80

Total Assets

$20.53B

Cash & Equivalents

$3.34B

Free Cash Flow

$163.00M

Financial Statements
Beta
Revenue$2.67B
SG&A Expenses$352.00M
Interest Expense$90.00M
Net Income$499.00M
EPS (Basic)$0.80
EPS (Diluted)$0.80
Shares Outstanding (Basic)622.00M
Shares Outstanding (Diluted)624.00M

Key Highlights

  • 1Total revenues increased by 5% to $2.67 billion for the quarter ended September 30, 2019, compared to the prior year period.
  • 2Adjusted EBITDA, a key non-GAAP metric, grew 12% to $856 million, indicating improved operational profitability.
  • 3Net income attributable to Fox Corporation stockholders decreased by 17% to $499 million, largely due to increased interest expense from a $6.8 billion senior notes issuance in January 2019.
  • 4The Television segment showed significant Segment EBITDA growth of 47%, driven by strong affiliate fee revenue and advertising pricing, despite a slight dip in advertising revenue overall.
  • 5The Cable Network Programming segment's Segment EBITDA increased by 8%, supported by higher affiliate fees and reduced operating expenses, though advertising revenue saw a decline.
  • 6Fox announced a $2 billion stock repurchase program and entered into an accelerated share repurchase agreement, demonstrating a commitment to returning capital to shareholders.
  • 7The company acquired a 67% stake in Credible Labs Inc. for approximately $260 million, marking a strategic move into the consumer finance marketplace.

Frequently Asked Questions

The primary driver for the 5% increase in total revenues to $2.67 billion was a combination of factors, including higher affiliate fee revenues, particularly in the Television segment due to increased rates and fees from affiliated stations, and growth in other revenues such as digital content licensing. Cable Network Programming affiliate fees remained stable overall, supported by higher rates offsetting a lower subscriber base.

Net income attributable to Fox Corporation stockholders decreased by 17% primarily due to a significant increase in interest expense, stemming from the issuance of $6.8 billion in senior notes in January 2019. Additionally, a decrease in unrealized gains on investments and higher costs associated with operating as a standalone public company also contributed to the decline.

The announcement of a $2 billion stock repurchase program, along with an accelerated share repurchase transaction for $350 million, signals the company's confidence in its financial position and its commitment to enhancing shareholder value by reducing the number of outstanding shares.

Fox is pursuing a strategy that includes both returning capital to shareholders and strategic acquisitions. The acquisition of a 67% stake in Credible Labs Inc., a U.S. consumer finance marketplace, for approximately $260 million, indicates a move to diversify beyond traditional media assets into a new growth sector.