10-QPeriod: Q3 FY2020

Fox Corp Quarterly Report for Q3 Ended Mar 31, 2020

Filed May 7, 2020For Securities:FOXAFOX

Summary

Fox Corporation's (FOXA) Form 10-Q for the quarter ended March 31, 2020, highlights a significant increase in total revenues, up 25% year-over-year for the quarter, driven by strong advertising revenue, bolstered by the broadcast of Super Bowl LIV and increased digital advertising. Affiliate fee revenue also saw a healthy 10% rise due to higher per-subscriber rates. However, the company is navigating the early impacts of the COVID-19 pandemic, which is causing disruptions to sporting event broadcasts and local advertising markets, leading to an estimated potential revenue impact of $200 million to $240 million in the fourth quarter of fiscal year 2020. Operationally, the company experienced increased expenses, largely attributed to higher sports programming rights amortization and production costs, as well as costs associated with operating as a standalone public company. Despite these increased costs and the looming uncertainty of COVID-19, Fox Corp completed strategic acquisitions, including Tubi for approximately $445 million and three television stations for $350 million, while also selling two stations. The company also announced a $2 billion stock repurchase program and has maintained a strong liquidity position with $3.2 billion in cash and cash equivalents and an unused $1.0 billion revolving credit facility.

Financial Highlights

47 data points
Beta

Revenue

$3.44B

Net Income

$78.00M

2.3% Net Margin

EPS (Diluted)

$0.13

Total Assets

$20.24B

Cash & Equivalents

$3.20B

Free Cash Flow

$1.52B

Financial Statements
Beta
Revenue$3.44B
SG&A Expenses$464.00M
Interest Expense$89.00M
Net Income$78.00M
EPS (Basic)$0.13
EPS (Diluted)$0.13
Shares Outstanding (Basic)608.00M
Shares Outstanding (Diluted)612.00M

Key Highlights

  • 1Total revenues surged 25% in the third quarter of fiscal year 2020, primarily driven by a 44% increase in advertising revenue due to the Super Bowl LIV broadcast and higher digital advertising, alongside a 10% increase in affiliate fee revenue.
  • 2The Cable Network Programming segment saw a 6% revenue increase, with Segment EBITDA growing 7%, boosted by higher affiliate rates and advertising revenue at FOX News Media.
  • 3The Television segment's revenue jumped 41% in the quarter, largely due to the Super Bowl LIV broadcast which contributed approximately $500 million, and higher political advertising at broadcast stations.
  • 4The company made significant strategic acquisitions, including Tubi for $445 million and three television stations for $350 million, while divesting two other stations.
  • 5Despite revenue growth, operating expenses rose 24% in the quarter due to higher sports programming rights amortization, production costs, and expenses related to operating as a standalone entity.
  • 6COVID-19 is beginning to impact operations, with cancellations/postponements of sporting events and a decline in local advertising markets, posing an estimated revenue risk of $200-$240 million for Q4 FY2020.
  • 7Fox Corp ended the quarter with a strong liquidity position, holding $3.2 billion in cash and cash equivalents and having an undrawn $1.0 billion revolving credit facility.

Frequently Asked Questions

The COVID-19 pandemic is beginning to impact Fox Corp by causing cancellations or postponements of sporting events and a decline in local advertising markets. This has led to an estimated potential revenue decrease of $200 million to $240 million in the fourth quarter of fiscal year 2020. The company also notes that the magnitude of the impact depends on the pandemic's duration and governmental responses.

Fox Corp reported a significant 25% increase in total revenues for the three months ended March 31, 2020, compared to the prior year. This growth was driven by a substantial 44% increase in advertising revenue, largely due to the broadcast of Super Bowl LIV and higher digital advertising, and a 10% rise in affiliate fee revenue stemming from increased per-subscriber rates.

During the period leading up to and during the quarter, Fox Corp acquired Tubi, Inc. for approximately $445 million in net cash, and three television stations for approximately $350 million. They also sold two television stations for approximately $45 million.

Fox Corp reported $3.2 billion in cash and cash equivalents as of March 31, 2020, and has an undrawn $1.0 billion revolving credit facility. They also issued $1.2 billion in senior notes in April 2020. The company has implemented short-term cost reductions, including executive compensation adjustments, to address the impact of COVID-19.