Fox Corporation on Tuesday touted strong quarterly growth at its free ad-supported streaming TV (FAST) service Tubi, which saw double-digit increases for both revenue and viewing time in the first three months of 2023.
Advertising revenue on the free streaming platform was up 31% over the year prior to $170 million, which it said comes on the back of increased engagement and stable pricing. Tubi’s total viewing time in the quarter climbed 38%. Net EBITDA investment in Tubi of $60 million was largely in line with the prior quarter.
Speaking on Tuesday’s fiscal third quarter earnings call, Fox CEO Lachlan Murdoch called Tubi’s performance in the quarter “nothing short of stellar” while suggesting metrics continue to follow a positive trajectory.
“While still early in the fourth [fiscal] quarter, the April results for Tubi show the momentum across the platform accelerated, having recently marked the three-year anniversary of our acquisition of Tubi,” he commented.
Fox acquired Tubi in 2020 for $440 million. The chief executive called out progress over the longer timeframe as equally impressive, with quarterly TVT increasing by over 200% and revenue by 400% since the purchase. Tubi also marked a milestone in February when it reached the 1% threshold for TV viewing time in the U.S. that month, breaking out of the “other streaming” category to nab its own spot on Nielsen’s The Gauge report. That same month the FAST disclosed reaching 64 million monthly active users.
Fox last month announced the creation of Tubi Media Group, led by Paul Cheesbrough, which Murdoch explained brings digital capabilities together formally in a coordinated fashion to better monetize digital touchpoints across the Fox properties.
Asked during the call if Tubi provides an advantage for Fox on the advertising front, particularly with the Upfronts, Murdoch noting revenue is “accelerating pretty strongly” without disclosing a specific breakout but telling analysts the number “would break most of your models.”
And ad gains aren’t yet keeping pace with total viewing time activity on Tubi, which “continues to grow even faster,” he commented.
“We have the avails, we’re looking forward to Tubi being a central part of our Upfront negotiations. It’s clearly not only a strategic driver for us but an important driver going forward,” Murdoch commented, adding that Fox will continue to invest in the service at the same levels as the last year or so. “We just think it’s a tremendous opportunity.”
He added that the team , both over the last three years and prior to the acquisition, has been building a best-in-class AVOD experience and creating a library with nearly 55,000 titles in the U.S. Speaking to the size, Murdoch noted the Tubi library is five-times the size of the Netflix library. Tubi’s also growing brand recognition, with the CEO citing a Super Bowl LVII spot for the FAST that delivered nearly 7 billion impressions.
Super Bowl underpins advertising gains
The Super Bowl LVII itself was a huge bright spot for Fox’s overall earnings, underpinning 43% growth in total advertising revenue and the main driver of 61% ad growth in its television segment as the Fox Broadcast Network coverage generated approximately $650 million of gross advertising revenue.
The championship between the Kansas City Chiefs and Philadelphia Eagles delivered 115 million viewers across Fox platforms, making it the most-watched program in U.S. television history “and the pinnacle of an extraordinary year for Fox Sports,” Murdoch said.
Fox’s television segment reported quarterly revenue of $2.48 billion, up 36% from the same quarter a year ago and bolstered by a $590 million bump in segment advertising revenue which reached $1.55 billion. Along with the Super Bowl, TV ad revenue benefited from more NFL games at Fox Sports as well as continued growth at Tubi. Affiliate fee revenues increased 9% to $764 million thanks to higher rates at Fox’s owned-and-operated stations and third-party affiliates. TV segment EBITDA of $117 million was up by $82 million over the prior year period.
On the cable network programming side of the business, quarterly revenue was down slightly to $1.57 billion. Fox cable advertising revenues were $316 million in the quarter, compared to $339 million a year ago. Higher subscription revenues at streaming service Fox Nation helped contribute to other cable revenue of $161 million, up 10% year over year.
Total quarterly revenues of $4.08 billion were up 18% year over year. However, Fox reported a net loss for the quarter of $50 million, compared to net income of $290 million a year ago. This was mainly due to charges associated with Fox News Media settling a defamation lawsuit by Dominion Voting Systems over accusations that its coverage baselessly accused the company of rigging voting machines in the 2020 election. Fox Corp settled the lawsuit for $787.5 million, although as the Associated Press pointed out, the ultimate cost to the media company was likely to be much lower.
On the earnings call Murdoch said it was proud of the Fox News team, noting the move to settle was made to avoid a lengthy legal process that could involve a six-week trial and potentially 2-3 years of appeals.
“We made the business decision to resolve this dispute and avoid the acrimony of a divisive trial and a multi-year appeal process. Our decision clearly in the best interest of the company and its shareholders,” Murdoch said. “The settlement in no way alters Fox's commitment to the highest journalistic standards across our company, or our passion for unabashedly reporting the news of the day.”
Executives also took time to comment on the ongoing Hollywood writers strike, which is stretching into its second week. Murdoch believes Fox is well positioned amid a strike, thanks to its strategic focus on news and sports, which he said are “two areas that are not affected by the writers strike.”
“In entertainment, you have to remember we only program two hours of entertainment a night, that’s a mixture of both scripted and unscripted content. So we feel very well positioned there not to be affected by the writers strike really at all,” Murdoch said. He added there might be some scheduling changes with scripted content but it’s not something that will have a significant financial impact on Fox.