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Fox (FOXA) Q3 Earnings Top Estimates, Revenues Decline Y/Y

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Fox Corporation (FOXA - Free Report) reported third-quarter fiscal 2021 adjusted earnings of 88 cents, which beat the Zacks Consensus Estimate by 51.7%. The figure decreased 5.4% year over year.

Revenues were down 6.5% year over year to $3.2 billion. The figure surpassed the consensus mark by 3.1%.

Affiliate fees (53.5% of revenues) rose 10.3% to $1.7 billion. Meanwhile, advertising (37.3% of revenues) revenues decreased 23.7% to $1.19 billion primarily due to the absence of the prior-year broadcast of Super Bowl LIV. Other revenues (9.3% of revenues) declined 4.2% from the year-ago quarter’s levels to $298 million.

Fox became a standalone, publicly-traded company on Mar 21, 2019, following the merger of Disney and Twenty-First Century Fox, Inc.

Standalone Fox’s portfolio comprises Twenty-First Century Fox’s news, sports and broadcast businesses. These include FOX News, FOX Business, FOX Broadcasting Company (the FOX Network), FOX Sports, FOX Television Stations Group, sports cable networks like FS1, FS2, FOX Deportes and Big Ten Network as well as certain other assets.

Fox Corporation Price, Consensus and EPS Surprise

Fox Corporation Price, Consensus and EPS Surprise

Fox Corporation price-consensus-eps-surprise-chart | Fox Corporation Quote

Top-Line Details

Cable Network Programming (45.8% of revenues) revenues improved 0.3% year over year to $1.47 billion. Advertising revenues declined 6.9%, as continued strength in linear pricing at FOX News Media was more than offset by a slower news cycle in the quarter under review.

Meanwhile, revenues from Affiliate fees increased 6.2% year over year driven by contractual price increases, including the impact of distribution agreement renewals.

Other revenues declined 23.6% on a year-over-year basis, primarily due to lower sports sublicensing revenues and the absence of pay-per-view boxing in the quarter under review.

Television (52.7% of revenues) revenues decreased 12% from the year-ago quarter’s figure to $1.9 billion. Advertising revenues decreased 27.7% as the impact of the consolidation of Tubi, the addition of the rotating NFL Divisional playoff game and the timing of the NFL’s Week 17 doubleheader in the fiscal third quarter were more than offset by the absence of the prior-year broadcast of Super Bowl LIV.

Meanwhile, Affiliate fees and other revenues increased 17.7% and 20.6%, respectively. Affiliate revenues were driven by increases in fees from third-party FOX affiliates and higher average rates per subscriber at the company’s owned and operated television stations. Increase in other revenues was primarily driven by higher content revenues at FOX Entertainment and Bento Box.

Operating Details

In third-quarter fiscal 2021, operating expenses decreased 8.5% year over year to $1.8 billion. As a percentage of revenues, operating expenses contracted 130 basis points (bps) to 58.6%.

Selling, general & administrative (SG&A) expenses decreased 5.8% year over year to $437 million. As a percentage of revenues, SG&A expenses expanded 10 bps to 13.6%.

Total adjusted EBITDA decreased 2.3% year over year to $899 million. EBITDA margin expanded 120 bps to 28%.

Cable Network Programming EBITDA improved 7.3% to $850 million. EBITDA margin grew 380 bps to 57.8%.

Television EBITDA declined 39.7% to $135 million. EBITDA margin contracted 370 bps to 8%.

Balance Sheet

As of Mar 31, 2021, Fox had $5.7 billion in cash and cash equivalents compared with $4.5 billion as of Dec 31, 2020.

Long-term debt as of Mar 31, 2021 was $7.20 billion compared with $7.94 billion as of Dec 31, 2020.

Zacks Rank & Other Stocks to Consider

Fox currently carries a Zacks Rank #1 (Strong Buy).

Some other top-ranked stocks in the broader consumer discretionary sector are Clarus Corporation (CLAR - Free Report) , Playtika Holding Corp. (PLTK - Free Report) and TEGNA Inc. (TGNA - Free Report) . All the three stocks sport a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Clarus Corporation and TEGNA are slated to report quarterly earnings on May 10 while Playtika Holdings is scheduled to report on May 11.

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