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Fox (FOXA) Q2 Earnings Beat Estimates, Ad Revenues Decline
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Fox Corporation (FOXA - Free Report) reported second-quarter fiscal 2024 adjusted earnings per share (EPS) of 34 cents, which beat the Zacks Consensus Estimate by 240%. The figure decreased 29.2% year over year.
Revenues declined 8.1% year over year to $4.23 billion. The figure beat the consensus mark by 1.28%.
Affiliate fees (42.2% of revenues) rose 4.4% to $1.78 billion, driven by 10% growth in the Television segment.
Advertising revenues (47.3% of revenues) declined 20% year over year to $2 billion, primarily due to the absence of the FIFA Men's World Cup at FOX Sports and lower political advertising revenues at the FOX Television Stations because of the absence of the 2022 mid-term elections. The decline was due to the impact of elevated supply in the direct response marketplace, lower ratings and higher preemptions associated with breaking news coverage at FOX News Media.
Other revenues (10.5% of revenues) jumped 14.1% year over year to $445 million.
Cable Network Programming (39.2 % of revenues) revenues increased 1.6% year over year to $1.65 billion. Advertising revenues plunged 22.8%, whereas revenues from Affiliate fees rose 0.5% year over year. Other revenues surged 80% on a year-over-year basis, primarily due to higher sports sublicensing revenues at the national sports networks.
Television (60% of revenues) revenues declined 13.4% from the year-ago quarter’s figure to $2.54 billion. Advertising revenues declined 19.4% year over year. Affiliate fees increased 10.2% year over year, led by higher rates at both the company's owned and operated stations, and third-party FOX affiliates. Other revenues decreased 32.7% year over year, primarily due to lower content revenues at the entertainment production companies as a result of industry guild labor disputes.
Operating Details
In second-quarter fiscal 2024, operating expenses decreased 3.8% year over year to $3.39 billion. As a percentage of revenues, operating expenses increased 350 basis points (bps) to 80.1%. The decrease in expenses includes lower entertainment and sports programming rights amortization and production costs, led by fewer hours of original scripted programming and the absence of the Men's World Cup, partially offset by the renewed NFL contract.
Selling, general & administrative (SG&A) expenses decreased 10% year over year to $495 million. As a percentage of revenues, SG&A expenses declined 30 bps to 11.7%.
Total adjusted EBITDA decreased 34.1% year over year to $350 million. Adjusted EBITDA margin contracted 330 bps to 8.3%, primarily due to lower expenses.
Cable Network Programming EBITDA increased 59.8% year over year to $564 million. Television reported a negative adjusted EBITDA of $138 million.
Balance Sheet
As of Dec 31, 2023, Fox had $4.12 billion in cash and cash equivalents compared with $4.82 billion as of Sep 30, 2023.
Long-term debt, as of Dec 31, 2023, was $7.19 billion, lower than $7.44 billion as of Sep 30, 2023.
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Fox (FOXA) Q2 Earnings Beat Estimates, Ad Revenues Decline
Fox Corporation (FOXA - Free Report) reported second-quarter fiscal 2024 adjusted earnings per share (EPS) of 34 cents, which beat the Zacks Consensus Estimate by 240%. The figure decreased 29.2% year over year.
Revenues declined 8.1% year over year to $4.23 billion. The figure beat the consensus mark by 1.28%.
Affiliate fees (42.2% of revenues) rose 4.4% to $1.78 billion, driven by 10% growth in the Television segment.
Advertising revenues (47.3% of revenues) declined 20% year over year to $2 billion, primarily due to the absence of the FIFA Men's World Cup at FOX Sports and lower political advertising revenues at the FOX Television Stations because of the absence of the 2022 mid-term elections. The decline was due to the impact of elevated supply in the direct response marketplace, lower ratings and higher preemptions associated with breaking news coverage at FOX News Media.
Other revenues (10.5% of revenues) jumped 14.1% year over year to $445 million.
Fox Corporation Price, Consensus and EPS Surprise
Fox Corporation price-consensus-eps-surprise-chart | Fox Corporation Quote
Top-Line Details
Cable Network Programming (39.2 % of revenues) revenues increased 1.6% year over year to $1.65 billion. Advertising revenues plunged 22.8%, whereas revenues from Affiliate fees rose 0.5% year over year. Other revenues surged 80% on a year-over-year basis, primarily due to higher sports sublicensing revenues at the national sports networks.
Television (60% of revenues) revenues declined 13.4% from the year-ago quarter’s figure to $2.54 billion. Advertising revenues declined 19.4% year over year. Affiliate fees increased 10.2% year over year, led by higher rates at both the company's owned and operated stations, and third-party FOX affiliates. Other revenues decreased 32.7% year over year, primarily due to lower content revenues at the entertainment production companies as a result of industry guild labor disputes.
Operating Details
In second-quarter fiscal 2024, operating expenses decreased 3.8% year over year to $3.39 billion. As a percentage of revenues, operating expenses increased 350 basis points (bps) to 80.1%. The decrease in expenses includes lower entertainment and sports programming rights amortization and production costs, led by fewer hours of original scripted programming and the absence of the Men's World Cup, partially offset by the renewed NFL contract.
Selling, general & administrative (SG&A) expenses decreased 10% year over year to $495 million. As a percentage of revenues, SG&A expenses declined 30 bps to 11.7%.
Total adjusted EBITDA decreased 34.1% year over year to $350 million. Adjusted EBITDA margin contracted 330 bps to 8.3%, primarily due to lower expenses.
Cable Network Programming EBITDA increased 59.8% year over year to $564 million. Television reported a negative adjusted EBITDA of $138 million.
Balance Sheet
As of Dec 31, 2023, Fox had $4.12 billion in cash and cash equivalents compared with $4.82 billion as of Sep 30, 2023.
Long-term debt, as of Dec 31, 2023, was $7.19 billion, lower than $7.44 billion as of Sep 30, 2023.
Zacks Rank & Stocks to Consider
Fox currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Consumer Discretionary sector are Ralph Lauren (RL - Free Report) , AMC Networks (AMCX - Free Report) and Corsair Gaming (CRSR - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Ralph Lauren, AMC Networks and Corsair Gaming are scheduled to report the quarterly results on Feb 8, Feb 10 and Feb 13, respectively.
The Zacks Consensus Estimate for RL’s fourth-quarter 2023 EPS is pegged at $3.53 per share, up 1.7% over the past 30 days.
The Zacks Consensus Estimate for AMCX’s fourth-quarter 2023 EPS is pegged at 64 cents, which remained unchanged over the past 30 days.
The Zacks Consensus Estimate CRSR’s fourth-quarter 2023 EPS is pegged at 24 cents, which remained unchanged over the past 30 days.