10-QPeriod: Q1 FY2022

Fox Corp Quarterly Report for Q1 Ended Sep 30, 2021

Filed November 4, 2021For Securities:FOXAFOX

Summary

Fox Corporation's (FOXA) quarterly report for the period ending September 30, 2021, indicates a 12% increase in total revenues to $3.045 billion compared to the prior year's quarter, driven by robust performance in affiliate fees, advertising, and other revenue streams. Despite top-line growth, net income attributable to stockholders saw a significant decline of 37% to $701 million, primarily due to a substantial one-time settlement benefit received in the prior year's comparable quarter related to the Disney divestiture. The company's operational performance, measured by Adjusted EBITDA, decreased by 9% to $1.064 billion, reflecting increased operating expenses related to programming rights, sports production, and digital investments. Segment-wise, Cable Network Programming saw a modest 1% decrease in Segment EBITDA, with revenue growth offset by higher expenses, particularly in sports programming due to the return of a full college football schedule. The Television segment experienced a more pronounced 21% decline in Segment EBITDA, as revenue increases were outpaced by significant rises in operating expenses, including higher programming rights amortization and increased digital investment in Tubi. The company maintains a strong liquidity position with approximately $5.4 billion in cash and cash equivalents and an undrawn $1 billion revolving credit facility.

Financial Statements
Beta
Revenue$3.04B
SG&A Expenses$415.00M
Interest Expense$97.00M
Net Income$701.00M
EPS (Basic)$1.22
EPS (Diluted)$1.21
Shares Outstanding (Basic)575.00M
Shares Outstanding (Diluted)578.00M

Key Highlights

  • 1Total revenues increased by 12% to $3.045 billion for the quarter ended September 30, 2021, compared to the prior year period.
  • 2Net income attributable to Fox Corporation stockholders decreased by 37% to $701 million, largely due to a significant non-recurring settlement benefit in the prior year's quarter.
  • 3Adjusted EBITDA declined by 9% to $1.064 billion, reflecting increased operating expenses across segments.
  • 4Cable Network Programming segment revenues grew 7%, but Segment EBITDA remained flat year-over-year due to higher programming and digital investment costs.
  • 5Television segment revenues increased by 17%, but Segment EBITDA decreased by 21% due to higher operating expenses, particularly in programming and digital investments (Tubi).
  • 6The company maintained a strong liquidity position with $5.4 billion in cash and cash equivalents and an undrawn $1.0 billion revolving credit facility as of September 30, 2021.
  • 7Fox Corporation repurchased approximately $250 million of its common stock during the quarter under its $4 billion repurchase program.

Frequently Asked Questions

Revenue growth was primarily driven by increases in affiliate fees (due to higher average rates per subscriber), advertising revenue (benefiting from growth at Tubi, live events, and original programming, partially offset by lower political advertising), and other revenues (from sports sublicensing, pay-per-view events, and FOX Nation subscriptions).

Net income attributable to stockholders decreased by 37% primarily because the prior year's comparable quarter included a substantial one-time settlement benefit of $462 million related to the Disney divestiture. Excluding this non-recurring item, the underlying operational performance would show a different trend.

The decrease in Adjusted EBITDA was mainly due to higher operating expenses. This included increased amortization of sports and entertainment programming rights due to a higher volume of live events and original scripted content compared to the prior year, which was impacted by COVID-19. Additionally, higher sports production costs and increased digital investments in Tubi contributed to the rise in expenses.

The company maintains a strong liquidity position with approximately $5.4 billion in cash and cash equivalents as of September 30, 2021. It also has access to an undrawn $1.0 billion unsecured revolving credit facility. Key uses of cash include programming rights acquisitions, operational expenditures, marketing, capital expenditures, and debt repayments.