News

A month has gone by since the last earnings report for Fox (FOXA). Shares have added about 3.1% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Fox due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Fox Q3 Earnings Beat Estimates, Ad Revenues Decline

Fox Corporation reported third-quarter fiscal 2024 adjusted earnings per share of $1.09, which beat the Zacks Consensus Estimate by 11.22%. The figure increased 16% year over year.

Revenues declined 15.6% year over year to $3.44 billion. The figure beat the consensus mark by 0.22%.

Affiliate fees revenues (56.2% of the total) rose 4.4% to $1.93 billion, driven primarily by 9.2% growth in the Television segment.

Advertising revenues (35.8% of the total) plunged 34.1% year over year to $1.24 billion, primarily due to the absence of the prior year’s broadcast of Super Bowl LVII and fewer NFL games on FOX Sports.

Other revenues (7.9% of the total) declined 22.2% year over year to $274 million.

Top-Line Details

Cable Network Programming revenues (42.7% of the total) decreased 6.2% year over year to $1.47 billion. Advertising revenues declined 6.3%, whereas revenues from Affiliate fees rose 1% year over year. Other revenues plunged 55.3% on a year-over-year basis, primarily due to the timing of sports sublicensing revenues at the national sports networks.

Television revenues (56.2% of the total) declined 21.7% from the year-ago quarter’s figure to $1.93 billion. Advertising revenues plunged 39.8% year over year. Affiliate fees increased 9.2% year over year, led by higher rates at both the company's owned and operated stations, and third-party FOX affiliates. Other revenues increased 8.6% year over year, driven by the timing of deliveries from FOX Entertainment Studios.

Operating Details

In third-quarter fiscal 2024, operating expenses decreased 24.8% year over year to $2.05 billion. As a percentage of revenues, operating expenses contracted 730 basis points (bps) to 59.5%. The decline in expenses was led by lower sports programming rights amortization and production costs, led by the absence of the prior year’s broadcast of Super Bowl LVII and fewer NFL games.

Selling, general & administrative (SG&A) expenses fell 3.4% year over year to $510 million. As a percentage of revenues, SG&A expenses expanded 190 bps to 14.8%.

Total adjusted EBITDA increased 7% year over year to $891 million. Adjusted EBITDA margin expanded 550 bps to 25.8%.

Cable Network Programming EBITDA rose 3.4% year over year to $819 million. Television reported an adjusted EBITDA of $145 million, up 23.9% year over year.

Balance Sheet

As of Mar 31, 2024, Fox had $3.79 billion in cash and cash equivalents compared with $4.12 billion as of Dec 31, 2023. Long-term debt, as of Mar 31, 2024, was $7.19 billion.

How Have Estimates Been Moving Since Then?

It turns out, estimates review flatlined during the past month.

VGM Scores

At this time, Fox has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Fox has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.