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Ladies and gentlemen, thank you for standing by. Welcome to the FOX Corporation to acquire Roku Conference Call. [Operator Instructions]. As a reminder, this conference is being recorded.

I'll now turn the conference over to Chief Investor Relations Officer, Ms. Gabrielle Brown. Ms. Brown, please go ahead.

Great. Thank you, Polly. Good morning, and thank you all for joining us to discuss FOX' agreement to acquire Roku. You can find more information about the transaction in a press release and investor presentation on FOX' Investor Relations website at investor.foxcorporation.com.

Joining me on the call today are Lachlan Murdoch, Executive Chair and Chief Executive Officer of FOX; Anthony Wood, Founder, Chairman and Chief Executive Officer of Roku; John Nallen, President and Chief Operating Officer of FOX; and Steve Tomsic, Chief Financial Officer of FOX. First, we will give prepared remarks on the transaction, and then we will take questions from the investment community.

Please note that this presentation may include certain non-GAAP financial measures including adjusted EBITDA or EBITDA, as we refer to it on this call. In addition, the presentation may include forward-looking statements, including statements regarding the proposed transaction between FOX and Roku, including with respect to the expected timing of the completion of the transaction and its benefits.

These statements are based on FOX and Roku's current expectations and are subject to risks and uncertainties, which could cause actual results to differ from current expectations. Please review the cautionary statements and other safe harbors in FOX and Roku's SEC filings and respective investor website.

And with that, I'm pleased to turn the call over to Lachlan.

Thanks, Gaby. Good morning, and thank you all for joining us. Today, we announced the acquisition of Roku, which is a defining moment for us, one that pairs FOX, the leader in live news and sports with Roku, the leading connected TV platform. This acquisition will strengthen and expand our position in the high-growth digital video ecosystem and unlocks new ways to serve our audiences and partners.

Before I go any further, I would like to take this opportunity to recognize the visionary achievements of Roku's Founder, Anthony Wood, who is with me on the call this morning. As an early investor in Roku and long-time commercial partner, we, at FOX, have witnessed firsthand the enormous impact Roku has made in transforming the TV viewing experience. Anthony and I have known each other for many years, and I am extremely pleased that as part of this transaction, Anthony has agreed to join the FOX board and to continue to expertly guide Roku forward. Thank you, Anthony.

This transaction brings together 2 companies at the intersection of the most powerful forces reshaping video consumption, the enduring primacy of live news and sports, and the continued rise of streaming. The result will be a next-generation FOX Corporation that is uniquely positioned with even greater reach and a more complete product offering, leveraging the strength of Roku's preeminent connected TV technology and data platform. The combination not only strengthens FOX' existing business, but more importantly, expands our presence in the highest growth segments of media, connected TV, advertising and subscription aggregation.

It's not a surprise to anyone on this call that the way consumers access and engage with content is evolving dramatically. Throughout this evolution, FOX has remained disciplined, participating in the market carefully and moving with purpose and conviction only when the opportunity is right.

In 2019, we reorientated our company around live news and sports. Two categories that command premium advertising rates, drive appointment viewing and have only grown in strategic importance as the broader television landscape has fragmented. We chose and continue to choose focus over scale-for-scale sake, deliberately sidestepping the arms race that defined and challenge the subscription streaming industry.

In 2020, we acquired Tubi, then a nascent tech start-up in what was an underdeveloped segment of the video ecosystem, free ad-supported streaming. That investment and our subsequent thoughtful execution of a rapid growth plan has proven to be an unqualified success across every metric that counts, top line growth of approximately 25% to generate revenue approaching $1.5 billion in fiscal 2026 with over 13 billion hours of content consumed annually by its 100 million loyal viewers. And less than 12 months ago, we successfully launched FOX One, our innovative direct-to-consumer platform that has gone from strength to strength in its first year.

I must highlight an important part of our culture at FOX that is particularly important to this deal. Integral to our journalistic and creative focus, we've built a business where technology and engineering talent flourish, a place where we're extremely forward-leaning in investing in technology and coordinated in the way that we design, build and deploy cutting-edge platforms across our products and services.

From setting streaming records for the Super Bowl through to the advanced work that our teams are doing with AI, our achievements give us great confidence in our ability to enhance Roku's growth inside the enlarged FOX Corporation. The video entertainment ecosystem is evolving and growing rapidly, and several dynamics are worth highlighting.

Live programming, particularly news and sports, continues to be the primary driver of engagement. FOX has led in both categories for decades, consistently ranking first. This live appointment-driven programming remains foundational to our current strategy of ubiquitous distribution of our content, which delivers highly-engaged audiences, driving value for our distribution and advertising partners alike.

Premium and free content also continued to drive complementary consumer demand and engagement patterns. That dynamic is enduring. Our strategy is centered on these dynamics from which we have derived considerable benefit. What is also changing more fundamentally is how consumers access and navigate content, and this is where we see the most significant opportunity.

Streaming continues to gain share in total viewing and consumer wallet. Nearly 50% of all U.S. television consumption now takes place within the streaming ecosystem, roughly double the level in 2020. And Roku's prominence in streaming throughout this growth has been remarkable. The consumer now subscribes to an estimated 4 services on average, creating an increasingly fragmented landscape where discovery and navigation have become more complex. At the same time, viewing behavior is shifting rapidly.

In response, we are seeing a clear consumer preference for aggregation. Consumers are gravitating towards simpler, more unified experiences on their favorite platforms like Roku and the rebundling of services reflects this trend in real time.

Advertisers are reaching similar conclusions, seeking large audiences, improved digital targeting and more consistent measurement across platforms. These converging dynamics across viewing, aggregation and advertising have fueled the rapid growth of connected TV, and we are still in the early stages of this transition. Within that video ecosystem, Roku is the leader as the foremost connected TV platform in the United States.

On a pro forma basis, the combined company will become the third largest player in U.S. television by share of viewing with an attractive mix of FOX' sports, news and entertainment content alongside free streaming services, Tubi and the Roku Channel. That distribution and scale spans every major viewing environment, broadcast, cable, local and streaming, creating broad and diversified reach. And together, through this reach, we will address the evolving needs of both consumers and advertisers by combining premium live content, scale distribution and leading platform capabilities into a more integrated and compelling offering than either company could build alone.

We are committed to operating Roku as an open partner-friendly platform and to the continued ubiquitous distribution of FOX and Tubi content. Roku's openness is central to what makes the platform valuable for consumers, content partners, advertisers and Roku itself. That will not change.

And for our shareholders, I want to underscore that this transaction continues our disciplined approach to use of capital. Purposely and diligently, we are meaningfully expanding the growth profile of our company, while maintaining investment-grade status and capacity to continue our shareholder capital return program.

Before I turn it over to Anthony, I want you all to know that the opportunity to acquire Roku at this moment as Roku hits its inflection point of growth is a transformational step forward for FOX and for our shareholders.

Thank you for your continued support. And I'll now hand over to Anthony.

Thanks, Lachlan. I'd like to start just by saying how excited we are to be joining forces with FOX to shape the future of television. When I founded Roku in 2002, it was on the premise that all TV would be streamed, and our goal was simple: make TV better for everyone.

We believe the Internet would fundamentally transform television and create entirely new ways for people to discover and enjoy entertainment. Since then, Roku has built one of the industry's leading TV streaming platforms, reaching more than 100 million streaming households globally and 145 billion hours of engagement annually.

Roku is entering this transaction from a position of strength. As the streaming and advertising and AI landscape continues to evolve, we believe partnering with FOX is not only a terrific outcome for our shareholders, but a way for Roku to move faster and smarter with the support and resources of a strong partner. Put simply, it's the best way to accelerate our long-term strategy and continue shaping the future of television.

This agreement follows the conclusion of a strategic review and process overseen by the Roku's Board of Directors with the assistance of an independent financial -- with independent financial and legal advisers. After thoroughly reviewing the offer from FOX, our Board of Directors unanimously determined that this agreement with FOX maximizes value for all of our shareholders.

We're also pleased with the value we deliver -- we are delivering to our shareholders. The cash and stock structure allows Roku's shareholders to receive immediate cash value at closing, while also participating in a substantial potential upside of the combined companies going forward.

As a reflection of my personal commitment to the combined company and the ongoing growth of Roku, I have given my voting support to the transaction and at the close of the transaction, I will have an ongoing role at the combined company, and I will also join the FOX Corporation Board.

As consumers face increasing content fragmentation, rising subscription costs and more viewing choices than ever before, we believe Roku and FOX will together be uniquely positioned to deliver the value, personalization and simplicity that viewers want.

We'll also be better positioned to help our content partners build, engage and monetize large audiences and to give our advertising partners unique ways to reach our large and loyal base of TV users. And of course, we continue to deliver great, easy-to-use TVs and streaming players in collaboration with our TV OEM and retail partners.

Throughout our discussions with FOX, what stood out most was not just our strategic alignment, but also FOX' deep respect for what Roku has built and genuine appreciation for the team behind it. It was clear that FOX understands Roku's more than a platform. Our people, culture and innovation mindset are central to what makes the company special and will be important to our success going forward.

More importantly, following close, Roku will continue to operate as an open partner-friendly platform supporting the entire streaming ecosystem. I want to thank our employees, partners and shareholders for helping build Roku into the company that it is today.

With that, let me turn it back to Lachlan.

Thank you very much, Anthony. I'll now turn the call over to Steve to walk you through the details of the transaction.

Thank you, Lachlan. Thank you, Anthony, and good morning, everyone. FOX has maintained a disciplined and deliberate approach to capital allocation. From an acquisition standpoint, we have been selective, only pursuing transactions that support long-term shareholder value creation and align with our strategic vision. This morning's announcement is entirely consistent with this selective value-driven approach.

Let me walk through some of the financial detail. As we have announced this morning, FOX is acquiring Roku in a cash and stock transaction valued at $160 per Roku share. In total, 60% of the consideration or $15 billion is cash, and the 40% balance is FOX Class A common stock, comprising approximately 152 million shares. On a per share basis, FOX will provide $96 in cash and 0.9693 shares of FOX Class A common stock for each Roku Class A and Class B share outstanding.

The stock consideration represents $64 per Roku share based on a reference price of $66.03 per share, which was set using the 10-day volume-weighted average price of FOX Class A common stock as of June 10. Upon closing, existing FOX shareholders are expected to own approximately 73% of the combined company and Roku shareholders the remaining 27%.

The cash component at closing will be funded through approximately $8 billion of new debt, with the remainder funded from the roughly $9 billion of pro forma combined balance sheet cash expected at close. We expect net leverage at closing of approximately 2.8x pro forma trailing 12 months EBITDA, inclusive of 50% credit for run-rate cost synergies.

The moderate starting leverage and the rapid deleveraging made possible by the combined company's strong free cash flow profile allows us to maintain our existing mid-BBB investment-grade credit rating. Importantly, the strength of our balance sheet from day 1 will also support our growth plan, along with continuing to return capital to shareholders through share repurchases and dividends.

With respect to share repurchases specifically, we intend to continue with our buyback program post today's announcement, except for mandatory SEC blackout periods. As a combined company, we expect robust long-term growth and significant cash flow generation, supported by approximately $400 million in run rate cost synergies, supplemented by additional revenue upside.

We expect the deal to close in the first half of calendar year 2027 and be free cash flow per share accretive within 2 years of close. Underscoring the transformative impact of this transaction on a pro forma basis, we estimate approximately 30% of revenue will be generated from the scaled digital platforms of Tubi and Roku.

In the near term, we see meaningful opportunity to enhance growth through improved advertising capabilities and cross-promotion across the portfolio. The pro forma business is expected to enhance our long-term revenue growth profile and drive accelerating EBITDA and free cash flow growth. We have provided additional detail on the transaction terms on Page 14 of the investor presentation posted to our website earlier this morning.

And with that, let me turn it over to John.

Thanks, Steve. At the start, I want to make one overarching point. Opportunities of this caliber are exceptionally rare and the acquisition of Roku represents a transformational step forward in the evolution of FOX. You know well that we are very disciplined allocators of capital to drive long-term shareholder returns and we are confident that this acquisition will deliver significant long-term returns given the growth profile that this deal unlocks. Strategically, the combined company will be positioned in the highly attractive growth zones of the video market, advertising and subscription, particularly in the digital sector.

Additionally, this acquisition will enable us to achieve this growth profile without compromising our overall balanced capital allocation approach. Specifically, this acquisition will not impact our shareholder return program, which continues without change and with an ongoing solid investment-grade balance sheet.

Roku pioneered connected TV in 2008 with the launch of its first streaming player. In the years since it has been a central enabler of streaming's growth, serving as both a leading distributor of applications and one of the primary aggregation points through which consumers access their content, in effect, becoming a front door to the streaming ecosystem.

Today, Roku reaches over 100 million households globally and is the #1 CTV operating system in the United States reaching over half of all broadband homes. The vast majority of Roku's total revenue is generated by the Platform segment in 2 digital revenue streams, advertising and subscriptions, areas where FOX is also intensely focused and has a demonstrated decades-long track record.

As Lachlan mentioned, we are excited about this combination as it brings together 2 of the most powerful forces shaping the future of media, live sports and news programming and the rise of streaming. Against this backdrop, the combined company is strategically well positioned, particularly from our vastly enhanced digital presence, footprint and scale.

FOX' digital presence spans all of our content's digital offerings, products such as FOX One, FOX Nation and of course, our premium AVOD service, Tubi, all supported by a state-of-the-art tech stack. Roku's entire focus is streaming and its role cannot be understated. Roku is one of the central partners across the streaming ecosystem. Roku's home screen meets consumers at their moment of intent, a critical juncture in the video journey, which makes Roku a powerful platform for discovery and engagement and the Roku platform generates a rich authenticated data set on consumer behavior, which enables Roku to offer better products and experiences for users and commercial partners alike. The hallmark of FOX is our long-standing entrepreneurial mindset and our relentless focus on growth.

We have come to know that these attributes are shared with the entire Roku management team, which will go a long way towards making the cultural and operational combination of our 2 companies very efficient. We couldn't be more excited by the prospects of closing on the Roku acquisition.

And with that, let me turn it back to Lachlan to wrap up before Q&A.

Thanks, John. With this transaction, we are positioned FOX at the leading edge of where video consumption is going, owning the best content, one of the largest platforms and the direct relationship with large audiences in a single integrated business.

The FOX-Roku combination will represent a growth company responsive to the rapidly changing market, a company that is better positioned for the next decade of video than either of us would be alone. For shareholders, this is the purposeful convergence of 2 businesses that are stronger together than either could build independently.

Our financial profile improves. Our growth trajectory improves and our strategic position in advertising, distribution and international expands materially, all supported by a balance sheet that allows us to maintain our return of capital program. We are confident this is the right transaction at the right moment for all the right reasons. To Anthony and the great Roku team, thank you for choosing FOX as your partner. To our shareholders, thank you for your continued support. And to our new partners across the streaming and advertising ecosystems, we look forward to building this next chapter together.

We can now take your questions. Thank you.

Thank you Lachlan. Now, we are happy to take questions from investment community.

[Operator Instructions]. And we have a question from John Hodulik of UBS.

One quick one and then a follow-up. Could you guys provide any details on the process and whether there are any other interested parties? And then maybe a follow-up to Steve's commentary, what's the target leverage ratio? And given all the cash flow and growth you guys expect from the combined company, what's the time line to get to the new target ratio?

Thanks, John. Anthony can answer to the process, obviously, and Steve can do the details. So I guess Anthony first. Anthony?

This is Anthony. This process was run by our Board of Directors and an independent committee. It was a thorough and complete process. It's the conclusion of a strategic review by the Board of Directors. We thoroughly reviewed the offer from FOX and our Board of Directors unanimously determined that the FOX offer was the right offer for our shareholders. And so yes, we ran a very complete process and very happy with the outcome.

John, it's Steve. Just on leverage. So listen, we feel very comfortable about where we structured the transaction, as you can tell from what you've seen from our financials over the last 7 years and also now with Roku reaching or on track to reach the $1 billion free cash flow milestone in the next year or 2. We think we delever very, very quickly. If you look at the way we intend to set up the permanent financing, we'll be allowing for the opportunity to repay debt in the first year or 2 of the transaction, and we also have -- its outstanding $2 billion note that comes due in January '29, which we would imagine repaying to delever.

So we think we get back down to our target leverage -- gross leverage ratio of between 2.25% and 3%, which maintains our existing credit rating within the first year or 2 after close. And so -- and all of that supports the fact that we'll continue to be buying back stock all the way through. So we think that the way we're structured allows us a lot of balance sheet flexibility.

Next question, please.

We have a question from Michael Morris at Guggenheim Securities.

I have one strategic question and one structural question, if I could. First, strategically, how will the combined business balance that focus on growing the FOX audience while also being partner-friendly to this large number of third-party content providers that Roku has worked with in the ecosystem. So how do you ensure that these big businesses like Netflix and Amazon and Disney remain on the platform going forward?

And then on the structural side, the regulatory termination fee is over $1 billion. Can you just talk about what regulatory approvals are required and what gives you confidence in the clearance there?

Thanks, Michael. To your first question, maybe I can start and Anthony can follow on. Look, from -- I think speaking for both of us, at least to start, it is essential that Roku remain an open and partner-friendly business. We're a business that we will have -- Anthony has tremendous partners who really rely on Roku for a lot of their distribution, and we don't see that changing at all.

From a FOX perspective, if you remember, we've done this before. We're not -- it's not our first rodeo. We had Sky in the U.K. and Europe, we had Star TV. Those are all platforms that we have our own content, which we can grow and monetize very effectively, while hosting and distributing broadcasting all of our partners' content. And that's critical both for the business and for the future of the business and also, most importantly, for our consumers. Anthony, do you want to add to that at all?

Yes. This is Anthony. Well, first, I guess, I'll just say that Roku has a very large platform business. It consists of advertising and subscriptions. A lot of that business is driven by promotion of our partners. And our goal is to grow that business. It's not for that business to retreat. So we're going to continue to grow that business. That means working closely with partners to do that.

I'd also say that it's not a new problem for us. We have historically had owned and operated services as well as partner services that we promote on our platform. And the home screen, the platform is a unique asset. It allows us to do that. We have policies and processes in place to allocate inventory appropriately. So we are good at that. We know how to do that. We know how to promote our own services as well as promoting our partner services, and so we intend to continue doing that.

Thanks, Anthony. And to the second question, Michael, from regulatory approvals. Principally, we have HSR approvals in the United States and very, we believe, very limited international approvals.

Next question, please.

You have a question from Robert Fishman of MoffettNathanson.

Lachlan, John, Steve, we've discussed the importance of scale for FOX over the last few years. How does Roku help solve FOX' scale question when competing against the other larger media conglomerates, especially thinking about content spending and competing for sports rights? And then Roku has successfully carved out its leading position within the CTV space. I'm curious as you think about the next 3 to 5 years, what gives you the confidence that Roku can continue to compete against the likes of Amazon, Google and now Walmart after the VIZIO acquisition?

Thanks, Robert. Well, I can answer the scale question as it applies to FOX, and maybe Anthony can then answer the question as it applies to Roku.

On the scale question as it applies to FOX, look, we are entering this transaction in a position of strength. Our business has never been stronger. We've been able to compete aggressively and successfully in the news and sports marketplace. And we would expect to continue to do that with or without this transaction. I think you can see that it's evidenced in our ratings, most importantly, and almost equally importantly in our financial results or equally importantly in our financial results. We reported a short time ago, record Q3, and we're on track to report or achieve more records in our full year results. So we're really entering this transaction in a position of strength. And what excites us about this is it takes us from strength to strength.

Roku takes us to new markets to expand, obviously, digitally in streaming and subscriptions, and drive the business aggressively into the 21st century. Anthony?

Yes, this is Anthony. So just in terms of how we compete and continue to compete more successfully. I'll just start with the basics. I mean, we are the market leader in the United States and other markets. We're the #1 streaming platform in over half of broadband households, we have a -- we just passed the 100 million streaming households. We're continuing to grow that. We have a very loyal viewer base that loves their Roku products. We provide a very simple, delightful interface. And a lot of that is built on something that's unique that we have, which is we're the only streaming platform that's built an operating system from the ground-up, designed specifically for streaming.

We have a purpose-built operating system for streaming, whereas our other -- our competitors generally take HTML or they take a mobile operating system, they port it to television. And there's a lot of advantages to building something from the ground-up design specifically for streaming. It's a better user experience. It's simpler. But it's also importantly, very cost competitive. I mean the PC -- sorry, the TV business is extremely cost competitive.

And so having a lower cost to build hardware, which we've done through our purpose-built software design specifically among other things, to allow hardware manufacturing costs to be lower than any other operating system is a big competitive advantage in the market.

For example, just one example, we use a lot less memory than our competitors. And right now, memory prices are going through the roof. So that advantage is really being compounded. So we have the purpose-built operating system. We have very strong relationships with OEMs.

There's many, many factories and OEMs around the world to build Roku products. Those relationships are strong and growing. So the strengths that have gotten us here to the position we're in today are going to continue. And then I think also, when you think about all the assets that FOX brings combining with Roku, that's going to allow us to be even stronger in the market and offer a better product to our customers and viewers. So I'm very confident in our ability to compete and to continue to grow our competitive position.

Next question, please.

We have a question from Michael Ng of Goldman Sachs.

Just one and a follow-up as well. Just on content, could you talk a little bit about how the combination might change your appetite for things like Tier 3 sports rights, other types of news content. In a few years from now, will we look back at this and see it as an inflection point for more sports and more content generally on the FAST channels?

And then secondly, I was just wondering if you could talk a little bit about the synergies. Is the $400 million a conservative number? Is it kind of appropriate given what we know now? And what are the kind of obvious revenue opportunities that you see that you wouldn't have been able to achieve otherwise?

Thanks, Michael. The first question on sports rights is an interesting one. I think it's too early to say. But I think initially, our sports rights and particularly our Tier 1 sports rights, our most valuable sports rights really sit within our broadcast cable and from a streaming perspective, FOX One and we don't really see that changing.

Of course, the discovery of those sports rights and the viewership of those sports rights can really be assisted with distribution across Roku and discovery through the Roku home screen, which really is the beachfront property in the streaming ecosystem.

In terms of the synergies, we've done, obviously, as you'd expect, very extensive due diligence on the business, which is where we came to the $400 million of cost synergy. And I think we're being conservative, appropriately prudent and conservative in coming to that number.

Obviously, from moving forward today, we'll continue to do more work on whether that's the appropriate number or not. But sitting here today, I think we've been fairly conservative. That does not include, as you rightly point out, any revenue synergies. So we have not announced revenue synergies. But as you can hear from -- answer a lot of your questions and from our scripted comments, we believe the revenue opportunity is very significant within this business, but we're not putting a number to that at this stage.

Why is it significant? Obviously, the market is changing dramatically, both in terms of the viewing of streaming in the United States now approaching 50% of all U.S. television viewing. And what's happening behind that, of course, is the connected television ad spend as a proportion of television ad spend in the last few years has grown from 25% to 41% and that trend just continues.

When you pair that with the reach of our content with FOX News, with live sports and FOX Sports, combined with Roku's really great depth of a rich first-party data and performance marketing tools. It's a tremendous opportunity, and we're very excited about the revenue synergies that we believe will uncover going forward.

Next question, please.

We have a question from Jessica Reif Ehrlich of BofA Securities.

I think, Lachlan, you just touched on one of my questions, which is the advertising upside, like what specifically, what areas can you grow? I mean, it sounds like an area of opportunity that you're not in now? And is it all about that first-party data?

And the second thing that was mentioned early in the call was international opportunities? And can you just maybe put some -- give us some color on how you can expand that? FOX is kind of -- has become more of a domestic company. What could you take advantage of with Roku's footprint? What can you do differently to grow that business?

Thank you, Jessica. Yes. Well, I think I probably answered the advertising question. But the -- if you look at the -- I'll say, if you look at the businesses, I think we can boost the distribution of the FOX content, that will help ratings. We can pair that with first-party data and Roku's tremendous advertising tools. I think Roku really does have unique expertise in performance marketing, which we can bring across our entire platform. I think the advertising synergies or revenue upsides are very significant. You then pair that with our -- at FOX, our direct sort of relationship with our advertisers and clients, it's a tremendous opportunity. So I think the 2 sides and 2 expertise of the companies are very complementary coming together to drive revenue synergies.

On international, you're right that this puts FOX on an international footing again. We did launch aggressively and it's doing very well, FOX Latin America, over the last 12 months. I think the Roku platform will assist those businesses as well.

Next question, please. Operator?

We have a question from David Karnovsky, JPMorgan.

Just with Tubi and Roku Channel, can you talk to your go-forward vision of what that would look like for a consumer? Is there any rebrand or kind of commonality of programming or channels? And then can you just speak to the strategic and cost synergies as it relates to items like content acquisition or marketing for the services?

Thanks, David. So if you look at the Tubi and the Roku Channel together, they are incredibly complementary services. There's about 1/3 overlap between the audience -- between the 2 of them so that they're not identical audiences, bringing the 2 of them together effectively triples the reach of the combined service.

It's too early to say, but our expectation is fully to keep the services separate. They serve consumers and their viewers in different ways. Obviously, Tubi is over 90% video-on-demand. The Roku Channel is, I think, around 80% or over -- just a little bit over 80% are FAST channels. This -- the combination of the 2 and how you sell the 2 of those -- the inventory in the market, I think, is a tremendous opportunity and combination.

So our expectation is to keep the brand separate to serve their viewers -- to continue to serve their viewers in the way they do now. I don't know, Anthony, if you have anything to add.

Yes, I think -- well, I think, obviously, the combination of the Roku Channel our ad inventory that we have distributed through the platform and TV creates an extremely large and scaled ad platform. And then the combination of the data and the ad tech are just going to be a very powerful ad platform. So I think that's obviously going to be incredibly helpful for our business. Both platforms distribute content. Among other purposes, they're primarily content distribution platforms.

And so the amount of content being distributed now has significantly increased in scale and that provides a lot of leverage on different dimensions and makes us a more interesting and must-use partner for content owners. So I think that's also super helpful.

And then I guess the other thing sort of add to what Lachlan said, one of the reasons the audiences are different is that the distribution is different. So the Roku Channel, obviously, as we call it off platform, meaning off Roku. It is available off Roku, but most of the distribution is on the Roku platform. Tubi has a lot of distribution, obviously, a successful on Roku as well, but also has a lot of distribution outside of Roku. And so that provides a very broad and comprehensive distribution across different platforms together.

Next question, please.

We have a question from Steven Cahall of Wells Fargo.

On Slide 10, you highlight how the deal moves FOX to 10.2% of U.S. TV time, 1/3 of the industry. Can you just help us understand how you think that math kind of sums up to more than the parts? You mentioned the revenue upside. I know the advertising piece is pretty big. But how do you think that the engagement kind of takes these different platforms and really turns them into something bigger than they are today?

And related, maybe just to Michael's earlier question, do you think about using the Roku platform to really promote FOX content more heavily? I know that would cannibalize a little bit of home screen EBITDA. But just curious if you think that's a bigger opportunity for the content that you've already got.

Thanks Steve. Look, I think obviously, on Slide 10, that's a basic math of putting together where the businesses sit today. What's not expressed in this chart is actually the benefit of putting those 2 businesses together. And the growth that can be achieved by adding the FOX content, FOX Sports, our news content, local stations to Roku and obviously benefiting Roku and benefiting from Roku and the Discovery platform that Roku is.

So I would expect that we can grow our viewership in the U.S. with a combination of Roku technology, Roku's platform, the tremendous content that's on the Roku Channel and the content that FOX brings to it as well.

I just wanted to -- this is Anthony again. I just wanted to talk a little bit about -- you said a comment, which I think I just want to correct, which is that you implied that promoting FOX owned and operated properties on the Roku home screen would somehow reduce profitability for the home screen. I don't think that's true. Actually, it's going to increase profitability. I mean just to kind of level set. So one of the -- so we sell ads on our home screen throughout our UI, obviously. But we also have many, many ways to promote content throughout the UIs that are not necessarily sold.

And we use that to promote partners, but we also use it to promote our owned and operated our own properties. So for example, we have the sports zone, which is very popular on Roku because sports are so fragmented, it's very -- consumers often don't know where to go to find a particular game. So more deeply integrating, for example, FOX Sports in the Sports zone is not going to impact other sports properties, but it will provide more visibility to sports content, and it will be useful to our viewers, and we'll do it in a way -- it's very personalized. So we know what viewers like and what they're interested in, and it will be personalized for the viewer, but it won't be done in a way that's going to hurt other partners. It will be done in a way that will promote FOX Sports content.

So just, for example, the Roku Channel, 25% -- yes, so 25% of viewing to the Roku Channel comes from someone clicking on the tile for the Roku Channel. 75% of viewing comes from some other ingress point whether it's search or what to watch or there's just many, many different ingress points throughout the user experience.

And so what -- and those different ways from a content, they're not "sold out." There's just almost an infinite supply. So we can easily, for example, promote owned and operated properties, which would now include FOX properties, obviously, as well as partner properties, and we can do it in a way that's going to increase the amount of revenue that's generated by the Home Screen.

Most items on the Home Screen are personalized in the sense that we decide what to show a customer based on what they're most likely to watch and what they're most likely to buy. And by having more properties that generate revenue or generate more revenue, and be able to decide when to promote them and when not to promote them will result in overall more revenue being generated by the Home Screen. So that's really the power of the Home Screen. So this will definitely improve profitability of the Home Screen. It will not hurt profitability of the Home Screen.

Next question, please.

We have a question from Rich Greenfield of LightShed Partners.

I guess one for Lachlan, one for Anthony. For Lachlan, when you think about the sports rights that you spend so much money on, particularly the NFL, how does -- maybe talk to us about what opportunities does owning Roku, the Roku Home Screen, what does that unlock for FOX in terms of new ways to monetize sports rights that we might not be thinking of?

And then for Anthony, you mentioned, Anthony, that you ran a strategic review. I think we've long believed you were going to sell the company and that there were buyers. What triggered you to want to do a strategic review in 2026? Like why this year versus last year, your growth is accelerating. Why not next year? Like why was this the exact right moment to sell?

Thanks, Rich. I'll start with the easy one. And so look, in terms of this deal, and you can look at it, you mentioned the NFL or premium sports rights, but this is also true for premium entertainment content and for news content. So the answer is the same for all. We weren't focused particularly on sports rights in this transaction. But absolutely, the combination of FOX and Roku, we really think can expand the reach of all of our premium content, primarily today through -- our premium content is distributed direct-to-consumer through FOX One. FOX One is already a partner of Roku and doing very well, and we would see the opportunity here to drive the take-up further and even further success for FOX One via some of the methods that Anthony just spoke about. And then, of course, as we've already discussed at some length, just the advertising targeting, first-party data and skills that the Roku has combined with our relationships with our clients and agencies, I think will take -- will obviously increase the value of that premium content and increase the monetization of that premium content across both broadcast and cable and streaming. Anthony?

Yes. Rich. Well, first of all, you're right. I mean, things -- I have never been more positive about our business than I am now. If you just look at where we are in the world, like the #1 streaming platform in the United States, over 100 million streaming households over half of broadband households in the United States using Roku to watch television, a brand that people love. We've been posting strong growth quarter-over-quarter.

We're just really well strategically positioned kind of at the center of the streaming ecosystem. So we are in a position of strength and there's nothing special. You said, why now? There's nothing special about this year, but I do think that the -- strongly the -- by combining the assets of FOX with what Roku has really improves our position to continue to execute on our strategy over the long term.

We'll accelerate that progress on that strategy. We'll move it in and allow us to grow faster. So I just think it's a combination that allows us to execute on our strategy even faster than we already are and so -- and improve growth. And it's a great price. And I also just think about what's happening in the ecosystem. I mean we are seeing streaming, advertising, AI landscapes evolving and scale and technology and content are increasingly important to compete in an increasingly competitive market.

So I do think it puts us in a stronger position over the long term to be increasingly even in a stronger competitive position. So that's the reason we're doing this. It just allows us to execute on our strategy faster than we would otherwise buy ourselves, even though we're doing extremely well.

Next question, please.

We have a question from Kannan Venkateshwar of Barclays.

So maybe one on the strategy here. So, Lachlan, when you think about the free streaming approach. Obviously, Tubi has been very successful, and Roku independently has been very successful. But when you combine the 2 into -- under 1 umbrella, there's a lot of content overlap across the 2, but you will have this fragmented go-to-market approach.

So -- and then, of course, you have conflicts on the other side in the sense that so far, when you negotiated with, say, Comcast or YouTube, you were largely a supplier of content, but now you're also a distributor of the content. And so it just creates a lot of complications, both with respect to how many brands you own, what those brands individually do as well as your distribution strategy.

So could you just talk about the approach and over time, how this scales and how you manage these conflicts across time? That would be useful.

Thanks, Kannan. So in terms of the -- I think you mentioned content overlap, I don't think that's quite the case. As I mentioned before, if you look at the -- look at Tubi and you look at the Roku Channel, they are both incredibly successful platforms, but they do have somewhat of a different viewer base. As I mentioned, there's about 1/3 overlap between the viewers of Tubi and the viewers of the Roku Channel. And the experience of -- both experiences are excellent, but they are different.

Tubi primarily drives its ad impressions through video-on-demand programming. And the majority of Roku's advertising impressions are currently sort of a fast channel program. So it's different content, a somewhat different viewer experience and I think very complementary to bring together. So we think the opportunity there to bring those together and have this fantastic reach, as Anthony mentioned a couple of questions ago, I think it's incredibly exciting.

In terms of any sort of conflict between content and distribution, look, I just don't think that's the case. I think we're partners now in many ways with YouTube and YouTube TV and Comcast. That doesn't change. Those businesses themselves, in many cases, are both distributors and content providers. That doesn't change. So this is the business and the ecosystem that we exist in today, and we exist in going forward, and we look forward to continued healthy partnerships with all of our distribution partners.

And we have time for one more question.

Final question will be from Peter Supino of Wolfe Research.

. Congratulations. Steve, you recently mentioned the importance of neutrality to FOX. And Anthony, your company has always emphasized consumers and the consumer experience. In that light, I'm wondering if maybe each side could talk about the things that are most important to preserving the virtues that are obviously going to be more in conflict as you try to get the benefit of this combination.

Peter. So yes, listen, from a FOX perspective, I think Lachlan has covered it pretty extensively on the call already in terms of sort of our approach on neutrality. And I think we covered it in the script earlier. But we see a key strength at FOX is our existing distribution footprint and having absolute ubiquity of distribution of our content across all platforms, and we don't see that changing as part of this transaction at all. And so we like that set up.

And then our sort of thesis going into acquiring Roku is not to sort of upset or dislocate any of the relationships that Roku has in terms of being sort of the Switzerland of distribution for so many other content providers. And so we don't see this as being a sort of a transaction that activates conflict.

If anything, we see that the benefit of both platforms having that ubiquity on both sides of the distribution sort of side of things as being a key strength.

Anthony, do you want to follow on?

Yes, this is Anthony. I'll just -- I guess, I think one of the things that is exciting about working with FOX is the mutual respect that we have for each other. And also I would say FOX' commitment to letting Roku continue to do what it does, which is distribute content, grow our existing business, which involves working with third parties and distributing third-party content, allow our employees the freedom they need to continue to build and innovate great products in the streaming ecosystem.

So I think that's one of the things I'm looking forward to is the increased resources of FOX and increased assets, but still the freedom and the entrepreneurial nature and the ability to continue to drive our business the way we always have. So I don't think that's going to change.

Thanks, Anthony. Just in summary, I would just like to say, I think for those of you who have been on our earnings calls over the last several years since the new FOX spun out of the old FOX. We've talked about our disciplined approach, our disciplined use of capital, but also the fact that we have a world-class best-in-class balance sheet that we were and have been looking at leverage for the right acquisition to take company forward. And as we've spoken about many times before, we are actively looking for the right opportunity.

And I think we applied that disciplined approach to many opportunities that we saw before. Nothing has the upside and the massive scale and opportunity that this transaction has. We are incredibly proud to be partnering with Anthony and Dan and the entire Roku team. The Roku team is incredibly impressive. And bringing these 2 companies together really will help define the future of television in the United States and in many other markets around the world.

We're excited. We hope you are, and this really does bring a step change in terms of not just for our businesses, but for the streaming and television ecosystems going forward. So thank you very much for your attention, and we look forward to talking again.

Great. At this point, we are out of time. But if you have any further questions, please give me or Charlie Costanzo a call. Thanks so much for joining us today.

Ladies and gentlemen, that does conclude the FOX Corporation to acquire Roku Conference Call. A recording of today's presentation will be available on the FOX Investor Relations website. Thank you.

All right. We're going to get going. Good morning, everyone. Thank you for being here. I'm Robert Fishman and we are very excited to have John Nallen back again this year. So thank you so much for being back. We have lots to dig into since we had the opportunity to chat last year. You also have 1 more year under your belt since getting promoted. So congrats again for that.

So let's jump in. With all the changes going on around you because there has been a lot over this past year, including the month-long Warner Bros. Discovery bidding war saga, maybe just talk to us how you would characterize where Fox is currently positioned within this larger, broader media ecosystem.

So first, thanks for having us again and it's great to be here with you. The -- look, I'd say we're in a really good spot from a Fox perspective. We've -- probably 2 things that are emblematic of what -- where we are is focus and momentum. Those are 2 -- and your note the other day covered those points. And by the way, I disagree with your note that we're at fair value. But we can talk about that.

We can talk about that. Yes.

But the intense focus we have around live news and live sports and increasingly around AVOD with Tubi, really doesn't -- it just doesn't distract us. We're really intensely focused on what's going on there. If you take that, coupled with the momentum we're seeing across FOX News with -- and I'm sure we'll talk about each of these as we go through. The ratings gains that we've seen across FOX Sports with the World Cup coming up and a very successful football season, great baseball classic that we had going on. Across the stations, where we're seeing increasingly better signs of the base market. And obviously, the elections coming up, which will be a boon for them.

Tubi goes from strength to strength. The kind of numbers they're posting are -- can't be rivaled by a lot of other AVOD companies that we see out there. And then you couple that with the pristine balance sheet that we have, it just provides us a lot of flexibility around what we can do and how we can deliver value to the shareholders. So I think we're in a different spot than the rest of the market is, the rest of the peers are with this intense focus on what we're doing and no distractions.

Okay. You just mentioned the balance sheet and it is a question that usually ends up towards the end of these sessions. But I think it is important to talk about the balance sheet in the context of the flexibility that it brings you when considering the overall company's position. So you guys have talked about looking at accretive M&A opportunities and the fact that you've actually repurchased more shares than you expected since initially forming the new Fox. So just talk to us a little bit more about how important scale is for the future of Fox given your current position and what's been going on around you? And how investors should expect anything more in terms of the recent tuck-ins that you have been making over the past couple of years?

So you're right. If we look at -- I mean, the general question is around capital allocation for us at Fox and we've deployed most of our excess capital toward shareholder returns, since we're close to $10 billion in capital returns covered with buybacks and dividends. You're right, from an acquisition standpoint, we've been really selective in what we've done. Tubi is probably the biggest acquisition that we made in that sub-$1 billion from an acquisition standpoint. But the place that gets lost a bit is the use of capital to organically invest. And we've been very active there. Take Tubi as an example. We've invested heavily in Tubi over the last few years to see and match the growth that it's been able to achieve and basically the turning point it's on right now.

Latin America is another place, FOX Nation, FOX Weather, some of our other digital initiatives are places where it's not massive capital but the returns that we've seen have been very significant. So we play very well in building businesses. Having said that, I've said this consistently at your conferences and others, we are on the lookout for an accretive acquisition that is of size for the company. Now scale for scale's sake is not what we're after. We're after for something that's aligned with what we're doing, that's kind of in the sweet spot of our knowledge base and what we do. So we're not going after a pharmaceutical company or an automotive company. We're looking in the space that we play. And look, growing the enterprise is a real objective of ours. So I'm hopeful we find that sweet spot acquisition to grow the enterprise. But to date -- and Fox has been around for a while now, we're very disciplined on what we do. There hasn't been anything that's emerged for us to say, hey, that's it. Let's lean into that one.

You talk about sweet spot. So let's shift to sports for a second. With all of the ongoing press reports and there's been many about an early NFL renewal, we know clearly the importance the NFL plays to all media partners and especially Fox given the long history that you have with the league. Can you just talk, maybe broadly or as specifically as you want, about how Fox could offset higher rights fees if you would reach a deal to extend with the NFL? And would that come with probably an increase in payments, if you want to touch on -- you just got a couple of extra games. So how does this broader NFL conversation factor into the long-term planning?

Yes. So let me take the NFL writ large. And then in the last 48 hours, nothing has happened, meaning we had our earnings release. Lachlan commented on the fact that we haven't had substantive discussions with the NFL. That's -- none of that has changed. So you should take his remarks as being unchanged from where we are today. But 2 points. Clearly, when input costs for any company come in, you look to your top line to monetize them. And that's where we would be looking if rights costs came with an increase -- look, 50% of our revenue is advertising, 50% of our revenue is distribution. We're a very simple company and we would seek to monetize any rights costs through those 2 revenue avenues. Ultimately, with one of them at least, it ends up down the chain to the consumer but that's the way it's historically been.

We've renewed 5 contracts with the NFL. You've seen our rates increase virtually every time as a result of that. I don't expect history to change all that much on the first instance. On the second, the press reports and clearly from sister publications have been out, we just find it as a distraction. It's an incredible distraction, which the evidence speaks for itself. Over the weekend, we were able to secure with the media committee's approval, 2 new national windows. These are accretive to EBITDA on an advertising basis only. So this is not -- we didn't need to go out and buy games to just have them. Clearly, these are accretive to the business. And I think it's just further evidence of the fact that the relationship we've had with the NFL for 30 years is strong despite what you read in the press reports. So if there's a point coming up for engagement on both sides, we'll both approach it the way we've approached it over the last 30 years.

Okay. That's very helpful. If we think a little bit broader about sports rights, can you talk about how FOX One and Tubi, which we'll get into in a little bit more detail, how do those platforms change your calculation when thinking about the ROI of sports investments and the rights that you have to bid for, thinking about Men's World Cup or MLB or NASCAR over the next couple of years?

So the simple answer to that is not much. But to dive in a bit, if you take each of those platforms, Tubi is not a platform for us to be the first position for our sports rights. It will always be FOX Sports and FS1, where we will put those on. But to put sports on Tubi like we've done with the NFL in the past and we have 2 games for the World Cup coming up, the opening match and the first U.S. match is just a fantastic way to drive top-of-funnel engagement into Tubi and to get much more brand awareness for Tubi in the market. So it's much more a marketing approach by putting sports on Tubi than it is fundamentally Tubi being a sports platform. In fact, there's very little advertising that Tubi gets because they're just simulcasting the broadcast of FOX Sports on there and creating additional reach for us but not create -- there's no revenue opportunity for Tubi coming out of that. There is for the company but not for Tubi.

If you then look at FOX One, what sports does for FOX One and it's done at the start of the college and NFL season, start of baseball season, World Baseball Classic and will do again with the start of the World Cup shortly, is creates a great marketing opportunity first to bring new subscribers to FOX One. And we've seen this at every one of those inflection points that I mentioned. It's also -- having that bouquet of sports is also a great retention tool. So it helps reduce churn and we've seen that and I'm sure we'll talk about FOX One. So when we look at the acquisition of rights, we don't necessarily look at a direct benefit from Tubi and FOX One but these indirect benefits of retention, brand awareness, marketing are really important to those rights decisions.

Okay. So let's shift gears to FOX News now, which is an important contributor to FOX One as well. The competitive landscape around FOX News is also potentially changing with this Paramount Skydance set to take ownership of CNN. So if you can help us understand how a reimagined CNN could impact FOX News and what that means for your own strategy. Clearly, FOX News is operating from a position of strength right now, as you just talked about on the earnings call. But how do you think about these other competitive forces around you?

I think, first, you do have to set the stage for what FOX News is. I mean, its scale is very significant in the ecosystem now, #1 cable channel, at times, the #1 channel on television. We've seen great increases recently from a trend on the ratings. We were up high single digits in March, repeated that again in April. So the strength is not abating on FOX News. I'm not suggesting at all that we're not mindful of all the competition, whether that's linear or digital that we have on FOX News but we are dealing from a position of strength.

And whether that's -- and we'll probably talk about this later as well, whether that's from the revenue that we're generating or just the amount of news consumption that we're seeing. I mean, obviously, big stories over the last 1 month or 2 in the Iran War, the White House Correspondents' Dinner, the King's visit. And today, the China visit that will be there, just drives incredible viewership to FOX News because of how they cover it. So whatever competition comes our way, we'll be ready and mindful of it. But I'm not suggesting that we're pivoting FOX News in any way because of what's out there from a competitive standpoint.

Okay. One piece of FOX News that I think is often overlooked is the strength of its engagement, not just in digital overall but specifically on YouTube. So maybe help us understand how this expands FOX News' overall reach? And anything you can share about -- are these viewers more casual, younger, cord cutters? Or is this the more typical FOX News older audience?

No, it's a younger audience on YouTube. FOX News is the #1 news brand on YouTube by a mile. And last quarter, for example, FOX News Media had 2 billion views on YouTube, which was colossal. In April, they -- April was our third largest quarter -- third largest month for views on YouTube. So like I said, on the linear side, it's not that FOX News is abating. And there's a bit of a flywheel to it in that we've got consumption from the linear channel. When people aren't on the linear channel, they go to either FOX News Digital or YouTube. And we see traffic coming back from YouTube to the linear channel and FOX News Digital. So those 3 platforms are working pretty well in tandem with each other. But the consumption that we see on YouTube, just by definition is younger. And it attracts a different audience but it's a meaningful part of the viewership and the portfolio of FOX News.

Okay. So we just talked about cord cutting. So if we shift over to the distribution side of the house, cord cutting trends have improved in the past few quarters. You guys have talked about it again on your earnings calls. We think -- and obviously, this is clear, YouTube TV and Charter have been a big contributor to that success or improvement. When you think about the long-term views on cord cutting, I know we've had this chat over the years, how do you, as Fox, think about where these trends can go? And are continued improvements part of your realistic forecast?

Yes. We've had this discussion quite a lot and I'm bullish. I'm much more bullish than maybe some of the other participants in the conference. We've seen 6.5% and better declines over the last several quarters in the traditional market and I'm including the MVPDs in that because you have to look at them separate for the moment. Great strength coming out of a couple of those players like YouTube TV, Charter is doing great work. All of our distributors are doing great work around it. But those numbers are meaningfully reduced when we now include the results FOX One.

FOX One has been a real contributor to ameliorating the decline that we've seen in subs and I expect this trend to continue. I do expect also that the trend -- the core trend, that 6.5% is not perpetual, that we will see a slowing down of the rate of erosion. And part of it comes from the innovations that we're seeing by distributors. And things like skinny bundles, different offerings are really opportunities to hold more people inside of the traditional ecosystem than we've seen before. So I'm -- as I look out, I don't have a death knell on where the linear business is going. I'm more constructive than most on it.

Okay. You talked about FOX One, we've talked about it a couple of times. So anything that you can share in terms of how it is performing either versus those initial expectations or where we are on a subscriber standpoint? I think the critical question that we're struggling with or love to better understand is, how much incremental revenue or profits even at this point is it starting to drive or as we think about where the opportunity is over the next couple of years for it?

So the way to measure incrementality is whether it's cannibalistic. And every indication we have, including recent studies, is that a tiny piece of the sub base that we now have of FOX One has come from traditional cable and that the overwhelming majority of subscribers were previously not cable or cable subscribers. They were cordless. So that is pure incremental to us from a revenue standpoint and that's encouraging. As we promised when I talked to you last year and we promised to our distributors, the focus of FOX One is on the cordless community. So you don't see advertising for FOX One on our traditional linear. You don't see it on an NFL game or college football or baseball game. You don't see it on FS1, you don't see it on FOX News. You see it all through all of the gains that we've received is through marketing in digital venues. And that's where we've seen the growth. We continue to do that.

And you'll see us marketing even more coming up as we lead into the World Cup to try to get more subscribers into the platform. Overall, the results of FOX One are above our expectations. Meaningfully, 2 points. One is that churn and they're correlated -- churn is far less than what we expected. Given our sports calendar, you would think that churn would have been higher. But what we see is a significant consumption of our viewers in off sports periods in news. And obviously, you'd expect during the week, heavy news consumption, on the weekend, much more sports consumption but heavy news consumption. So it's not like our subscribers in FOX One are solely focused on our sports offering and we risk high churn because of that. Seeing this engagement -- and we promote news to our FOX One subscribers. They know what's there, is helpful in retaining those subs from a churn perspective. So it's above our expectations and I expect the growth of FOX One to continue.

Okay. When we think about how Fox has maintained its affiliate fee, now renamed distribution revenues, clearly, FOX One has played some incremental impact, as you just talked about. But even stripping that out, it's clear that Fox has been a notable outlier within the overall pay-TV ecosystem to get those affiliate fee dollars. So when we think about how skinny bundles that you touched on before, like YouTube TV Sports enters into that market and potentially grows its scale, does that shift the balance of future negotiations because Fox and FOX Sports are the only ones included and not FOX News. So help us think about how we, as investors and thinking about the projections of this affiliate fee line should feel comfortable over the next couple of years with all those changes.

You should feel comfortable. But the background to that is, look, there is innovation in distribution happening and that's encouraging. The models that we had historically are changing and to see DIRECTV, YouTube TV and others, Charter come out with skinnier products are encouraging to us because we permit a certain level of flexibility with our distributors on how they can offer our products, up to a certain level, so that there are times where FOX News is in a bundle and FOX Sports is in a bundle. But if you look at the overall profile of the subscriber count in any distributor, our full suite is in there. And you should expect that our full suite will continue to be in there. The skinny bundles thus far are small take-up. It's -- YouTube TV has only been out there for 1 month. DIRECTV has been out there for a little longer.

But at this point, they're still beginning only the promotion of it. Price points are important as against the full bundle, right, where the skinny bundle sits. And I think from a consumer standpoint, you're touching at a point on some of these skinny bundles where the full bundle differential is not big enough for them to stay with the full bundle. And again, that's good for us. But I think allowing the flexibility that we do to the distributors is good for the market but recognize that still -- and I would say 1 year from now when I come and sit with you and beyond that, that in the totality of any distributor's products, our full offering will be in there.

Okay. Let's shift over to advertising, a big week for that with the upfront presentations. And it's obviously with all of the uncertain backdrop that you touched on from the FOX News perspective. So how do you see that overall advertising playing out for Fox? Again, we just heard the update on earnings that things are stronger than we would have expected. But given the context of that uncertain backdrop, how to think about the upfront commitments that maybe you've already started to have some initial conversations around? And how much does the increased flexibility around those commitments play into it? Because I think that's evolved over the past few years with all of the changes.

So if you look at the upfront for us, it's focused on 3 businesses but each at different levels or maybe 4 but certainly through sports, our entertainment business and Tubi are the primary places where we touch. And entertainment, remember, is a much smaller business for us than it used to be. So the amount of upfront even dollars that gets allocated to entertainment is a much smaller business than probably anybody else given we're only 2 hours of prime time and then rest of the market. But the -- you described an uncertain backdrop, which is not what we're seeing. We're seeing great strength. Every indication, scatter pricing is up, cancellations are low. The mood is good from what we're seeing from advertisers.

So we're going into the upfront from -- with not just the position of strength but the fact that things are healthy. It's for us, at least, it's a healthy environment. I come back to my opening comment, we're focused. We're not selling a very wide suite of products out into the market and these products work really well together. On the news side, which I didn't touch on, is a small piece of the upfront. Most of its sale is "scatter and direct response." So you won't see a dramatic upfront coming out of that. But just taking it writ large, the advertising market for us is very healthy right now and I expect that's continuing through '27.

So you did touch on at the beginning, too. We do have midterm elections. I think everyone is pretty aware of that coming up. So when thinking about how FOX News is positioned within that, not from the upfront side but just in terms of capturing the attention that it gets. How do we think about Fox's news position because most of the dollars usually go towards local but FOX News obviously plays an important role within -- thinking about the political landscape. So help us understand how FOX News is positioned with the upcoming elections, please.

So I'll cover it from a company perspective and deal specifically with FOX News as well because this midterm election coming up, if the primaries and the current elections right now are any indication, it's going to be massive. There's -- you would have heard numbers of $11 billion of advertising spend across all media, digital, outdoor, radio, TV. A high concentration of that will be in linear television local. And that's basically all local market spending. We've got big races in Georgia, in Florida, Pennsylvania, increasingly in California, Michigan, big 3 races going on there that will command a significant amount of spending in markets that we're heavily invested in. So the big beneficiary -- the 2 big beneficiaries of local election spending are going to be the stations and Tubi because they just have to be.

With that amount of spending going on, the digital participants are going to be beneficiaries of this. And Tubi sits in a place where it has a different audience. It can personalize the advertising. So for campaigns and issues that are looking to reach a particular audience, Tubi is going to be a great place for that as well. Interestingly, FOX News is not a direct beneficiary from the midterm elections. It benefits from its coverage of what's going on around and benefits in growing an audience and therefore, growing ratings. But it's not -- you're not going to see the governor in California advertising on any national and particularly on FOX News. So we benefited FOX News from the viewership. We benefit at the local level, from that local spend and we'll benefit at Tubi as well.

Okay. I'm curious if I can just follow up on that because are the incremental dollars or the dollars going towards Tubi truly incremental? Or are they actually shifting out of the local budgets? So maybe help us understand from 2 years ago, where did the dollars from Tubi come from or where you're expecting these dollars?

So shifting from the linear?

Correct. Yes.

No, what's happened, if you look at the spend against where it was 2 years ago, the overall spend is incremental. So there's a shift of -- there's not a shift going on, there's just a movement of incremental dollars into digital. So we don't feel in any way that we're cannibalizing the linear local television business by moving money from there into Tubi. It will be incremental.

Got it. So when thinking about total inventory within the streaming connected TV world, clearly, Netflix, Amazon have added a lot of inventory to this marketplace. When thinking about how Fox competes with premium entertainment, I understand that's a smaller piece of your overall pie but help us think about whether that's caused any pressure on Fox's overall CPMs or how we think about Fox's position given the focus that you keep talking about with sports and news and Tubi. But maybe help us understand if that did impact any of the premium entertainment as well.

Yes. So if I cover it from the entertainment division and Tubi, just to contrast what's going on. For the entertainment division, even scatter, we're seeing high single-digit premiums against prior upfront pricing. So we're seeing no pressure from the digital players on the revenue that we're generating on the entertainment division. Tubi is different because there's a ton of CTV and digital inventory out there. And as these ad tiers become more significant, there's more inventory out there. Now the place that you could get into trouble is to try to compete on price, right, to capture just more share, which we don't.

Tubi is very disciplined, and we're very disciplined about not taking price down against what is pretty competitive. So different -- our premium entertainment network, highly engaged, great audience, great advertising dollars that are coming in. Tubi -- well, look, we had 23% growth in revenue this past quarter. We're pacing at or above that in April and May. So Tubi strength continues. I think any other company, digital company, we've talked about this, that post '23, 20x percent growth quarter-on-quarter, stock is not at fair value when you talk about that as an element. So we -- it's much more -- my point to you is, it's much more competitive in the connected place but Tubi really sets itself out as a premium digital offering.

Another part that Tubi has leaned into is some other bold content bets. So they've leaned in on creator programming, podcasts, even exclusive content. We saw that earlier this week at the upfront presentation. So maybe just help us think about how Tubi can continue to compete within this space. And if you can give us what we all look for when thinking about Tubi, what that payoff really is going to be and your confidence around getting there now that you're already in the positive territory on the profit side. So maybe just set us up for where the vision of Tubi is going with all these other bets that they're making as well.

So still the biggest amount -- highest amount of consumption on Tubi is on product that we -- library product that we get from the big studios. That's still the biggest consumption. But in many ways, the Tubi Originals are partially what I covered on sports. They're a way to establish the brand and create awareness and almost be a marketing alternative for Tubi without a tremendous amount of cost. The Tubi Originals do not compare in cost to what you're seeing on the other big digital subscription -- the SVOD guys, we're much more disciplined around what the cost is. But there's an increasing viewership and awareness that comes out of the Tubi originals. With the creators, it's a brand-new initiative by us. We've got 200 creators on the platform now, we'll probably have 400 by the end of June. It's a good economic model for both of us.

And some of these creators are seeing more consumption on YouTube -- on Tubi, sorry, than they are on YouTube, which is a great sign for the audience in Tubi. Now as far as the economics of it, look, we continue to see top line revenue growth along the lines I just mentioned. We have the ability to toggle the investment in Tubi really around 2 focused areas, content and marketing. But to the extent that we want to continue to bring, as I referred to earlier, top-of-funnel audiences and new audiences into Tubi, we'll continue to invest in those until we get to a point of saying, okay, that investment level on an absolute dollar basis is fine for Tubi to continue as opposed to growing it at all. So the outlook for Tubi, unchanged. We've said that we expect 20% margins -- EBITDA margins from the business in the near term. That's not going to be 2027. I can tell you that. But as we look out, that is absolutely still true north for us on Tubi.

Okay. Good stuff. So when we think about some of the other investments that Fox has made at the beginning, we start to talk about one that has proven pretty successful has been the shift into sports betting. But clearly, given the public market valuations, that has taken a step back. So maybe just share with us how you view Fox's FanDuel option at this point, given the rise in prediction markets that we've seen? And any update on Fox's willingness to go through a pretty difficult licensing process?

Yes. So Lachlan touched on this a bit on the earnings call. Just as a reminder, we have a -- our betting portfolio is a 2.5% investment in Flutter Topco and an 18.6% option in FanDuel, which we have until 2030 to exercise. There's really no compelling reason for us to today sit there and exercise the option when we have that kind of runway ahead of us. That kind of runway permits us also to go through the licensing process, which I've come to understand in going through it that you can't just get licensed and sit on it. You need to get these collective licenses done and basically commence your exercise of the option. So we're going through the process. It is onerous but it's a process others have gone through. So it's not -- there's a track record for it. And our expectation is to be fully licensed to be in a position to exercise that option whenever we want inside that 4-year period.

Given the relationship with Flutter overall and FanDuel, how do you view a potential partnership with a prediction markets player today? Is that on the table as well?

Partnership in what sense?

I mean, Kalshi and Polymarket have some aggressive valuations out there right now. So they look to be -- looking for marketing partnerships.

Okay. Yes. Well, we do have a relationship with Kalshi. We just announced that, yes, mainly through FOX News. But the relationship is intended to be additive to what FOX News is. It's not going to be in your face kind of -- I'm a Knick fan. And every night, I'm watching the Knicks. Every 10 minutes, there's another new betting odd that's coming up from DraftKings or FanDuel. You're not going to see that kind of relationship with the prediction markets and FOX News. It will be editorial. It will be integral to the storytelling that our journalists do on FOX News. But I think that's, that partnership, that kind of partnership with the prediction markets is the extent of the partnerships that we can see going forward.

As we start to ramp up here -- wrap up, not ramp up, we are -- listen, we talked about at the beginning that there are lots of other changes going on in the ecosystem. Others are even spinning off linear networks. We didn't touch on that specifically yet or even retreating from entertainment programming. And again, you guys have shown that you're still in that game. So when you think about the competitive advantage for where you sit today, you talked about the strength and focus. How does that play out over the next couple of years, thinking about where the future of Fox is really going within this evolving ecosystem.

Yes. I come back to my opening comment of focus and momentum that I think it's a real company asset that we're focused on what we do. And as we look out, that position just gets stronger. I don't have any sense that FOX News is going to -- despite the competition we talked about earlier, FOX News is going to weaken its position, that FOX Sports is not going to continue the strength with all of the portfolio that we have of sports, that Tubi won't continue to grow in the kind of rates that I've referred to. Local stations will enjoy the benefit of the elections and the entertainment division will continue to put out great product, most of which you saw at the upfront on Monday. So look, I don't have a crystal ball. I'll end the way I started. Fair value is still to be achieved for Fox.

All right. I think we will end it there then. Thank you, John.

All right. Thank you.

Thank you for standing by, ladies and gentlemen. Welcome to the Fox Corporation Third Quarter Fiscal Year 2026 Earnings Conference Call.

[Operator Instructions]

As a reminder, this conference is being recorded. I'll now turn the conference over to Chief Investor Relations Officer, Ms. Gabrielle Brown. Please go ahead, Ms. Brown.

Thank you, operator. Good morning, and welcome to our fiscal 2026 3rd quarter earnings call. Joining me on the call today are Lachlan Murdoch, Executive Chair and Chief Executive Officer; John Nallen, President and Chief Operating Officer; and Steve Tomsic, our Chief Financial Officer.

First, Lachlan and Steve will give some prepared remarks on the most recent quarter, and then we'll take questions from the investment community. Please note that this call may include forward-looking statements regarding Fox Corporation's financial performance and operating results. These statements are based on management's current expectations, and actual results could differ from what is stated as a result of certain factors identified on today's call. and in the company's SEC filings. Additionally, this call will include certain non-GAAP financial measures, including adjusted EPS and adjusted EBITDA or EBITDA, as we refer to it on this call. Reconciliations of non-GAAP financial measures are included in our earnings release and our SEC filings, which are available in the Investor Relations section of our website. We also refer to free cash flow which we define as net cash provided by operating activities, less capital expenditures. And with that, I'm pleased to turn the call over to Lachlan.

Thank you, Gaby, and thank you all for joining us this morning. It's a busy day for us here at FOX. This morning, we reported our fiscal third quarter results. And later today, we will host our annual upfront presentation where our advertising partners will experience firsthand the power of our programming and the platform we provide for them across our family of Fox Corporation brands. And as you will hear today, all signs point to a healthy upfront for Fox.

From global news and live sports to high-quality free entertainment and essential local news coverage, Fox turns audience engagement and passion into performance for our advertising and distribution partners alike. This performance was demonstrated again in our fiscal third quarter, where our financial results continue to reflect the unabated momentum across the business. We reported $4 billion of revenue and EBITDA growth of 11% to just over $950 million reflecting strong core top line delivery from ongoing advertising trends and distribution revenue growth. Distribution revenue grew 3% during the quarter, benefiting from the continued early success of FOX One where both new subscriber additions, which we are confident are additive to the ecosystem and subscriber retention outperformed our expectations. Advertising revenue, as expected, declined due to the absence of last year's Super Bowl broadcast. However, excluding the Super Bowl impact, advertising revenue would have grown double digits driven by strength across the company, and that momentum continues into our fiscal fourth quarter. The strength of these trends is most evident at FOX News, which achieved its highest third quarter advertising revenue ever.

In rapidly changing and consequential news cycles, audiences turned to FOX News for compelling accurate and timely reported. This is easily and clearly reflected to the Fox News channel, finishing the quarter as the most watched cable network in both total day and Prime and the sequential momentum is growing. For example, FOX News finished April with year-on-year total audience growth, which contributed to FOX News being the second most watched network in Monday through Friday Prime in all of television, surpassing all but one broadcast network. Fox News Digital also delivered strong results in the quarter, with both YouTube and social media views up double digits over the prior year. FOX Sports delivered major wins during a slightly less hectic time of the year for our sports calendar. The World Baseball Classic across Fox were they resound in success with average ratings across the series, up over 150% versus the 2023 tournament and more than 10 million viewers tuned in for the final. That trend continued as Major League Baseball's opening weekend on Fox, scored ratings 45% over last year and IndyCar race to its best start in years, growing ratings 37% as of quarter end.

Earlier in the quarter, we concluded a strong NFL season, highlighted by over 170 million viewers tuning into regular season NFL games on Fox during the 2025, '26 season culminating with the NFC Championship game, which averaged more than 46 million viewers, not bad. The NFL has been a key partner with Fox for more than 30 years, in what is a mutually beneficial relationship. To underscore this relationship with the NFL, yesterday, Fox acquired rights to 2 additional NFL games in national windows for this coming season. And looking ahead, Fox will shortly be home to the world's biggest sporting event of the year, the FIFA Men's World Cup. We are proud to bring the first World Cup to the United States in over 30 years to our audience this summer. This year's tournament with an expanded schedule encompassing 104 matches over 5 weeks, will see Fox deliver the most matches ever on U.S. broadcast television. Tubi will also be part of our coverage as the simulcast the opening matches, including the first USA match and will be home to a FIFA World Cup hub, where Tubi's nearly 100 million monthly active users can engage with a broad assortment of soccer content. This added exposure from the World Cup builds on Tubi's strong third quarter where revenue grew a healthy 23%. Engagement was also solid with a 19% increase in total view time, maintaining strong momentum from library content, to be originals and creator led titles. Tubi now features more than 220 creators with over 17,000 episodes with plans to further expand its creator universe as this content attracts younger audiences and drives higher retention. Just like we have seen at the start of each sporting season, we also expect the World Cup on FOX to be a positive for FOX One. Trends across FOX One continue to be encouraging with strong consumption across both our news and sports offerings.

Finally, from an entertainment perspective, our refreshed mid-season play introduced several great new shows, led by Fear Factor, Memory of a Killer and Best Medicine. These attracted robust audiences consuming live on the network and were amplified with meaningful levels of delayed digital streaming. In addition, at today's upfront, we'll be announcing the launch of several new shows for the upcoming year, including BayWatch and the Interrogator. Fox's third quarter results once again underscore the strength of our brands and our leadership in live program positioning us to deliver record EBITDA this fiscal year. As we look ahead, this strength will be showcased through the upcoming Men's World Cup and the looming midterm election cycle. These events will supplement our outstanding core sports and entertainment schedules, our continued rapid growth of Tubi, and our leading national and local news coverage where we continue to make significant investments in the work of our dedicated journalists. We have solid momentum, and our financial position is strong supported by a robust balance sheet.

We remain committed to delivering value for our shareholders in a thoughtful and disciplined manner, and we will continue to explore every opportunity to maximize that value over the long term. And with that, I will turn the call over to Steve to take you through the details of the quarter.

Thanks, Lachlan, and good morning, everyone. Fox delivered another strong quarter financially highlighted by our fiscal third quarter total company revenue of $4 billion and adjusted EBITDA growth of 11% to $954 million, a record third quarter for Fox. Distribution revenue grew 3% over the prior year, driven by 5% growth at our Cable segment. As expected, advertising revenue on a headline basis was down 24% as we lapped last year's broadcast of Super Bowl LXI.

As Lachlan mentioned, excluding the impact of the Super Bowl and other NFL postseason schedule changes, our total company advertising revenue would have grown double digits over the prior year quarter. Content and other revenue was up 12%, primarily due to higher sports sublicensing revenue in our Cable segment. Meanwhile, total expenses fell 14%, mainly a result of the NFL post season schedule differences I just mentioned. Net income attributable to Fox stockholders was $166 million or $0.38 per share as compared to the $346 million or $0.75 per share reported in the prior year period. Excluding noncore items, adjusted net income was $570 million and adjusted EPS was $1.32, up 20% compared to the $1.10 per share recorded in the prior year. Now let's turn to our operating segments. Starting with the Cable segment, which delivered 6% revenue growth and 1% adjusted EBITDA growth to $884 million. Cable distribution revenue grew 5% over the prior year quarter as pricing gains outpaced the impact from net subscriber declines, which remained stable at under 6.5% across our third-party distributors before taking into account a meaningful positive contribution from FOX One.

Cable advertising revenue was up 5% versus the prior year, driven by strength in national pricing at News and the benefit of the World Baseball Classic sports. Cable content and other revenue increased 24%, driven by higher sports sublicensing revenue. Revenue growth at our Cable segment was partially offset by a 13% increase in expenses, primarily attributable to higher sports rights amortization. Turning to our Television segment, which reported $2.2 billion in quarterly revenue. As anticipated, advertising revenue in our Television segment declined 30% as underlying growth led by Tubi, along with the benefit from this year's additional NFL wild card game was more than offset by the absence of Super Bowl LIX which generated over $800 million in gross advertising revenue in the prior year quarter. Television distribution revenue was down 1%, which continues to be in line with our expectation for TV distribution revenue to be about flat for the full year before returning to growth in fiscal '27. Television content and other revenue was up 2% year-over-year, primarily due to higher content revenue tied to our entertainment production studios. Meanwhile, expenses at the Television segment fell 24%, led by lower sports programming rights amortization and production costs due to the absence of last year's Super Bowl.

As a result, EBITDA at our Television segment was $191 million, more than 3x the level posted in the prior year quarter. Turning to cash flow, where we generated quarterly free cash flow of $1.77 billion. This strong quarterly free cash flow delivery is consistent with the seasonality of our working capital cycle, where the first half of our fiscal year reflects the concentration of payments for sports rights and buildup of advertising-related receivables, both of which reversed in the second half of our fiscal year. In terms of capital allocation, fiscal year-to-date, we have repurchased an additional $1.95 billion through our share buyback program. This brings the total cumulative amount repurchased to over $8.5 billion or approximately 36% of our total shares outstanding since the launch of the buyback program in 2019. This includes the $1.5 billion accelerated share repurchase transaction, which is now complete. These capital returns are supported by the strength of our balance sheet where we ended the quarter with approximately $3.6 billion in cash and $6.6 billion in debt. And with that, I'll turn the call back over to Gaby.

Great. Thanks, Steve. And now we'd be happy to take questions from the investment community.

[Operator Instructions]

We have a question from Michael Morris of Guggenheim.

I'll try to keep it to one topic, if I could. So first, congratulations on the agreement that you just announced with the NFL for the additional games. Can you share any more detail on those games when they're going to air and where they're coming from? And then more broadly on the topic, there was an article recently in the Journal saying that Rupert Murdoch expressed concern to the administration about games moving -- NFL games moving to streaming services. Does this new agreement mitigate that concern at all? And more broadly, can you just share any update on negotiations to extend the agreement just the article did raise some concern about elevated tension between Fox and the league. So it would be great to get your perspective on that.

Thanks, Mike. It's Lachlan. Let me, I guess, start in order of how you asked the question. So we're announcing this morning that we've acquired these rights -- these 2 additional regular season games. The first will appear in week 10, they're both National Games. The first will appear in week 10, that will give us, I think, it's the overseas game from Munich. That will give us a triple header that Sunday, which I think will be the first triple header on broadcast TV in history. So we're very excited for that.

And the second game will be Saturday game in week 15. So those are 2 games we've acquired. And I think the important note to take here, and this goes to your second question, is there is no tension really with the NFL. We're partners for 30 years. We look forward to being partners for the next 30 years. And as we've noted before, we have 4 years left on our current deal. We've read the speculation that the NFL would like to renegotiate and extend the current -- our current deal or the current deals that are in the marketplace, but we've had no substantive discussions with about that. So it's hard apart from what we read in the press around speculation around that. I wouldn't want to add to that speculation at all.

Having said that, we'd like to sort of broaden and deepen our relationship with the NFL. But we'll only do so in a disciplined way really take some -- creates value of our long-term shareholder value for our shareholders.

We have a question from Michael Ng of Goldman Sachs.

I wanted to ask about cable network distribution revenue growth. The 5% growth when I think many investors wonder if cable network distribution can grow sustainably above 0. So maybe you could just talk a little bit about the FOX One contributions, has the success of FOX One kind of given you confidence that cable distribution could grow mid-single digits, perhaps on a multiyear basis? And maybe anything on seasonality that you would call out?

Thanks, Mike. So let me start and then Steve can answer the tough part. So, look, we are from a cable and all series from a cable distribution perspective, we feel we're in the best place we've probably been for some time. That's based on 2 things. One is we're seeing a amelioration of sort of sub declines stabilizing of sub declines now for a few quarters in a row below 6.5% in [indiscernible] We think that's a very positive trend. And it's important to note that does not include our FOX One subscriber additions.

We've devided to take a very conservative approach and not include FOX One subscribers in that 6.5% because it's still early days for FOX One. We want to see at least, at the very least, sort of a full cycle flow through. So we understand there any seasonality that could be in the FOX One subscriber base. Although having said that, we're really not seeing a tremendous amount of churn within FOX One to date. So we're very pleased with that. The other side of that equation, obviously, is the strength of our brands. Our brands continue to be the most coveted and sort of valuable in the cable universe. and whether that's Fox Sports or ones that the brands are in a tremendous position. While skinny bundles are helping the ecosystem, we believe that's also early days. Skinny bundles really launched 12 to 18 months ago. We're watching that with interest, but all the signs are very positive about the evolving ecosystem.

Yes. Thanks, Lachlan. So Mike, in terms of trajectory, I think to sort of echo Lachlan's point, I think you're going to find there's a lot more heterogeneity in the performance of cable networks going forward. And so you've got -- in the old days, used to just be cable and satellite, and then we have the virtual. Now we've got FOX One as our own sort of owned and operated service and the emergence of genre bundles. And so we think that all is well for our networks, which it must have both from a broadcast perspective as well as our sort of mainline cable nets. And so we think that serves us really well.

As Lachlan mentioned, FOX One was a significant contributor to our sub growth or sort of the subscriber trends, and that's fed into our revenues in terms of both cable affiliate and TV. We'll sort of shy away from sort of whether it's mid-singles, but I think we're seeing pricing growth that we enacted about a year ago coming through. This coming year, we're lighter on cable versus TV pricing. So we've got about just north of 1/3 of our distribution income up for renewal in fiscal '27. And that's skewed towards TV. But we feel very good about where we're at in terms of both cable distribution revenue growth as well as TV distribution growth in fiscal '27.

We have a question from Sean Diffley of Morgan Stanley.

So advertising trends very strong at double digits ex Super Bowl. I was hoping you could parse out national versus local trends and the new category call-outs? And then as it relates to the World Cup, how should we think about the financial impact across the company how you plan to harness the event across the portfolio, including Tubi and FOX One?

Thanks, Sean. So you're right, advertising trends remain strong across the entire portfolio, whether that's sports, news, entertainment to and also strengthening trends of the -- in the local stations. We you don't feel that going into this upfront. And obviously, we have a presentation today, but we're seeing a similar market, which is a very healthy market that we saw sort of around this time last year. So we think that bodes well a very healthy upfront. We're seeing low options being taken up, very low options. So it's a strong marketplace. We're not seeing cancellations and we're seeing healthy scatter prices.

So most categories are growing. I think you asked some chat ups in some of the categories like pharmaceutical, we think is growing, we'll grow on the upfront, the tech segment and also finance. When we add to this political revenue that we'll start to see flowing towards the autumn. I think there were some market third-parties estimates of $11 billion being the political ad market this midterm which would be our midterm record. We'll do obviously well out of that with our stations in key battleground states. For example, at Florida and Georgia and also benefiting from a lot of the issue money flowing into states like California. And we're actually already seeing record political revenue for an off year. So the combination of a strong underlying ad market leading in these upfronts and also the political revenue that's already beginning to flow in gives us great confidence in the ad markets moving forward. In terms of the World Cup, Steve is raising his hand. So I will step about because we are very pleased with the World Cup performance.

There's a great deal of anticipation and excitement around the World Cup, both from our audiences and from our partners. We're -- as I mentioned in my earlier comments, we're really very proud to bring the World Cup to the United States in this 250th year, and it's going to be a very successful competition. It will be -- it will assist, I think, the additive to FOX One. Obviously, that amount of sort of sports content on FOX One will be added to FOX One. And it will be a great -- the 2 games Tubi has simulcast won't impact Tubi's revenue because that revenue will be recognized by Fox Sports, but it will certainly help to our, be additive Tubi's sort of brand and audience metrics.

And Sean, just in terms of how that shakes out for us, as Lachlan said, we're going to light it up across all the assets of the company. The way you should think about it is it's basically a 50-50 in terms of where the tournament spreads financially. So Q4 of this current fiscal year into Q1 of our next fiscal year, and then from a revenue/EBITDA perspective, you should be thinking more on the broadcast side from a revenue perspective as well as being EBITDA accretive and then on the cable net side, less revenue and probably not EBITDA accretive. But on an overall company basis, absolutely EBITDA accretive.

We have a question from Bryan Kraft at Deutsche Bank.

I guess I had one on FOX One, if I could, and then just wondering your sports betting investments. So on FOX One, you commented a little bit on the churn. I was wondering if you could talk about what you've seen in terms of sign-ups related to the spring sports, so Major League Baseball and NASCAR, some of the other stuff like Indy. And do you have any do you think you have any line of sight to FOX One potentially fully offsetting the traditional pay TV declines at some point? And then on the sports betting side, just wondering if you could provide an update on your strategy and your plans regarding those investments in FanDuel and Flutter and how you plan to leverage those longer term?

All right. Thanks, Brian. Look, on FOX One, look, overall, I think let me just say that we are very pleased with FOX One. And in almost every way, it has exceeded our expectations, but it's still early days. So we're being sort of conservative and how we view it. Having said that, as we've come into the quieter summer period of spring period and summer period for us, we have seen very little churn, much lower churn than we had expected, and this obviously goes to the strength of the content and the platform. It's important to note that in the third quarter that we're reporting today, over half of their viewership on FOX One is news viewership and that goes to really the strength of that content and the user base. So we're very pleased with that.

And obviously, to your question, as we have sports added to FOX One, that's helped, obviously, with bringing in new subscribers. As to the sports betting opportunity, we remain bullish on FanDuel, and we retain our 2.5% option in Flutter. Sorry, our 2.5% equity stake in Flutter and our 18.6% option in FanDuel. We have over 4 years to exercise that option. We are going through, as we talked about before, a licensing process so that we can exercise. But we have 4 years to do that. But we're bullish on the FanDuel business.

Operator, we have time for one more question.

We have a question from Steven Cahall of Wells Fargo.

So first, just on FOX News, I guess as we think about the really big reach you've built over the last few years, is there any way to think about how much your pricing has come up structurally over that time? And I know the midterms will be probably another nice bump. But how do we think about just the general cycle of viewership that you have on FOX News over the next 12 months? Is it sort of down and then up as you get to the midterms? Or is it a little more stable in there.

And then just on net digital investments. I think this is something, Steve, that you've talked about kind of on a total company basis before. How are you thinking about net digital investments for fiscal '26 and fiscal '27. With the balance sheet, you have a ton of capacity to invest in things. I don't know if that's things like marketing around FOX One or Tubi, but would just love to know how you're thinking about that for the medium term?

Great. Thanks, Ray. So on Fox News, so from a pricing perspective on FOX News, we're seeing, obviously, with strong ratings, particularly in April, now and April, but really through -- I think Q3, our share was about 57%. Ratings were down as we were to the presidential inauguration a year ago, but we're seeing very positive year-on-year growth in April. And so share and ratings are solid for us and we're seeing really advertisers respond to that. I think in fiscal year '26, we added 200 new additional advertising clients, premium advertising clients. And that's on top of the preannounced 350 new advertising clients in fiscal '25. So over 500 new clients yearning on to be on the platform. And what has that done? Well, that's really driven our CPMs up. Our CPMs and national pricing for Fox News are up over 45%. That's still a long way between the Seagram pricing and Fox News and the broadcast networks that we compete against. So we think there's actually a great upside opportunity for us as we endeavor to sort of narrow that gap between the #1 cable network in the country.

The #2 that were sort of overall, I think 1 broadcast network is slightly ahead of us. but with pricing where there's a ton of upside. On net digital investments, I'll let Steve go into the detail, but Tubi continues to grow. That's sort of our -- between Tubi and FOX One are the core of our digital investments, but we're seeing the investment in to be sort of moderate as it continues to sort of grow and expand. The investment in Tubi is really a launch costs, marketing costs, some tech costs and we're seeing that ameliorate as it continues to grow. And that will be offsetting some of our broader digital investments, which are pretty modest cost

Yes. Thanks, Lachlan. Just on investment in. I think we've got a track record now of how thoughtful we've been on deploying capital. And so if I look at it year-to-date, we're pacing better on investments than where we were year-to-date this time last year. And it's exactly what Lachlan said, we've had better than we anticipated success both at FOX One and Tubi. Tubi was again a little bit better than breakeven for Q3, which is a fantastic achievement. So that's 3 quarters in a row being breakeven or better. So, look, I gave a couple of numbers out over the course of this fiscal year so far. So I think we started saying around $350 million. Last year, we did sort of $290 million. I'd expect the full year to be comfortable inside the $290 million that we did last year not anticipating any surprises for fiscal '27 in terms of an investment envelope. But as I said, we've been thoughtful about it so far. So if we see the opportunities, we won't be shy of investing in it. But where we're really happy with where the investments are right now.

At this point, we are out of time. But if you have any further questions, please give me or Charlie Costanzo, a call. Thanks so much for joining us today.

Ladies and gentlemen, that does conclude the Fox Corporation Third Quarter Fiscal Year 2026 Earnings Conference Call. Thank you.

Okay. Welcome, everyone. So we're here with our second fireside chat of the day. So I'm thrilled to introduce John Nallen, who's the Chief Operating Officer of FOX. John, welcome.

Thanks, Bryan. Thanks for having us.

Maybe just to start off, kind of a high-level question. So despite this being an off-cycle political year, FOX has continued to exhibit very strong results year-to-date. I'll remind people, FOX is on a fiscal year, so we're actually more than halfway through the year now. Revenue has been up versus last year. EBITDA is down a little, but still dramatically up from 2024. Perhaps maybe you could just start off by talking about some of the highlights over the last 12 months that have driven the strong fundamentals. And what are the key areas of focus in the back half of fiscal 2026 and as you head into fiscal 2027?

So a lot to unpack there, but let me go high level and maybe we'll use it to dig down into some of the areas as we talk about. So if I look back for the last 12 months briefly, it's been a very strong period for FOX. FOX News has had incredible rating gains during that period. FOX Sports has had record-breaking revenues led by the NFL, College Football, Baseball. We launched FOX One, which was a big initiative by us. FOX Entertainment has launched 3 big shows that are new to the network that are really promising. And I guess Tubi, which I'm sure we'll talk about, has had great engagement and revenue gains during that period. And the backdrop for that last 12 months has been a very -- for us, a very healthy advertising market and some constructive trends on subscribers.

If I look forward, from a business perspective, we've got a dynamic new cycle that's -- which attracts big audiences to FOX News. We've got the World Cup on FOX coming up this summer, which will be very, very exciting for us and a great platform for our advertisers. The continuance of the growth in Tubi and their growth in KPIs and contribution to EBITDA will be a theme as we look forward. And of course, the growth in FOX One is something that we're looking forward to in the next few years to reach the kind of levels we've talked about in the past.

I think the theme for us is that we've got confidence in the momentum that we've got right now. There's not really anything on the horizon that is a big speed bump for us as we look forward. The -- and I think you wrap that up in a balance sheet and cash flow generation that's been super, right? I mean our balance sheet is an asset of the company. We use it judiciously. We're focused on capital allocation and really disciplined about it. So I think if you look both backward and forward, at this point, about confidence in the momentum is really what we're focused on.

Okay. All right. We're going to dig into several of those areas you mentioned. So it was a good way to start off. So on the affiliate side of the business, the rate of subscriber decline across your networks has continued to gradually improve. I think it was 6.3% decline in the December quarter, and that's without the contribution of FOX One. What are the factors that you think are driving this improvement? And where do you see that trend going from here?

Yes. So as I said, the trends in subs are pretty constructive lately. And we've had 7 quarters in a row of improved trends around subscribers. And underscoring that, to your point, it's without the inclusion of FOX One, which makes those trends even better. We're holding off, including FOX One in the trend line until we get through an annual cycle, with FOX One to really understand the dynamics around that. But it's not -- it's interesting. What's not driving it is some of the real innovations that are coming in, in the pay-TV world.

So for example, skinny bundles are not -- have not really hit the market yet only recently as YouTube announced theirs. DIRECTV has put a couple out there. Charter, obviously, has a smaller package. But we haven't seen a dramatic improvement in the trend coming from skinny bundles, which is a positive because our expectation is those kind of innovations are going to contribute even more toward the trend line in subscriptions. So all in all, it's a good sign. We're still -- look, we're still in a decline, let's not forget that. But luckily, here at FOX, we've been able to outpace that decline with the pricing power of the channels that we have.

Second derivatives, those are positive second derivatives.

Right.

So you've successfully renewed 25% of your affiliate base in fiscal '25, and you're in the process of renewing, I think, another 25% in this year in fiscal '26. How are you positioned for the larger cycle in fiscal '27 and '28, where I think you've said you'll be breaking new ground with a new vintage of deals? And how do you expect pricing power to evolve in this landscape, particularly as those skinny bundles you mentioned proliferate?

So for us, to your point, we had 25% of our "book" renewing in the fiscal '26 that we're in. We're basically done with that. So we don't have any major renewals to finish out our fiscal year for June. And those were quiet. They were successful. There wasn't the kind of noise that some of the other channel providers had across their portfolio.

Beginning in '27, that steps up. We have a higher percentage increase renewing at that point in time. But to your point, it's a fresh vintage. The ones that we've completed up through this year were based on market rates that had been established on other deals. We're now coming to some new territory on rates and packaging around all these renewals that are coming up.

Look, we've got a very focused portfolio. We don't have a big tail of channels like we did in 2019. I think that helps. I think the investments that we're putting into our product, particularly in the journalism, FOX News, the sports on FOX Sports, the Entertainment product, as I referred to earlier, helps us in pricing. And in many ways, our pricing -- I don't want to say power, but our pricing power is pure in that we're not bringing along underperforming assets in the discussion.

And given the strength of our channels, the discussion with the distributors has always have been about, these are must-have channels in any portfolio. Whether it's big or skinny, you're going to need FOX News, FOX Sports, FS1, all the other channels we have. So look, these negotiations are always difficult. But the innovation, as I said earlier, that's coming into the market, I think, is a positive trend looking forward.

Yes. As you mentioned, the company has really distinguished itself with live sports and news. And that's really insulated the company from the ratings declines that we've seen broadly in linear entertainment for the industry. But there's still this cord cutting, obviously, dynamic. So beyond specific renewal terms, how do you think about the long-term evolution of FOX's business model in a world where the traditional pay-TV subscriber likely continues to shrink? And how does your portfolio strategy ensure that you'll be able to thrive and grow over the next, say, 5 to 10 years?

So your question focuses on the business model, and the heart of FOX's business model is delivering content, primarily news and sports, to highly engaged scale audiences and then taking that content and monetizing it through ad. 50% of our top line is advertising sales, 50% is distribution. It's a simple business and a simple business model.

I don't see in the next 5 to 10 years, on the content side, the channel development side, much change. That is, we'll continue to invest heavily in journalism and into sports and entertainment product to make -- to continue to make the FOX channel stand out in a very complex world. But there will be -- I think on the distribution side, there will be evolution. We've already seen it on our own business with the launch of FOX One as a digital distributor. And I know people talk about traditional distributors and digital distributors. And really, that is morphing into one. I mean what's YouTube TV, a digital distributor or traditional distributor? What's Xfinity? And are they digital or are they traditional? Most everything is going to be focused as a digital distributor and unleash the kind of innovation inside that product that you'll see.

And FOX One will be our biggest near-term evolution in distribution to bring subscribers from the nonpay world into FOX One. And I think that's a vitally important point. We are not -- said differently, our top priority is our pay-TV universe, our pay-TV partners. And we don't take any actions that would look to cannibalize at all the relationship we have with them. So I think the place you'll see evolution over the next 5 to 10 years is not in the content side, probably not so much in the advertising side. But on the distribution side, I think you'll see the business model change in a bit.

Yes. Okay. Maybe we can get into news a little bit. Looking back, I think most people would have expected FOX News viewership to decline after the presidential election cycle. But the network has continued to deliver increasing audience and audience share. You've attracted hundreds of new advertisers, national advertisers over the last several quarters to FOX News. Do you think CPMs continue to grow? Based on the success, do you expect to see more advertisers joining the platform? And maybe as part of that, you could also discuss how much of a discount to broadcast TV, FOX News is at, at this point in time? And how much of that gap could actually be closed?

So FOX News has continued to just gain market share in a very heavy new cycle. If you take, for example, the state of the union, a couple of weeks ago, we had 9 million viewers that night, which was 70% of the cable news market share. And that's just indicative of the strength that FOX News has in that market. And to your point, in competing with broadcast news as well.

Right now, we underprice against broadcast about 50%. So that's the opportunity on pricing for FOX News to continue to move up in pricing and we've seen that. We've seen high single-digit increases in national rates at FOX News. We've seen DR rates mid-single digits, including -- but you don't do it overnight. It's not -- you're not going to achieve that kind of lift in pricing overnight. But to your point earlier, we've attracted more and more advertisers to FOX News, not only linear but digital as well. And that's because of the scale of their audience, more Democrats, more Independents, more Asian Americans, more Hispanic-Americans on FOX News than any other channel.

So it's a safe environment for big blue-chip advertisers to come in and to get to an audience that they otherwise wouldn't be getting to. So we've had 7 quarters in a row of revenue growth at FOX News. I don't see what would -- we've got an election cycle coming up. We've got, again, a big dynamic news cycle going on. So the prospects for FOX News continue to be as strong as ever.

Is that 50% discount? I mean is that average of all broadcasts? Or is that broadcast news? Or is it broadcast exports?

No, it's pretty well across the daypart against the equal daypart for broadcast. But that, look that's -- our ad sales group knows that's the opportunity that they're to go after, but it's not one that you get overnight. But it is that prospect of pricing power -- pricing opportunity, I should say, that is a great outlook for FOX News.

Right. Okay. I think Lachlan mentioned on the last earnings call that you expect a robust political advertising cycle in the midterms this fall, which I don't think is too surprising for everyone. And FOX News is increasingly capturing a larger share though of that national political spend, which I think is a more recent dynamic. So as we head into the '26 midterm election season, how are you positioning the entire FOX portfolio from the local stations to FOX News and even Tubi to kind of maximize your share of what should be a record-breaking political market?

Yes, it will be a record breaker. There's no question as we look out. Estimates I've seen put the market spend across all advertising media at $11 billion and upwards of that, which is a record. There's spending everywhere, but there will be aggressive spending in certain key markets that we're in, like Georgia and Florida here have big -- have gubernatorial and Senate races. California, you well know, has the big gubernatorial race. Michigan has got a trifecta, gubernatorial, Senate, House. And Pennsylvania has got really active House seats that's always competitive and a lot of money always spent in Pennsylvania, whether that be national or local. So we're clearly going to benefit at the local station level because that $11 billion is across all media, but a heavy concentration will be amongst local station and local digital. So the stations are positioned really well for the midterm.

Tubi just has to be a beneficiary of that because they hit a market that you can't get with linear. About 2/3 of their users and audience are cordless. So they're not in the environment that people are spending the linear money to. So Tubi had a great national election cycle last time. And from a local standpoint, it's got to be -- it just has to be campaigns need to use Tubi.

The place where we don't get a tremendous amount and very, very little in midterm elections is FOX News because it's a national channel. But we get a second derivative benefit because there's a lot of viewing that comes out of these races and people understanding what it means to the rest of the country. And that ratings lift has a knock-on impact to advertising. So we get it in 3 ways: the principal stations, driven by the stations. Then by contribution that Tubi will have really for its first time in midterm election of size. And then FOX News through ratings.

And do you know what the last presidential cycle was? I mean so if this is -- let's say, the $11 billion is accurate? Do you remember what?

I don't.

Okay. I was just wondering how much lift that was -- represents. But maybe we could just talk about the current ad market for a second. Can you just talk about what you're currently seeing in terms of ad trends across your networks and stations and Tubi? Anything on category performance, which ones are better than others? And how is demand broadly across the market?

So as I said in my opening comments, the advertising market for us at FOX is really healthy. And that's particularly true on the national side. I'll touch on local as well as we go through it. But we've had, again, 7 quarters in a row by coincidence of advertising growth. From a category standpoint, 9 of our top 10 categories are growing, led by finance, pharma and tech. The only one that's down is entertainment, and that's really just because of theatrical releases in movie schedules when they're going out. The scatter pricing is up, the amount of options that are taken is quite low from cancellations, from advertisers, from the upfront.

And if I look almost division by division, FOX News continues to be strong based on the comments I just mentioned and particularly strong. What's surprising is the last 2 quarters on a comp basis because they were comping to heavy political spending a year ago, yet revenue is up in FOX News. So that really talks to the strength of what we're seeing in FOX News.

FOX Sports right now, heavy bookings going on with motor sports. That's the season we're in. But a lot of attention and a lot of enthusiasm around the World Cup beginning in June on FOX.

Entertainment, as I said, we've got 3 new shows, Memory of a Killer, Best Medicine, and Fear Factor that are doing really well and attracting advertisers to Entertainment, something we really don't talk about much because Prime Time Entertainment is a relatively small business for us, but they're standing out during this time.

Local station is a bit more mixed. The Olympics has sucked a lot of money out of that market and put it into the NBC stations. So right now, it's a quieter market in local stations. I expect that to change really dramatically with the advent of the World Cup coming in our Q4 and Q1 upcoming.

And then the last one would be Tubi where that is a really competitive market. Digital AVOD, incredibly competitive market from a price standpoint. But Tubi has continued to stand out as what we call premium AVOD during that period and has continued its growth, and I'm sure we'll talk about its KPIs. But it hasn't abated at all at the Tubi level. So despite the really heavy competitive nature of the pricing, the volume and engagement we're getting at Tubi continues to see ad sales growth. So overall, healthy advertising market. I don't see anything on the horizon that's really going to interrupt that. We're getting ready for the upfront already. You think about when the cycle goes around, and we're going into it very encouraged on our position.

Yes. Okay. Great. Maybe we can talk about FOX One, which you launched about 7 months ago just before the NFL and the College Football season started. It sounds like it's performed well with sub growth pretty healthy relative to your expectations. Could you provide maybe some additional color on FOX One's performance? Now that the football season is over, what are you seeing in terms of seasonal churn among those customers?

Yes. So remember what FOX One is. FOX One is a digital platform that really just provides our channels in a really interactive way for users. It is not an SVOD platform. So for the most part, what's on it is our linear content. Our subscriber growth has been better than we expected, really encouraged by it. And importantly, as I mentioned earlier, we see no tangible outcome of it taking subscribers from pay-TV. We just haven't in the remits that we get from pay-TV and the conversations that we have with our pay-TV operators, it's attracting subscribers from the cordless community. We made a quasi-promise that we wouldn't go after pay-TV subscribers in our marketing. And you have yet to see and won't see advertisements for FOX One on the NFL and College Football on FOX Entertainment. They're all digitally sourced and all the subscribers are digitally sourced.

From a viewing standpoint, as you'd expect, during the sports season, particularly the NFL season, heavy concentration of viewing by those users on sports. 2/3 of the viewing in a week was on sports. But as the seasons were ending, both College Football and NFL, we started to see more toward the users around our news product, just to get them more enticed in the news product. And what we've seen now, which you'd say, is almost obvious, but has now shifted where 2/3 of the viewing is news on a highly engaged audience.

Churn has been better than what we expected, but I think we're yet to see the full story on it. It just deals with how the monthly subscribers renew. And we're probably a couple of months away from understanding completely what the churn profile is. But from an investment standpoint, it continues to be right in line with what we expected. It's not a massive investment. And you think about what happened during the streaming launches of other companies and billions they put into it, that's not the level of investment we've had or will have in FOX One.

So all in all, we're really encouraged with the ability of the subscribers to hit the levels we want. We remain encouraged by. And importantly, really importantly, the fact that it's accessing and not cannibalizing pay-TV and accessing cordless is an important element for us.

Right. Okay. Great. Maybe you could talk about Tubi a little bit, turned profitable 2 quarters ago, which I think is earlier than was articulated in the outlook by management. What drove that outperformance? And as you look forward, what are the key drivers that are going to drive Tubi to that long-term 20% to 25% margin that you've talked about? And related, how do you balance reinvestment into growth with margin expansion at Tubi?

So Tubi's numbers have been very good. Last quarter that we reported was a 19% top line growth in revenue and a -- I think it was 27%, 28% increase in TVT, which is the underpinning delivery.

Engagement, yes, yes.

And it was a contributor, not only a contributor to EBITDA, but the comp contribution from a year ago was dramatic. And you'll continue to see that now quarter-on-quarter because we were investing heavily into Tubi a year ago.

From a content standpoint, we continue to invest in what is the biggest library out there. But we're also experimenting more and more with original content that we know based on the algorithm will work with the users. For example, there's -- we have a host of Gen Z, female-skewed content on there now, and we introduce it every month. And what we find is the median age of that content comes way down, 25 years old. And it's, again, attracting an audience that you generally can't get on the linear side.

As far as scaling the business and marching toward the 20% to 25% margins, which I still think is exactly where you go. What we're seeing is we don't need on a percentage growth basis to invest as much in content and marketing as the top line is growing. So the top line is outpacing the growth of the cost, which is exactly what we thought would happen because the library is so big. It's not like as users grow, we need to add more and more and more content on top of the library. The investment there will grow at a more natural rate while top line will grow with engagement. So I don't see anything in the way of Tubi hitting those margins in the near term.

Okay. That's really interesting that you feel like you don't need to add content at this point to...

Content dollars. Content dollars.

Content dollars. Okay. So it's almost like the -- it's like an accumulating habit where people are engaging more with it because they like it.

Yes. And not only they like it, we make them like it because the algorithm is there to just get people. They -- Tubi has always used this phrase, the rabbit hole, to just take them down the rabbit hole to different places and all of a sudden, they're locked into Tubi for a long time.

Interesting. Okay. Maybe you could give us a more holistic view of the digital portfolio. How should investors think about the path to profitability for the entire group of digital investments? And at what point do you see this collection of assets going from a net investment to maybe a significant source of EBITDA and free cash flow growth for the company?

So let me take that one as basically the investment spend that we have. And it captures your comments in there because it's just one leg of our capital allocation strategy, organic investment into the business. So we said to the market at the beginning of the fiscal year that we expected to invest roughly $350 million of EBITDA into growing initiatives. And quite frankly, they were led by 2: FOX One and FOX Latin America, which is principally Mexico, which is in our operation. Those are both doing better than we expected, and we would expect to invest less than the $350 million by the end of the fiscal year because of the track that they're on.

A year ago, we invested $300 million into EBITDA in fiscal '25. 90% of that was Tubi. And as you can see, just by demonstrating the investments that we've made over time, that's now flipped to an EBITDA contributor, no longer in the investment cycle. And we've got these 2 others, FOX Nation, FOX Weather, a few others are in that bucket as well.

We build businesses. You know that historically. So you're always going to see some level of organic investment by FOX into a business to grow the business and grow the enterprise. We haven't used a lot of our capital for external inorganic M&A, but we have deployed it internally. So our expectation of both of these new initiatives being contributors to EBITDA is in the near term that they will turn around. But something else, we're going to be -- we'll sit here a year from now and talk about the new investment we made into X. I'm not sure what X is yet. No, no, I mean, I should say Y, not X. But it's just in our DNA to invest into EBITDA. But overall, the investment spend that we targeted will do better than. And the businesses that we're investing in are doing better than we expected.

Okay. Okay. Great. Maybe we can move to sports. So there's obviously a lot of discussion right now in the market about the early reopening of media rights and negotiations with the NFL. How can you reassure investors that there won't be a significant transfer of value from FOX to the NFL in this process, which is a concern that clearly has been weighing on the stock lately?

So you're right, there's been a lot of chatter about the NFL over the last month or so in the market. The one thing I would say at the beginning and I would say at the end is we have a fantastic relationship with the NFL. It's 30 years, 31 years in the making. We produced their most complex set of games on Sunday. We provide an incredible promotional platform for them, not only on Sports Sunday, but in the entertainment network on FOX News and increasingly, on Tubi and FOX One and, of course, at the local stations. So it's an important relationship going both ways.

Factually, we have 4 years left on our contract fixed before this famous opt-out year occurs in 2029. And look, we've been through this before. If there's an early discussion around lengthening -- significantly lengthening our relationship with the NFL, then we'll want to understand what that means for FOX and for our shareholders and for our partners.

But we've done this 5 times. And every time, I think I've sat with you at least once or twice around renewal time, the question is how do you monetize the step-up in rates. And the way it's been done historically is the way it will be done in the future and that our top line ecosystem participates in this. I mean for anyone to think that rights increases begin and end with the media rights holders is just misguided. That's not the way the ecosystem has historically worked and will work. So we'll look forward to a discussion if there is to be one around early renewing or talking about the current deal. But like I said, I'll end with the fact that we've got just a super relationship with the NFL.

Okay. World Cup. So the FIFA Men's World Cup is going to be in the U.S. this summer. Maybe you could talk about your expectations for the event relative to what we've seen in prior years when you've had it, particularly around advertiser demand and just the ability of World Cup to maybe attract new subs to FOX One. Seems like there's an opportunity there as well.

Yes. So it's wholly different now than any other cycle. We're in the U.S. principally, North America. For America250, it's just a big event. We've got -- it spans -- to remind you, it spans our fourth quarter and fiscal first quarter, June and July. We've got 40 more matches than we've ever had, and 70 of the total matches are going to be on broadcast TV on FOX. We will simulcast a couple of batches on Tubi early on, but that's a small piece of the activity.

But every indication from a viewer standpoint and certainly from an advertiser standpoint is that this is going to be a big event. And there's a lot of momentum going into it. We already see advertisers in market, particularly those that are FIFA partners, advertising the World Cup as part of their -- Coca-Cola is a great example where a lot of their advertising right now is coupled with mentioning of FIFA. So we're getting a lot of promotion from a viewing standpoint through the advertisers who are talking up FIFA. So I expect -- look, the next 2 cycles are outside the U.S. This will be a very big cycle. And of course, we knock on wood that the U.S. team goes far along on this whole cycle.

There will be a repeat of hockey, right?

Yes, that would be nice. That would be wonderful, great story to tell.

It sounds like -- I mean, it sounds like it's going to be much bigger than any past World Cup. I mean not only is it a year, but you've got the times zone advantage as well. I mean could it be multiples of prior World Cups or?

Yes. I don't want to guess, but it's going to be big. There's no question. The -- I mean, there's just been a lot of activity, a lot of discussion around it. There's more interest in the World Cup in America now than I've experienced on prior World Cups that are outside the country.

Yes. I think '96 was our last one.

Yes. And that's a while ago.

Yes. What about FOX One? I mean do you think there will be a big event as well?

Oh, sorry, FOX One, yes, absolutely. There's -- if you look at the start of any sports season for us, whether it was College Football, Pro, even with motor sports that we're having now, we always see a lift coming out of it. There's no question. For 2 months, you basically have an NFL season over these 2 months. And our expectation, and we will be promoting heavily toward the World Cup for FOX One is that we'll see a lift coming right out of that.

Now the benefit coming out of it, too, is we will be in baseball following the World Cup, and then shortly after that into College Football. So the ability for us to hold on to those World Cup subscribers and to not have them churn right away is better than we'll say the period that we're in right now where there's a big gap between football and World Cup. So -- but hopefully, the churn metrics will be as positive as we're seeing right now.

Yes. Okay. Great. Maybe we could talk about capital allocation a bit. So FOX has been, I would say, a very prudent allocator of capital ever since the divestment of assets to Disney. Balance sheet, as you mentioned before, remains conservative with significant cash. I think gross debt to EBITDA is under 2x. And you've got really seasonally strong free cash flow ahead in the March and June quarters. So what are your plans for capital allocation and cash deployment? Any appetite for M&A? I'd love to hear your thoughts on that.

Yes. So I guess, as I said in my opening, it's an asset, a real hallmark of the company going way back, but certainly since the spin in 2019, that we pay attention to our balance sheet and to the uses of our cash flow. Three principal areas of focus that we have is organic investment that I touched on, capital returns to shareholders and M&A or inorganic investment. But the place we've really leaned into since 2019 has been on the capital returns. It's over $10 billion return to shareholders in buybacks and in dividends during that period of time. We've got still a healthy ceiling left on our buyback authorization to continue to do that. In fact, we just finished -- we announced in September, I think it was $1.5 billion ASR, which just last week, we completed and we're in the market buying stock now.

So capital returns has been the place we've been focused because we haven't found any M&A asset or enterprise that's been so attractive to us that we'd want to separately lean into that. Now my desk is filled with every banker's pitch on every business out there, but none of them has risen to the point given the discipline we have where we say, okay, that fundamentally will change the business of FOX and extend the business of FOX.

But we are -- I should say, we are about growing the enterprise. It's not that we want to just be a buyback machine. We want to deploy our capital to grow the enterprise of FOX. So we continue to look out there in the market and be focused on opportunities that are around. As I said, we did a small one several years ago in putting probably around $500 million into buying Tubi, but that was really the largest initiative -- acquisition initiative that we had.

So more recently, we acquired Red Seat Ventures, focused on the podcast business, but that wasn't -- that didn't rise to the level of, say, a Tubi acquisition. And we'll continue to -- and we've done that. We've augmented Red Seat, which is primarily focused on podcast with more and more acquisitions of podcasters as well as little businesses that are around the podcasting space, something that's below the radar for most discussions that we have. But clearly, it's an area that's got a great amount of growth ahead of it, and we're riding that on a smaller scale going forward.

I mean, can you -- I mean, how bullish are you on that podcast opportunity? I mean we've seen other company -- it's obviously very big, right? It's become a big medium. There's big stars in it making real money. The advertising dollars have grown a lot. I wouldn't call them big, but they've grown a lot. It seems like enterprises though don't really make a lot of money on it. I mean SiriusXM makes some money on it, I don't know if Spotify does. But do you think it could be a big moneymaker someday? Or is it still to be determined?

It's all a question of scale, right? You're not -- you need to have a very big stable of clients, podcasters in there to make money -- make sizable money. We are profitable at Red Seat. And that's what we're focused on. We just did this Audiochuck deal, Crime Junkies, a few others that we were continuing to add to the stable of the Red Seat podcasters. And I think in volume, you'll see a sizable contribution. But is it going to be the size of Tubi or FOX One or one of those businesses in the near term, probably not.

Yes. Okay. And then maybe just lastly, we could talk about your nonconsolidated investments in FanDuel and Flutter. How should we think about the value of those, both financially and strategically? I think I know the answer to this, but I'll give you an opportunity to talk about it. Do you think the stock price reflects the full value of those assets? And are you concerned about the prediction market's impact on the sports betting business?

Let me take the last one first because there's a whole number of ways you can go with the prediction markets. My view is with the prediction markets being nationally licensed, that it actually put some pressure on the states to open up online sports gambling that haven't, the states that haven't because the prediction markets can now be active in markets where heretofore, they said, no, there's no gambling in these markets.

So for firms like FanDuel, Flutter, DraftKings, MGM, others, I think there's an opportunity that there'll be an expansion of the TAM through markets opening up for them. The converse is do the states get active against the prediction markets and try -- there have been a couple of Nevada and a couple of other places have been...

On money.

Well, that's what -- and it works both ways, right, to the extent that you can expand the market. There's more money for the states to the extent the states can put their hands on the prediction markets, there's more money for the states. So I don't think there's a threat that the prediction markets are going to unseat the online sports gambling guys. I think they can cohabitate among them.

Now, yes, you're right. My answer to your question within the question is we don't fully get the value for our sports betting assets that we deserve. We make that point at every conference and every meeting. So I'll leave it to market pundits to do their work. But we've got the investment in Flutter, topco and the 18.6% investment in FanDuel. We've got until 2030 to get license. We're on track to get that all done. And gambling is a great adjacency, wagering to what we do at FOX Sports.

And we are involved with the prediction markets, both Kalshi and Polymarket have talked to us about how can they interact with sports and news, which are 2 vital areas for what they do. So I think it's -- I don't see the death knell of online sports betting as part of the prediction markets, and I still see great opportunity for the place we're invested in there.

Okay. I agree with you that those assets aren't priced into your stock for what it's worth, so...

Keep telling the market. Will you?

All right. We'll wrap up there. We're just about out of time. So thanks so much, John, and thanks, everyone, for joining us.

Appreciate it. Thank you.

All right. We're going to get started. For important disclosures, please see the Morgan Stanley research disclosure website at morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. And I'm really excited to welcome back to the conference, Lachlan Murdoch, Executive Chairman and CEO of Fox Corporation. Lachlan, thank you for coming back.

Thank you very much, Ben. Thanks for having me back. Can I take a quick opportunity to congratulate you on 2 things. One, for building such a great conference because I know you put your heart and soul into this, and it's been amazing. Every year, all of us have come, but also congratulate you on your new roles.

Well, thank you very much. I appreciate it.

And is it true that I'm -- you're going to be interviewing your boss later in the conference?

It is true. Future boss.

So one word of advice you should go hard, you have a couple of questions.

That's a good idea. I will take that back under consideration.

All right. I'll be watching.

I think I'm blushing on the phone. I appreciate that. All right. Well, back to you. I'm asking the question one last time.

So look, let's talk about FOX and sort of the strategic priorities and the long-term vision for the company. FOX had a very nice couple of years. I know the last few months have been choppy, but I wanted to ask you about kind of the strategic priorities for the company and where you're most excited in terms of long-term growth for FOX.

Yes. Great. Well, first of all, last few months have been tremendous. The stocks had a choppy period as a lot of stocks have, but the business is firing on all cylinders. I think we've had across different sort of verticals in sports and in news, on Tubi, we've had record revenue and record profitability in many of those businesses, if not all. So the business is really firing, and we're incredibly happy with the position that we're in. In terms of strategic priorities, let say like 2 or 3 strategic priorities over the next couple of years.

For us -- well, first of all, as of today or as of this weekend, obviously, the news cycle is incredibly important and it's obviously resonating with a lot of people. When there's major news stories, news organizations really have to stand up and that's not always easy. It's something that actually requires a tremendous amount of skill and investment and effort over many years to be able to cover major new stories, particularly international news stories as well as we can.

So our continuing to do that is very important to us. I just saw some -- a note this morning actually before I came on stage that FOX News on Saturday had its highest rating Saturday in over 23 years. And so that effort that you put in that investment, you put into news and news gathering is important and does resonate with all audiences. Other priorities for us are definitely our move into digital platforms, whether that's a direct-to-consumer with FOX One, which is an aggregator of all of our content, direct-to-consumer is very important and very key to us. I'm sure we'll talk about that later on over the next few minutes.

And Tubi. Tubi was a contrarian acquisition. A lot of people thought we were crazy buying an advertising video-on-demand business. People at the time asked me and asked, well, how many subscribers do you have on Tubi? And so it's not about subscribers. It's about our advertising and our advertising revenue. And that business continues to grow and continues to drive and improve further profitability. So I'd say those, sitting here this morning, are our 3 priorities over the next little while.

So Fox has benefited quite a bit, Lachlan, from a focused portfolio. You guys talked about sports and news. That's been sort of the message since you became a company in 2019. What adjacencies are you and the team kind of most excited to expand into? And are there areas that you are determined not to go into given some of the economics out there you say...

Sure. Yes. So let me answer that in the question in reverse. First of all, what we're not going to do, you won't see us investing substantially in businesses that are reliant on the traditional cable subscription ecosystem. We -- you'll see us instead invest in businesses that further our reach in news and sports, further the engagement with our consumers and our viewers that are interested in live news and live sports. And we've already done that to date.

We've -- our digital business, what a lot of people don't realize is that FOX News, the linear channel that they think about and FOX Business and FOX Weather, the linear channels, but our digital business, FOX News Digital is the #1 digital news site in America. And it's the #1 digital news on social media across all of America. And we're pushing further and further into that, not from -- just from a platform and distribution point of view, but from -- really from an organic content point of view in those -- on those sort of social and digital platforms.

To that extent -- or to that end, we also bought a business called Red Seat Ventures, which is a podcasting business over a year ago now. Red Seat Ventures has done tremendously well for us, puts us in this creator economy with podcasters. I think we did over -- or just under 3 billion YouTube views in 2025, and its audio downloads are up 97% year-on-year. So those new businesses for us, making sure that our content is in front of our consumers wherever they are and however they want to engage with us is incredibly important. And we're making very positive steps towards that end.

When I think about Fox and even going back to 21st Century Fox, even going back to News Corp, you guys have always been investing and harvesting cash flow to some degree kind of simultaneously. I think some of the areas right now would include FOX One, Tubi, some other net investments. But how are you thinking about balancing sort of free cash flow maximization with investing in sort of your core growth strategies?

Sure. Well, look, we're blessed because it's not all luck, it's by design and work that we have a tremendous balance sheet. And so how we then utilize that balance sheet, obviously, we look at the tools that we have. There has been modest sort of M&A activity. You'll probably see more of that. We don't have anything at hand right now to announce, but we'd like to do more M&A at a more sort of substantial level.

We're continuing to do our buybacks. We had, I think, up to $12 billion buyback capacity over a period. I think we've done about $8.5 billion, $8.6 billion. So we have now over $2.5 billion -- close to $2.5 billion of buyback authority to go. We announced a $1.5 billion accelerated share repurchase and we're effectively close to completing that. And now we're back in the market buying shares on the open market as well. So if you look at M&A, you look at returning value to shareholders, returning capital to shareholders, whether it's through buybacks or through dividends, I think since the spin, we've returned $10 billion of capital to shareholders, and that's a path I think we're going to continue.

Okay. Great. As you can imagine, there's been a lot of investor focus on the Warner Bros. Discovery process, which appears to maybe be coming to a conclusion, at least with an announced agreement with Paramount and WBD. What's the discussion inside Fox around scale? It's obviously a big topic. And any other implications that this particular combination, if it closes, might have on your company?

Sure. So there's 2 parts to that question. First is a broader question on scale and then how does that -- how does Warner Bros. acquisition presumably by Paramount affect us and how we think about it. From the broader question on scale, we don't -- for us, I'm not saying this is necessarily true for everyone, but we don't believe in scale for scale's sake, right? We don't think -- you just need to get bigger to be better.

In fact, we've seen a number of occasions, and we've executed deals on a number of occasions where smaller scale has worked better for us, right, whether it was the sale of our entertainment assets to Disney, which gave us a focused live news, live sports, highly engaged, concentrated brands strategy, which has proven incredibly successful in the last 6 years or before that, when we spun out and split the company between a newspaper company and News Corp and Fox. That transaction also worked for both entities incredibly well, allowing them to focus.

So our history and our education of this by doing it has proven that scale is not necessarily good for scale's sake. Sometimes, in fact, the opposite. But where we will make acquisitions and where we will grow are in areas that are strategic, right, that, again, will extend our engagement with our audience, extend our reach within our core sort of verticals, and we'll continue to do that.

As far as the Warner Bros. being acquired by presumably Paramount, we wish them the best of luck, and we've seen this as regardless whether it was Netflix acquiring Warner Bros. Discovery or Paramount acquiring Warner Bros. Discovery, there will be conditions put on this transaction we would expect which would require a producer of that size to continue to sell their content to third-party platforms. And we think that's very important, and we would expect that to be a condition put upon any transaction.

Any comment on how CNN may or may not change vis-a-vis its competitive position with FOX News? I know you guys have obviously been winning in news ratings for a long time.

No, we have been winning, and we win amongst sort of strong competition. And so whether -- under the Ellisons, I think CNN obviously will be a strong competitor as we would expect, but we like competition, and we've proven over many years now that we can -- running news is hard. I think we have something like I digress. But at FOX News alone, FOX News has been going over 30 years, and something like 100 of the staff at FOX News have been there the whole time. They're deeply engaged. They're deeply kind of committed to the business, have tremendous skills, and it shows up in the ratings.

Right. The other big topic that I'm hearing from folks on FOX has been around sports rights and in particular, the NFL. You and I were chatting when the NBA had a really successful renewal a year or 2 ago. And there's some concern in the market that the NFL may look to negotiate or renegotiate their deals with Fox and the other broadcasters early, maybe even this year, and that could pressure your earnings outlook. What's your answer to that concern? How do you approach and describe your relationship with the NFL and your overall sports portfolio?

Sure. So first of all, our relationship with the NFL is very strong. We've had a great relationship with the NFL for over 30 years. And for over 30 years, that relationship has been mutually beneficial to both Fox and to the NFL. And so we would be -- we would certainly look to continuing that mutually beneficial relationship going forward. That said, we have not had any material conversations with the NFL about a renewal yet.

But that said, we have 4 more years on our contract before any kind of presumed opt-out would take effect. So we feel comfortable with where we are. We think we're paying a market price for the NFL today. The prices were renegotiated only 3 years ago. They went up, I think, over 100% 3 years ago. So we think our current pricing is at market. But to the extent that there was any incremental cost for the NFL programming, I think the key thing for people to realize that incremental cost would flow through to local affiliates to our distributors and ultimately, to consumers and the fans.

Okay. That's actually a good segue. I wanted to shift gears over to distribution and talk a little bit about both the traditional business and FOX One. So on your last earnings call, Lachlan, you highlighted subscriber declines and now we're talking about the kind of traditional U.S. bundle, improving to just over 6% year-on-year. I know that's still a healthy decline, but that's a decent improvement from a couple of years ago. What do you think is driving that? And how sustainable is it that you might see a continued moderation of sub losses in your mind?

Yes. So we've seen now multiple consecutive quarters of improving sub decline, but the lessening of subscriber erosion in the traditional pay-TV subscribers ecosystem. And so that's very positive. And as you said, I think you said just over 6%. I might say just under 6.5%, but you can kind of pick the middle ground there. And it's a -- and that excludes, by the way, the subscribers that we have for FOX One, our direct-to-consumer service, which is created internally.

It is -- they are pay-TV digital subscribers. So we've excluded that number, which would improve that 6.5%. But we've excluded that because it's such early days, and we don't know about the seasonality within those subs, so we didn't want to confuse the number with these additional subscribers. It's too early to say whether this improvement in subscriber declines is from skinny bundles or skinny bundles alone.

Skinny bundles, what I mean is people who are just platform providers, distributors are now offering sports bundles or entertainment bundles or sort of news bundles. It's too early to say whether it's from that alone or we're finding some kind of more resistance to churn or to subscriber erosion as we get to a more core cable user. It could probably be a combination of both.

Got it. Okay. While you guys have been absorbing those declines, you've been able to grow your distribution revenues. Obviously, that's a function primarily of pricing. Look, the industry is constantly changing. There's a lot of big shifts that are structural, but what's Fox's confidence in your ability to continue to drive pricing power as you go through continued renewals, which I think you have some coming up soon.

Yes. No, I have strong confidence that we'll continue to drive subscription pricing. It's part of the benefit of having this sort of core set of channels that are highly watched, highly sort of respected and valued brands. If you have -- and this actually goes to your scale question in the beginning. If you have a lot of scale and you buy a lot of channels, but the channels that no one wants to watch, you spend all your leverage in your distribution negotiations, trying to protect the weaker channels, right?

And so you lose leverage in being able to drive pricing. Because we're so focused, we're really being able to drive pricing and really share of wallet for the cable subscriber over our competitors. And we have great confidence we'll be able to continue to do that. I think in this last quarter, we grew pricing by about 4%.

Yes. That's great. There's -- as you mentioned, the skinny bundles are a big factor in the market. They're probably helping potentially the subscriber erosion trends. But there has been some question as to whether Fox might feel some negative impact from some new skinny bundles coming, particularly from YouTube, which is rapidly growing to be one of the largest MVPDs out there. Can you talk a little bit about how your networks, particularly FOX News does or does not get impacted by, for example, a sports bundle that YouTube have been publicly talking about.

Sure. So we're not impacted is the short answer. I don't want to get into the specifics of different distribution contracts, which are confidential. But we sell to all of our distributors, we sell as a bundle, right? We sell a bundle of our channels, the highly valuable channels. And we're big believers in the cable bundle, in the core cable bundle as being the most efficient and valuable to consumers.

Having said that, we allow distributors to go to market in a flexible way, right, within reason. We have to be an appropriately flexible way. And so you can -- so YouTube or others can sell a sports bundle. You have to remember, sports bundle includes the local TV stations because they're the ones that kind of ultimately hold those rights. So it's a sports bundle or a news bundle or an entertainment bundle, you can go to market in an efficient way, in an appropriate way, dividing that content up, but we get paid as if it's one bundle.

Okay. That's helpful. FOX One was launched, I think, in August of last year, August, September time frame. You have said it's exceeding expectations. We don't know exactly what those expectations were, but it sounds like it's off to a good start. With a little bit of learnings now in the market, how are you feeling about the long-term opportunity and sort of the strategy around sort of investing behind this direct-to-consumer offering?

Yes. So we launched FOX One, right, I think it was last August before the college football season and obviously, the professional football season. It has exceeded all of our expectations, both from a subscriber perspective, subscriber growth perspective, well ahead of its plan. And also just from a -- because of that, it flows into an investment perspective, it's ahead of our expectations financially as well. What have we learned from that?

I think we are -- we've built a tremendous team, obviously sort of technologists and experts in streaming, but bundling is very important with a lot of these products. Our sales through Amazon, for example, have been incredibly successful. And then what we're seeing from a user perspective, really the news viewer is particularly valuable, right?

Our news viewers in the FOX -- watching FOX One watch like 3.5 days per week, which is a tremendous amount. I challenge sort of most streaming services to have that high sort of loyalty during the week, 3.5 days a week. They watch over 10 hours of programming per week, over 10 hours and over 6 shows, I think [indiscernible] over 6 shows per week. So we're really seeing that news viewer being incredibly valuable to the FOX One platform.

Great. I'm sure FOX One is part of your discussions with your distribution partners. Can you talk about a little bit how it may have either positively or negatively impacted those discussions, particularly as you go into these renewals coming up with FOX One in the portfolio?

So look, I think from our perspective, Fox has been the most pro cable, pro pay television bundle of any content company. And for FOX One, we have been extremely focused on not creating churn. We don't want any churn from a traditional cable subscriber from one of our distribution partners onto FOX One. And it actually doesn't make financial sense to us. And so because of that, what you've seen, you've seen no promotion of FOX one in linear news, linear Fox News or linear FOX Sports, none at all.

And we believe because of that, we haven't churned or it's a very small percentage of people who might have churned from traditional cable into FOX One. And that's very important. And that means we haven't put exclusive content. We're not promoting it in a way that will create churn, and that's incredibly important. But in addition to that, what we've offered all of our distributors is that if you're a cable subscriber on any of our distribution or a YouTube subscriber, you can get FOX One as part of your subscription. So we offer FOX One free to any of our distribution partners, which I think helps them as well.

Okay. Let's shift over to the other major revenue stream of the company, which is advertising. It's been quite strong for FOX. Let's start with FOX News. I think you've added a lot of new advertisers over the last kind of 1.5 years. Scatter pricing is strong. Any update? And sort of what do you think about the durability of that growth as we look into the rest of '26?

Advertising has been incredibly strong. I think advertisers have recognized that the FOX News now because of FOX News' reach and audience, we're competing against the broadcast networks. We are not competing against CNN or MSNBC or someone else for a news audience. Our audience is just too large. The reach is too great. So we're really competing with the broadcast networks. But we're competing against them with an unfair advantage, an advantage that's fair enough to have, but that our CPMs are much lower. So for an advertiser who wants to get their national reach across demographics, across all political spectrum, we have more democrats, we have more independents watching FOX News than our competitors. If you want that, you can get it at almost half the cost you can get it for on a broadcast network.

So we're seeing advertisers really flow to us. I think it was over 200 new advertisers. So that's very positive. Of course, that only works if you have great ratings, and the ratings continue to be strong. I mentioned this past Saturday, even before the news of this weekend in the Middle East, I think State of the Union address last week, we had about 70% -- I think we had 9 million people watch our State of the Union broadcast, which is the biggest ever, 11 million, if you include the shoulder programming, which is about 70% of the cable news audience. So the ratings are incredibly strong. That flows to advertising and advertisers are really awake to that.

I know the political advertising is a little bit down the road this year, but we have seen a lot of money shift from linear from broadcast to streaming or CTV. You guys play in both areas. What's your perspective on how quickly that money is migrating away from broadcast stations or linear in general, to businesses on the CTV side like Tubi, for example.

So first of all, there's a couple of broad terms in there. So revenue is immigrating from linear to CTV, but it's flowing from linear entertainment, right? So broadcast and cable entertainment programming is moving from there into CTV, right? So sports and news, linear is incredibly strong, right, record revenues. CTV is also a broad term. It incorporates a lot of different products and platforms. And it also incorporates FAST channels, right? So FAST, linear-like stream channels, right?

What we have in Tubi, which is the beneficiary of this massive flow coming into CTV, we have -- we're AVOD. We're video-on-demand, advertising-supported video-on-demand. And that means that I think 95% of our viewing is someone choosing proactively in that moment to watch that show and to engage with that advertising, right, and watch those ads. So it creates an incredibly valuable proposition to advertisers to have that engagement. So we are really the beneficiary of this flow from entertainment into CTV, but particularly into AVOD CTV, which we're the leader in.

And any view on how political money may or may not follow that?

It came last election cycle. This year, we've already seen -- and not this fiscal year, we have seen record political revenues in a period where there's usually none, which we think bodes very well to the next fiscal year in November, we think there's going to be tremendous political advertising, which will impact for the first time, like we saw it not for the first time, we saw it the first time in the last political cycle, we saw political advertising on Tubi because they're going to be incredibly targeted. They're young, they're diverse. They're 70% of them are cord cutters. They're very hard to reach. So Tubi got significant political advertising dollars in the last cycle. FOX News got some national political advertising dollars, which is unusual. And of course, for our local stations, it will benefit them tremendously.

Sure. Okay. Let's talk a little bit more about Tubi. I know we touched on it a couple of times. I think last quarter, what, 27% growth in view time, revenue growth, 19% and you're EBITDA positive now, at least over the last couple of quarters. So what are the big drivers of that business in terms of really making that a meaningful contributor to the company's EBITDA long term?

So look, you mentioned in your question, TVT, total viewing time as what stands for, growth at 27%, that's critical, right? Growing that total viewing time. It's also a key indicator is the is the service working, right? Do consumers like it. And every quarter -- every month, we're seeing that grow more and more. So the service is working, people like it, and then obviously, that brings to advertisers. So as long as we can continue to grow TVT, I'd like us to be able to -- it's a competitive market, to your last question, in this connected television advertising market.

So there is pressure on rates. I'd like our rates to be stronger. But having said that, we're garnering kind of lion's share of that AVOD advertising sort of dollars. So we're very confident we can continue to grow. It's also because we have the largest library. We have large library, incredible technology. We're moving more and more into -- to increase the funnel of people that come to watch us.

We're doing -- we've created this creator verse where we're doing Mr. Beast and other sort of podcasters and people who are now on Tubi with exclusive content, which is fantastic. About 10% of our viewers will watch -- will come in and they'll watch some of this creator-generated content, and then they'll stay to watch Hollywood produced television shows and movies. So the flywheel is working really very well.

You mentioned a couple of them, but your engagement growth is better than a lot of the competitive set we're looking at. And it seems like the revenue growth also is -- is there anything else you'd add in terms of either the ad tech or the content strategy that you think is a real kind of differentiator of Tubi and what is a really crowded streaming market for consumers?

Well, we're the only -- advertising-only streaming service, right, AVOD service, right? We don't have tiers. You can't get out of -- opt out of ads, you pay -- our proposition to the consumer is very clear, very strong. It's free. And it's a great proposition. It's simple. People understand it. We don't bombard you with trying to upsell you or move you into different tiers. So that's very strong. You have to remember that Tubi, which we've been very focused on advertising and obviously, the advertising tech that supports that. Tubi started as an ad tech company, right?

They built the ad tech and then they realized they could license the content to feed it. And so the culture there has been incredibly positive and the continued investment in the ad tech has been very strong. And by the way, AI and what we're doing with AI, driving that ad tech, driving engagement with consumers is also incredibly impressive and exciting.

okay. Maybe in the time we have left, Lachlan, you guys have been -- Fox and sort of the assets behind Fox and News Corp over the years have been very focused on sports betting in many different markets. I know you have a lot of experience that in Australia and the U.K. You've talked a lot about the value in your investment in Flutter and FanDuel. How does sports betting fit into your overall corporate strategy? And then I'd love to also hear your thoughts on the latest controversies or debates in the market around prediction markets and their impact on these businesses.

Sure. So with sports betting, we can remind the audience, we have like 2.5% of Flutter, the parent company. Below that, we have an 18.6% option in FanDuel, the American sort of FanDuel business. We're incredibly excited about that. We're going through -- we have 5 years to go for this option to exercise the option. And so we are moving forward with licensing. We need to be licensed, I think, in 26 or 27 states to be able to exercise that option, which we're confident we can do, although there's no rush because we have 5 years to do it.

So we like that business. We like sports wagering in particular. And I think FanDuel is a great partner for us. Having said that, if you look at the emergences, you mentioned of the prediction markets and whether it's Kalshi or Polymarket. I saw that this morning on FOX News, I think Robinhood Prediction Markets was advertising. I know there's some other technology behind it. And so these people are tremendous advertisers. So we're seeing a really kind of a surge of advertising dollars come on to, frankly, all of our platforms as there's a fight for position, right, and market share amongst these companies, and we really stand to benefit from a lot of that.

But does the prediction markets change how you view the opportunity long term for sports betting, particularly in the U.S. as an investor in Flutter and FanDuel?

No, I think everyone -- I mean we saw this overseas a decade ago. I think whether it's sports betting, sports wagering or prediction markets, there have to be some guardrails and ideally, they are self-implemented sort of guardrails in terms of what you can bet on, how you can bet where you can market because if you don't put the guardrails around that, governments and regulators will. So I think the -- we're not really in the industry, but I think the industry will have to work out what guardrails that they put around, how they're allowing those bets to be made and how you market them.

Got it. Okay. All right. Well, we covered a lot of ground, and we're running out of time. Lachlan, thank you so much. Anything you want to wrap up with for the audience on FOX's position?

Sure. Look, in summary, we had a great quarter. In fact, we've had a great few years. The business is firing on all cylinders. We are going from strength to strength, whether it's FOX News, FOX Sports, Tubi, FOX One, we didn't talk about entertainment. I'll be in trouble when I go back to L.A. And the entertainment business is actually doing tremendously. Rob Wade and his team have done a tremendous job driving those shows, the distribution of those shows and profitability in that business.

But the final thing I should say just coming back to my original comment on news, news is hard, whether it's news competitors or just how we do news every day. I was in Tel Aviv a month ago, visiting our new -- we have a big investment in a new FOX News Bureau in Tel Aviv, and it was amazing over the weekend to see Trey Yingst with really incredible coverage and that whole team that we've invested in and developed over many years, just over this new studio, this new bureau -- news Bureau for him and to see him broadcasting from that bureau as these missiles were crashing in Tel Aviv. So it takes a lot of hard work. We're incredibly committed to them, and we're incredibly proud of the news coverage that we provide. We think it's an essential service.

Great. Well, Lachlan, thank you so much. Thank you, everybody.

Thank you everyone. Thank you.

Ladies and gentlemen, thank you for standing by. Welcome to the Fox Corporation Second Quarter Fiscal Year 2026 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

I'll now turn the conference over to Chief Investor Relations Officer, Ms. Gabrielle Brown. Please go ahead, Ms. Brown.

Thank you, Christa. Good morning, and welcome to our fiscal 2026 second quarter earnings call. Joining me on the call today are Lachlan Murdoch, Executive Chair and Chief Executive Officer; John Nallen, President and Chief Operating Officer; Steve Tomsic, our Chief Financial Officer.

First, Lachlan and Steve will give some prepared remarks on the most recent quarter, and then we'll take questions from the investment community. Please note that this call may include forward-looking statements regarding Fox Corporation's financial performance and operating results. These statements are based on management's current expectations, and actual results could differ from what is stated as a result of certain factors identified on today's call and in the company's SEC filings.

Additionally, this call will include certain non-GAAP financial measures, including adjusted EPS and adjusted EBITDA, or EBITDA, as we refer to it on this call. Reconciliations of non-GAAP financial measures are included in our earnings release and our SEC filings, which are available in the Investor Relations section of our website. We also refer to free cash flow, which we define as net cash provided by operating activities less capital expenditures.

And with that, I'm pleased to turn the call over to Lachlan.

Thank you, Gaby, and thank you all for joining us this morning. As you can see from our release, the operating and financial momentum that we have delivered over the last several years has continued to build over the first half of fiscal 2026. It is the product of both a highly differentiated strategy and high-quality execution that reflect the power of our leadership brands across News, Sports, Streaming and Entertainment. Our favorable results were broad-based, including notable strength in advertising revenue, where despite high political advertising a year ago, we still adroitly grew total company advertising revenue.

I made the comment last quarter that we were experiencing the most robust advertising market we have seen for some time. That remained true during the second quarter, and it continues to be true today, where we are seeing unabated healthy trends and positive metrics across our portfolio. In Sports, we achieved record-breaking ad revenue for the Major League Baseball Postseason, capped off by a 7-game World Series, while we also generated records for both the National Football League and College Football Regular seasons. Looking forward, we've had a strong NFL postseason, and we're now gearing up for our marquee motorsports events, the Daytona 500 and Indy 500, and, of course, the highly anticipated FIFA Men's World Cup, which starts in June.

At News, despite comparisons to a heavy political news cycle in the prior year, we not only grew advertising revenue in the second quarter but also achieved our highest second quarter advertising revenue ever. New business, further demographic expansion and pricing growth in both direct response and national advertising all contributed to this strong result. Distribution revenue grew 4% during the quarter, with subscriber declines notably improving sequentially, even when excluding the contribution from FOX One, which continues to exceed our expectations, driven by both direct sign-ups as well as partnerships.

At this point, we have not observed any noticeable cannibalization of traditional subscribers, a result of our targeted marketing to cord cutters and cord nevers. Although FOX One launched just 5 months ago, we are encouraged by consumer reception to the product, and we have already gained meaningful insights into audience engagement trends. While live sporting events continue to drive the majority of engagement, News accounts for approximately 1/3 of total minutes viewed on FOX One. Notably, news viewers engage with the platform twice as many days per week as non-news viewers and watch it nearly 3x as many minutes per week on average. These patterns reinforce our view that FOX One is not only the premier destination for live sports, but also the leading platform for timely, relevant live news streaming.

Whether streaming, linear, social or digital, FOX News Media continues to meet our audiences where they are. Over the past 12 months, a fast-moving and consequential news cycle has reinforced FOX News Media's leadership position with audiences turning to the network for live coverage and in-depth analysis. FOX News, again, finished the quarter as the most watched cable network in total day while maintaining its lead as the most watched cable news network and producing the top 11 cable news programs. Again, according to recent Nielsen data, FOX News is the #1 cable news network among all 3 political parties, which bodes well for the upcoming political election cycle.

On the digital side, social media views for FOX News Digital were up an astounding 170% over the prior year and both FOX News and FOX Business ranked #1 in YouTube video views amongst their peers during the quarter. There is no question that FOX News Media remains front and center with today's audiences while actively engaging with the next generation of news consumers. We are focused on expanding our podcast content and talent across FOX News and the broader FOX platform, supporting our strategy to meet our audiences wherever they are.

Underscoring fan engagement across the FOX brands, FOX Sports ended 2025 as the leader in live sports event viewing, a title it has held for 6 of the last 7 years. From the World Series that drew over 27 million viewers for Game 7 to a 10-year high in NFL regular season viewership and the Big Ten championship setting the record for any Conference Championship game on any network, the strength of the FOX Sports portfolio is unmatched. We capped the season with the Seattle Seahawks' NFC Championship victory over the L.A. Rams, drawing 46 million viewers and providing a powerful lead-in to FOX Entertainment's Memory of a Killer, the most watched series premiere on any network this season, with over 11 million viewers across multiple platforms.

The trend of strong engagement was further extended at Tubi. Tubi delivered its most streamed quarter of all time and grew total view time 27% year-over-year, supported by an expanding content slate including the NFL Thanksgiving game simulcast and the premiere of Sidelined 2, a Tubi original that has become a fan favorite. This engagement growth was the strongest in 7 quarters and powered by an on-demand viewing, which is over 95% of consumption on Tubi.

Tubi's most streamed quarter translated into record quarterly revenue, which grew 19% in the quarter on an absolute basis. And this revenue growth, once again, translated to the bottom line, with Tubi achieving EBITDA profitability for the second quarter in a row. Meaningful audience engagement is a consistent and enduring theme across our results, highlighting FOX's unique cultural position, ensuring that we constantly and deeply connect with fans across our brands is at the forefront of our strategy.

As an example of this strategy in action, total minutes viewed across Sports, News, Entertainment and Tubi increased 15% year-over-year in calendar year 2025. Amid strong competition, FOX stands out through compelling storytelling and deliberate investment in fan-driven content that delivers unmatched real-time reach. Together, these elements reinforce FOX's position as a trusted destination for audiences today while building lasting connection with future fans.

We enter the second half of our fiscal year with strong momentum and with confidence in our strategic direction. Our emphasis on live sports and news, together with the strength of Tubi and increasingly FOX One has driven exceptional performance and reinforced our leadership position across the portfolio. This focus, together with our strong financial position and best-in-class balance sheet, underpin our ability to deliver sustained growth and shareholder value.

And with that, I will turn the call over to Steve to take you through the details of the quarter.

Thanks, Lachlan, and good morning, everyone. FOX delivered yet another strong quarter with our fiscal second quarter total revenues reaching $5.18 billion, a 2% increase from the prior year quarter. Distribution revenues grew a healthy 4%, reflecting the strength of our brands and must-have nature of our channels. Advertising revenues grew 1% despite facing a difficult comparison to last year's record political cycle, driven by strong linear pricing across our portfolio, continued robust revenue growth at Tubi and a 7-game World Series at Sports.

Content and other revenues were flat compared to the prior year quarter, as higher sports sublicensing revenues were offset by lower entertainment content revenues. Quarterly adjusted EBITDA was $692 million as compared to the $781 million reported in the prior year quarter, as the increase in revenues was offset by higher expenses. This included growth-driven spend at our digital-led growth initiatives and higher sports programming and production costs, partially offset by lower entertainment programming and production costs. Net income attributable to stockholders was $229 million or $0.52 per share compared to $373 million or $0.81 per share reported in the prior year period. Excluding noncore items, adjusted net income was $360 million and adjusted EPS was $0.82.

Turning to our segments. Starting with Cable, which delivered revenues of $2.28 billion and adjusted EBITDA of $687 million, both representing growth of 5% versus the prior year quarter. Cable advertising revenues grew a robust 7% driven by higher pricing in News and Sports. Cable distribution revenues increased 5% as pricing gains from our affiliate renewals outpaced the impact from net subscriber declines, which continued to improve, both inclusive and excluding the contribution from FOX One. Cable content and other revenues grew 4%, predominantly due to higher sports sublicensing revenues, which were offset by a corresponding level of sports rights expenses. Reported expense growth at Cable was 5%, with higher sports programming and production costs, partially offset by lower news gathering costs relating to our coverage of the last year's presidential election.

Now turning to our Television segment, which reported $2.94 billion in quarterly revenues. Advertising revenues at Television were unchanged as continued growth at Tubi, the impact of additional MLB postseason games and pricing strength across our sports schedule were offset primarily by the absence of last year's political advertising revenues. Television distribution revenues increased 1% in the quarter as healthy growth in fees across FOX owned and affiliated stations more than offset the impact from industry subscriber declines.

Television content and other revenues were down 19% year-over-year primarily due to lower revenues tied to our entertainment production studios which were impacted by the timing of deliveries. Expense growth at our Television segment was held to a modest 1% driven by higher sports programming rights and production costs and continued investment at Tubi, partially offset by lower entertainment programming and production costs. All in, EBITDA at our television segment was $143 million compared to the $205 million in the prior year quarter.

Turning to free cash flow, where we recorded a deficit of $791 million this quarter. This is consistent with the seasonality of our working capital cycle where the first half of our fiscal year reflects the concentration of payments for sports rights and buildup of advertising-related receivables, both of which reverse in the second half of our fiscal year. In terms of capital allocation, demonstrating our commitment to utilizing our full buyback authorization. Fiscal year-to-date, we have repurchased an additional $1.8 billion through our share buyback program.

This brings the total cumulative amount repurchased to $8.4 billion or approximately 35% of our total shares outstanding since the launch of the buyback program in 2019. This includes $1.5 billion of accelerated -- of the accelerated share repurchase transaction we announced last quarter, for which the initial tranche of approximately 8.5 million Class A and 10.9 million Class B shares have been retired, with the remainder to be settled during the second half of this fiscal year.

In addition, today we announced a $0.28 per share semiannual dividend. With this dividend distribution, our total cumulative cash returned to shareholders in the form of both dividends and share buybacks will have reached approximately $10.4 billion since the establishment of Fox Corp. These capital return measures are supported by the strength of our balance sheet, where we ended the quarter with approximately $2 billion in cash and $6.6 billion in debt.

And with that, I'll turn the call back over to Gaby.

Great. Thanks, Steve. And now we will be happy to take questions from the investment community.

[Operator Instructions] Our first question comes from John Hodulik with UBS.

It looks like cable advertising is really the standout. Can we talk a little bit about that? First, on the News side, are you guys closing the gap with -- in terms of CPMs with broadcasting? And how should we expect that to sort of move forward as the comps get easier as we move into the midterm elections? That's on the News side. For Sports, any color there in terms of pricing? And how should we think of -- how you guys look at profitability of the World Cup this year versus what you've had in the past, given it's in the U.S.?

Good to hear your voice. First, on cable advertising, the News -- I wouldn't say the News advertising market, but certainly the advertising market for FOX News has been incredibly robust. This half, we've added about 200 new advertisers. And you have to remember, that's on top of the 350 new advertisers that we added last year. So the demand for the product and the demand for the audience remains incredibly strong. That's also reflected in our scatter pricing for News, which is up sort of an embarrassing 46% or 47% year-on-year. We don't compare scatter pricing in news to the upfront because News doesn't have traditionally large upfront, so we compare it sort of on year-on-year pricing. So scatter pricing is very strong. Direct response pricing is strong, and we couldn't be more pleased with the performance of advertising sales at FOX News.

Moving forward into the political cycle, we expect that's only a positive for us. We expect a robust political advertising cycle. Of course, we benefit from that primarily at our local station group. But if you remember, from the last political cycle, news has started to see a growing appetite for national political advertising, and we would expect to be the primary beneficiary of that FOX News. And why do we expect to be the primary beneficiary because FOX News is not only the #1 news source for republicans and conservatives, but it's also the #1 -- has more democrats and more independents watching FOX News than watching our competitors. So we feel that we are in a very good position going forward into this political cycle.

As for the -- I think your second question was on the World Cup, will it be profitable? Yes, it will. There's a tremendous excitement around the World Cup by the sponsors and other traditional advertisers. We're looking forward to a great competition and to a sort of robust advertising market on our sports platform.

Your next question comes from the line of Jessica Reif Ehrlich with Bank of America Securities.

2 questions. On the NFL, like step-up, we all know that's coming. And obviously, the positive is it will give you certainty. But we're also expecting like a big step-up in costs. I don't know if you can address that or not, but how do you think about offsetting increased costs? Do you think -- are there any new ways to monetize? Like how are you thinking just about the NFL, like new contracts? And then separately, this is a little bit weird -- but I mean, unusual for me, but we never talk about Entertainment on this call. But it seems like you've been making a lot of talent deals in the last few months. And it seems notable. So how are you thinking about the Entertainment business overall? Are there any changes that you're contemplating?

Jessica, I hope you're well. So starting with the NFL, look, we don't want to speculate in terms of what the -- how the NFL will choose to move forward in terms of their option to renegotiate their rights. I would agree with you that, obviously, the great benefit of that is giving us certainty as we move forward. It's obviously tremendous content for us, and they've been a really fantastic partner. And although this year's Super Bowl is not ours, we're certainly looking forward to it as we're all fans. So again, without speculating, we have the ability to offset a portion of any kind of cost increases because we look at our Sports portfolio as a whole. So we would certainly consider balancing or rebalancing our portfolio as we move forward when those opportunities become available. So we feel pretty comfortable about sort of the sports business as we move forward.

On Entertainment, we continue with our existing strategy on the Entertainment network. As you know, we balance scripted and non-scripted programming efficiently to maintain sort of an efficient and sort of, ultimately, sort of profitable cost base in that business. But we will always sign first look deals and the creative deals with the best content creators and producers and writers in the industry. And the proof is in the pudding because this past season, with the launches of Good Medicine (sic) [ Best Medicine ], with the launch of a Fear Factor, with the launch of a Memory of a Killer. All these launches achieved over 10 million viewers in their first week across multiple platforms. This is the best season launch we've had in approximately 13 years.

So -- and that's also reflected in revenue at the Entertainment network, which was up in this quarter or this half for the first time in many years. So we're pleased with that strategy. It's not a signing first look deals or a signing creative deals, it's something that we've always done, and we'll continue to do so.

Your next question comes from Michael Ng with Goldman Sachs.

I just have 2. First, Lachlan, I was just wondering if you could talk a little bit more about the performance of FOX One. What's been driving the upside relative to your expectations? And as we go into the rest of the year and think about things like Sports seasonality, do you expect any of the subscriber momentum to be impacted by that? And then second, for Steve, relatedly, could you just explain where FOX One sits in the P&L? Is it in distribution revenue? Is it in corporate and other or both, perhaps? But I think there have been some disclosure changes. So I just wanted to make sure we understood how FOX One was flowing through the P&L.

Thanks, Mike. All right, I'll start with the first question. So we are incredibly pleased with the performance of FOX One. It has exceeded our expectations in terms of it from enthusiastic take-up by consumers. I think as I might have mentioned in my comments, and you would know, about 2/3 of the audience are sports fans and come to the platform first for sports and about 1/3 are news fans and regular news viewers. The -- we would maintain our -- I'll say we maintain our expectations of having sort of low to mid-single-digit millions of subscribers over the next 3 or 4 years. We're well on track to hit those benchmarks for us.

And we'll see as we move forward with sports seasonality. What we're actively doing, very proactively doing, is promoting the sports, now that the football season is over, promoting the tremendous sports slate that we have on FOX One on the platform, whether it's Daytona 500 or Indy 500, the start of the baseball season and, obviously, moving forward into the World Cup. So it's too early to tell what sort of -- how significant seasonality will be, but we're actively working to ameliorate any sort of declines that we might have.

Mike, it's Steve. Just on how we treat FOX One through the P&L. So the best way to think about it is the platform cost, the cost of sort of running FOX One as a business, it's in our Corporate segment. And so you're seeing that the Corporate segment, the EBITDA negativity there has gone from $81 million to $138 million. That's predominantly sort of the FOX One cost. It then pays like almost like a virtual MVPD, it then pays an affiliate fee to the networks for the programming, and we record that in the two segments, Cable and TV.

Your next question comes from Michael Morris with Guggenheim.

I want to ask one about distribution and then one about Tubi, if I could. On Distribution, can you share a bit more detail on the improvement in the rate of subscriber declines that you saw, how much did that improve? What do you think the drivers are there? And I think you're -- in your last year of renewals under your current contract vintages, how do you see yourself positioned for the upcoming renewals? So that's the first question. And then second on Tubi, can you share some more detail about the growth rate that you saw there on advertising during the quarter, how that's pacing for the balance of the year and what some of the drivers there are.

Thanks, Michael. On distribution, yes, we're pleased to see the sub 6.5% decline in our subscriber base. That's 6.3%, but it's -- I don't know why we don't say 6.3%, but it's sub 6.5%, and that's a great improvement and consistent improvement actually over some quarters. So we're very pleased to see that. That number excludes FOX One. So if we were to include our FOX One subscribers that are paying subscribers of our content just in the way that the cable subscribers are, that number would be better. But we've chosen, out of an abundance of caution, not to include the FOX One subscribers in that subscriber numbers. And nevertheless, we're very pleased with the 6.3% decline and improving.

What's driving that? It's too early to say, but we would expect that the emergence of skinny bundles in the cable universe will be playing a factor and potentially an increasing factor in keeping sub-declines down. It's early because a lot of the distributors are only launching now or planning to launch soon their skinny bundle packages. For us, for FOX, we like skinny bundles. We are in the skinny bundles. We are paid by the distributors for all of our channels. We bundle our channels when we sell it to distributors, and we give them some flexibility in how they want to take those channels and market them to their consumers.

So for us, skinny bundles are a positive, and we look forward to distributors continuing to make their packages more effective, more efficient to the consumer. On Tubi, Tubi has continued to grow, obviously, TVT growth is the lead sort of indicator of what we can then translate into revenue. TVT growth of 27% coupled with a very strong upfront for Tubi, a healthy direct response and partner trends, and also direct advertiser trends with big clients. All of that really drove that revenue growth of 19% in the second quarter. You have to remember that Tubi's audience is younger. It's more diverse, and it's hard to reach. 70% of Tubi's user base are cord cutters or cord nevers. This is higher than any of our competitive set and really puts us in a prime position with our advertising clients.

Yes. And Mike, just to pick up. I think you asked also about vintages in terms of renewals coming. We're pretty much done for the year. There's not much in the back end of our current fiscal year, but then we ramp in '27 and '28. '27 will be more skewed towards TV and '28 more skewed towards cable.

Your next question comes from the line of Robert Fishman with MoffettNathanson.

Can I just follow up on the skinny bundles? We've talked about this for many years and waiting for these launches. The upcoming launch with YouTube TV, sports pack, depending on how aggressively they price it, I'm curious if you can talk specifically about the FOX News economics, which I don't think is included in that specific package. And if there is a trade down from other pay-TV subscribers, who might only want sports, are there protections in place that you were just kind of referencing to limit that downside? And then on the sports betting side, just curious your updated thoughts on the prediction markets, whether this is a new opportunity to license or how you see this playing out like the partnership ESPN did with DraftKings? How you think you want to approach the whole FanDuel partnership in general?

Thanks, Robert. So on skinny bundles, as I said, we are a net beneficiary of skinny bundles. The short answer to your question is, yes. We -- as we sell to our distributors our entire bouquet of channels, we are not impacted by whether they choose to offer a sports bundle or a news bundle or another type of bundle. They acquire our channels as a bundle. And then they are -- they have flexibility in terms of how they market them to their consumers. So we do have that downside protection when it comes to how skinny bundles are offered as each distributor chooses to uniquely offer them to their customer base. I should just say that it's -- we are a fan of the bundle, right, of the core bundle.

We think consumers and sort of our consumers want to enjoy all of our content and enjoy all of our brands. And that's why we have #1 sports brand and the #1 news brand in the market. So I should note that YouTube post this football season is offering a discounted bundle for all traditional channels. So before they launch their sports pack, they're actually offering a bundle including News, including Sports and other channels to retain their customers. So we're a big fan of the big bundle. Obviously, YouTube and others are big fans of the big bundle. When, ultimately, the skinny bundles roll out, we think we're a net beneficiary of them.

In terms of sports betting and prediction markets, I should preface this with saying that we continue to be big fans of Flutter and FanDuel. Our 2.5% of Flutter is worth about $700 million. And our option, if you look at the average sort of buy-side valuation, of our option of 18.6% in FanDuel remains worth about $2.1 billion. If you take the 2 of those together, $2.8 billion, that's worth about $6 to $7 per share on our share price, which we don't think is reflected today. So we are -- we're big fans of sports wagering, particularly Flutter and FanDuel, and we're watching the prediction markets growth with interest. It is an opportunity for us in terms of advertising and sort of deals with these emerging prediction markets. And I think over time you'll see revenue flowing to us from an advertising -- significant revenue flowing to us from an advertising perspective from these clients.

The last question comes from Thomas Yeh with Morgan Stanley.

Back on the ad market, Lachlan, I think you mentioned new advertisers coming into News. Can you just help unpack which categories you're seeing particular strength in? Or are these new categories like the prediction market, one that you just mentioned or GLP-1s and consumer AI services being additive? And then on the Midterms, is there a view on whether more political spend, either at the national or local level migrates towards CTV? And how do you position to be in that particular instance to capture more of the political revenue opportunity?

Sure. Thanks, Thomas. So on the ad market, if I just step back one step for some perspective, if you look at the FOX portfolio of brands and businesses, about 94% of our ad -- sorry, I should preface our national advertising sales, 94% come from Sports, News and Streaming, 6% comes from Entertainment. Of course, what we know is that live news, live sports and streaming are the segments where there is growth and there is a great advertiser appetite for those segments. And the vast majority of our business is in those segments.

When I look at the category spend, and again, I'm just talking national, and I can -- you didn't ask about it, but I can touch briefly on local in a minute. But if I look at advertising category across our sort of national portfolio, this includes Sports and News, of the top 10 categories that we track, financial, pharma, retail, packaged goods, et cetera, automotive, 8 of the top 10 categories are significantly up. We've had significant demand for the 8 of the top categories. Leading that is financial, which is, obviously, really led by the insurance companies. So great strength across all categories. The ones that are modestly down, Entertainment, which is just movie premieres, and then sort of government and some sort of corporate political spending, which we expect to obviously increase as we get into the political cycle.

So what does that translate to? Well, at FOX News Media, we've had the highest ad revenue in FOX News Media's history for the first half with, as I mentioned, 200 new advertisers are added. For Tubi, the highest quarterly, weekly and daily ad revenue in Tubi history. On FOX Sports, in the NFL, the highest ad revenue for any Sunday package in history, the highest ad revenue for postseason and NFC Championships game in FOX Sports history, the highest full season ad revenue on College Football in FOX History and in Major League Baseball, the highest postseason ad revenue in FOX Sports history. So tremendous strength across our portfolio.

I should also mention, not to leave them out, at FOX Entertainment, we had ad revenue exceeding prior year for the first time in 4 years. Locally, as I mentioned, the local market is more mixed. This is really a factor of the Super Bowl and the Olympics in this quarter we're now entering, but we feel pretty good about the local market, although it is mixed as historically is always true. Super Bowls and Olympic cycles absorb some of that local advertising revenue. Now it's a great quarter for us, and the momentum continues into the third quarter.

But I should just say that if you look at the sustainability of this strategy, if I look back over 4 years or 5 years at 2021, if I look at our peer set, excluding FOX, total advertising including Streaming as a group, it's obviously mixed within it, it's down about 4% CAGR in advertising revenue over those -- each year over those 4 or 5 years. At FOX, we're up about 8%, of course, including Streaming over those 4 or 5 years -- 8% per year CAGR. And I think that just shows the strength of the strategy, the sustainability of the strategy and why we're so excited about FOX's future.

Great. Thank you so much. At this point, we're out of time. But if you have any further questions, please give me or Charlie Costanzo a call. Thanks so much for joining us.

Thank you, everyone. Have a good day.

Ladies and gentlemen, that does conclude the Fox Corporation Second Quarter Fiscal Year 2026 Earnings Conference Call. Thank you.

Okay. If everyone could please take their seats, we'll get started. Again, I'm John Hodulik, the telecom media analyst here at UBS. And I'm very pleased to announce Steve Tomsic, the CFO of Fox, is our next speaker. Steve, thanks for being here.

Thanks for having us back, John.

Yes. We really appreciate you guys participating every year. And I think we should start by just -- you've had a great year so far. We were just talking out in the hallway, stock up 40%. Can you -- we need to talk about the next year and how you keep the momentum going. So if you could start off by just giving us a sense of the priorities as we look out into '26.

Yes, sure. So listen, as we look out forward, it's always important to see what you're building from. And so it wasn't that long ago, we closed our fiscal '25 is a record year for us, record revenue, record EBITDA, record free cash flow. So that's a really, really important basis and foundation for us because in many respects, it reflects the fact that our kind of collection of assets is super distinguished versus our peers.

Like I think people fall into the trap of saying, okay, there are a bunch of cable and broadcast nets and therefore, we get compared to a certain peer group there. We don't see the world like that. We see it in terms of news -- a big news vertical, a big sports vertical and then a bunch of sort of digital investments that we've made that are prospering at the moment.

And so it gives people an understanding. It's not just financial records for us. If you look at our engagement because a lot of those sort of cable peers are seeing engagement sort of go down to the left, and we're seeing it going up and to the right, which is really, really, really important distinguishing feature for us. So if you look at our engagement this past October was the -- if you look at across all of our assets, news, sports, Tubi, entertainment, was the biggest month of engagement we've ever had as Fox Corporation.

And that's been -- and we've been year-on-year increasing for 19 of the past 20 months. And then if you think about influence over the [indiscernible] and cultural relevance, in fiscal '25, we did 2 trillion minutes worth of viewership. Now that's kind of like an enormous number, which is meaningless. But if you boil that down, that's 75 hours of annual viewing for every man, woman and child in America.

And so when you look at that basis, it kind of -- it behooves you to continue to invest and grow our core verticals, which is news and sports. And so the focus for fiscal '26 will continue to be around those key verticals for us. Then we're making great strides with our digital businesses, Tubi being sort of the most prominent there, but we've also launched Fox One successfully.

We're starting to build a really, really meaningful podcast business with Red Sea Ventures. And then wrapped up in all of that or part of all of that is this focus or this involvement with enormous events. And so come June, July of next year, we have the FIFA World Cup, which will be the biggest sporting event in the world next year.

U.S. got a good draw. So we should...

Against Australia. So we'll see how we go there. But no, so I think that's going to be enormous. And then listen, if you're generous enough to invite us back this time next year, we'll be picking apart the midterm elections. And so that will be an enormous event for us as well. And so listen, we feel super confident in where the business is at, and we've got really, really strong plans to sort of prosecute against...

That was a great overview, and we're going to touch on most of these points going forward. But let's start with sort of near term, more sort of micro focus. The quarter, I think, was highlighted by the outperformance in the -- on the advertising side. How would you characterize the health of the TV advertising market as you're seeing it today?

I think Lachlan encapsulated it really well on the last earnings call. We've never seen anything stronger. It's been -- and it's not -- I think it's -- there's market, but then there's the market we play in. And I think you've seen this great repositioning of ad dollars, which has basically seen money go from cable -- linear cable entertainment advertising.

A lot of that money has gone has sort of leaked out as that viewership and engagement has eroded and has come to places where we play, which is broadcast, particularly sports. It's definitely come to news, as you've seen with our cable advertising growth that you've seen. And it's come to streaming, and we've got Tubi there, which is picking up those dollars. And so we're seeing an incredibly robust advertising market across virtually all of our verticals. The only one that's kind of in that mixed category would be our local TV stations, but they're comping against an enormous political market that we saw this time last year.

But sports continues to be incredibly robust. We had the Big Ten championship game this past Saturday, and it's the most cash we've seen -- more cash than we've ever seen for a Big Ten championship game. This time around, we had 65 advertisers on the roster. 2 years ago when we had the last championship game, we're at 49. If I look at our Thanksgiving game, I think that's going to be a record for us, even though it was the early window for us. So there's the bid for sports as people -- as advertisers crave that kind of reach has never been stronger, as I said.

It's also gone to news in the sense that for us, FOX News has become the fifth broadcast net. You're kind of getting broadcast reach at pretty good rates. And so we're seeing continued demand for news advertisers, even entertainment, which is a sort of linear broadcast entertainment, which is a pretty small part of our business is because broadcast because of reach continues to perform well for us. So the advertising book, you would have seen even against a Q1 where we were comping against political -- early political revenue in the prior year, we were plus 6% across the book. And so you should expect the visibility we have into the advertising environment is really robust and solid for us.

That's great. And there appears to be, as you referred to, some structural shifts at FOX News with brand advertisers spending more in prime time. Could you talk about the mix in terms of brand versus DR on FOX News and maybe the sort of relative CPMs and sort of what you're seeing?

Yes. So I remember we discussed this when I was here last year, John, we're discussing whether it's structural. I'm not sure if it's structural, but it's absolutely enduring, right? So in fiscal '25, we added the better part of 350 advertisers to the FOX News roster of advertisers. And that's right through the book, whether it be national/brand advertisers, whether it be political, whether it be DR. And not only did we add those, but they continue to spend. And so that's the enduring aspect of it, which is these advertisers are hanging around on the platform because they continue to see -- they see returns from it.

The mix -- we haven't seen an enormous mix shift between the amount of money we write from a DR perspective versus the amount of money we write on a national perspective because the competitive tension bids up the CPMs. And so it's -- and we've been able -- because at this time of the year versus last year, we have fewer preemptions, so we've got more inventory. So we're able to cater to everybody. But if you look at it from an advertiser perspective, FOX News offers enormous value to them because they're getting broadcast reach at basically a CPM that's half the level of broadcast. So it's a really, really attractive value proposition for them. So it's kind of like the competitive tension in the book is really helpful because we're able to write on both sides whether -- and we're kind of indifferent to whether it's national advertising or DR, but both of those are growing at healthy levels.

Great. And as you mentioned before, sports has been particularly strong, phenomenal ratings, like you said for the Big Ten Championship for what you're seeing in the NFL. How sustainable is the sort of CPM uplift? And maybe can you give us some sort of sense -- I don't know if you can quantify or talk about what you've seen historically as it relates to World Cup and how you're looking at this summer?

Yes. Listen, there's no signal whatsoever that the bid for sport is going away. I think in a world where engagement is becoming increasingly fractured, sport will just continue -- will only stand out even more as being the place where you get absolute reach. And it's not just reach, it's truly engaged reach. And so the 2 verticals that we sort of have our strongest and leadership positions in is news and sports, where it's not just reach, it's that kind of high level of sort of passionate engagement.

And so I don't see -- we'll see in terms of if there's any kind of turbulence in sort of macroeconomic. But from a relative perspective in the industry, it's hard to see that, that shift changes that sport becomes less important. I think it only becomes even more important. And we've seen that through all of our big sports, whether it be MLB, whether it be NFL, whether it be college, whether it be NASCAR. And we've got FIFA World Cup, which will no doubt be -- from what we have visibility and it will be a super successful event from an on-screen perspective as well as financially for us. And so I don't think there's any abatement in that trend.

Got it. And you guys have shown a willingness to sort of shuffle the mix of the sports rights portfolio with Thursday Night Football and WWE. Can you talk about the portfolio you have today and then sort of how you make decisions to optimize the portfolio?

Yes. So we're really, really happy and settled with where the portfolio is at the moment. We have great duration in rights. We have a fantastic mix of what I would call kind of franchise-defining rights for the sports business, so kind of NFL, MLB, college, NASCAR, where sort of -- they define the franchise.

They're super important for advertisers, and they're also super important for distributors. And so they really help underwrite the retrans and cable affiliate business that we do with those. So we have a really, really strong presence there. Then we have a really, really neat mix of rights that sit underneath that, which are more what I'd call value-based rights, where we're able to take really, really economic decisions around those rights in terms of understanding their payoff to us.

And then I think what we've gotten now, which we -- which we've only just started to sort of delve into is this kind of emerging set of rights, where we're taking the power of our franchise and the power of our platform to help develop that sport. And so the 2 that are in sort of in the gun at the moment, the UFL and IndyCar, where we think we can grow those into meaningful businesses and meaningful sports in the U.S. market, and we're prepared to invest not just money, but also our kind of sort of the platform and the reach of the platform to drive those sports.

And in return for that, we not only get the usual advertising and sort of affiliate revenue or distribution revenue that comes from that, but we've got equity stakes in those 2 businesses, where if they turn out to be the success that we believe them to be, then there's an equity carry in those. And so we have to prove that out with each one of those competitions. But we feel pretty good about the portfolio of rights that we have now. We look at everything. The sports guys aren't shy about coming forward and they would buy everything. But no, we feel really good about where the portfolio is, where the longevity of that is and the mix that we have.

Right. There's a lot of conversation about the NFL potentially seeking an early renewal. How would Fox approach this? And could you pull back on the number of games or sort of anything you could tell us about sort of the way Fox thinks about that? And I've heard it could be as early as sort of the '27, '28 season.

Yes. It's way too early to sort of speculate on what sort of an early renewal or an early sort of decision on where NFL finishes, how that composition looks like the game count versus the cash cost and all the rest of it. We see it as an opportunity. We see it as an opportunity to sort of further build on our relationship with the NFL. We see it as an opportunity to again demonstrate to the NFL and to the ecosystem at large, just the kind of the importance we place on the NFL and what we do to cross-promote within our family of properties.

And so it's not just NFL broadcast on Fox. It's not just all the work that goes into the pregame and the post game. It's not the production values. It's the promotion in virtually each one of the local markets that we broadcast in. It's the FOX News cross-promotion. It's now the Tubi cross-promotion. And so there's an enormous power that gets brought to bear around those rights. And it is for sort of all of our marketing sports. And so we see it as an opportunity to solidify and lengthen the relationship with the NFL and sort of increase the duration of the key right for us.

Right. Maybe turning to affiliate. You've started early traction with, Fox One. Any color you can give us around subscriber trends or how bundling has helped the overall growth of the platform? In early days, admittedly early days.

It is early days. I'll resist the temptation to give you a [indiscernible] number. But listen, if I look at what we set out to achieve, we're super pleased with where the subcount is at the moment. If I look at other things that we wanted to achieve with the product, we established a price point for the service that's commensurate with the value that service delivers because it's the absolute best of sport, the best of news and entertainment, right?

So we've established a price point. We've had a great group of initial partners and bundlers to help distribute the service. And so the first cabs off the rank there have been Amazon, which has been a fantastic partner for us. We've got bundles with ESPN and Verizon. You should expect more of these to come because I think people naturally want to attach ourselves naturally want their product to be attached with our bundle.

And then the other piece to it is sort of the neat mix of content and the way that's been consumed. And so what we've seen from a behavioral pattern is that we've seen that on the weekends, we get a lot of our subscriber acquisition and we get peak viewership for the sports that gets -- that comes with that. But then through the week, we've had this really nice balance of consumption between news, entertainment and sports.

And so we feel really, really good about how we've come out of the gate with this product. It is early days, and we totally recognize that given sports has been such an important subscriber acquisition driver for us, our sport is really concentrated between sort of the start of the fall through to the end of winter.

And so we'll see how the service shakes out over the full year. Could help. Totally it will. I was just about to say we've got that sort of -- we've got a sort of brief period in between, but then there will be this enormous tournament. So we feel like really, really good about how that's opened up.

Has the availability of FOX One impacted your affiliate negotiations or any deals that you guys have done? Does it hurt you guys from a pricing standpoint?

No, it shouldn't, right? Like we've been totally clear about this. All of our affiliates are able to use the benefit of FOX One for their own subs. So first and foremost. We've made it sort of from a pricing perspective, we've made it that the retail price doesn't undercut the input price that we charge them on a wholesale basis for what we offer them on a bundled basis, on a wholesale bundled basis.

So -- and then if you've looked at our on-air, you won't see FOX One being promoted on our kind of linear for one of a better phrase, airtime. We totally see this product as being something targeted at -- for the cordless. Evidence to date -- we don't see any evidence today that suggests that the subscribers that we're acquiring is anything other than those coming from outside the bundle. And so for us, it should be additive to us, and it should be absolutely additive to our distribution partners.

And so -- there's always the argy-bargy of negotiations. But no, we feel like this is totally complementary to what we do. It was always meant to be complementary and always meant to be additive. And so far, the strategy -- our go-to-market strategy has sort of proven that out.

One other thing I was just thinking of when you sort of start off by talking about some sort of new comps that are not necessarily good comps just given their ratings trends they've seen, but you have Versant that is being spun out and then you have Discovery Global Networks, both sort of almost pure play but sort of linear TV companies that don't have any sports, right?

I mean the sports and the networks are being -- depending on the company are being sort of held back. So you've got these sort of -- I want to say stranded assets, but you've got these businesses that are being carved off within the ecosystem. In the Fox view, does that change the pricing dynamic? So you guys -- your ratings are going different -- your sports and news are going in a different direction. You have these very -- these are actually big drivers of -- there's a lot of viewership still on these platforms.

Does the fact that they might -- first of all, I don't want to necessarily -- unless you want to comment on other companies, but it would seem that they would have less pricing power, but that would leave more sort of money in the ecosystem for companies that are really getting a lot of viewership. So do you think that helps your case at all having these sort of spinouts, big spinout. These aren't small.

No channel groups. Yes. No, listen, we've said since the Investor Day, right, where we put up that we're going to do $1 billion extra of retrans, which we eclipsed really quickly. We've always said that the value we offer the bundle -- and our fidelity to the bundle should always mean or should have always meant and should continue to mean that we take greater share of wallet because we just think that the sort of the concentration of what we deliver to the bundle and the -- we're totally distinguished. They will run their own race these spin-offs.

The creation of Fox Corp came from the Disney transaction, but it was a very deliberate strategy in assembling the assets that we have as Fox Corp to be able to thrive in the current environment. So we absolutely expect that we should get greater share of wallet. And it's irrespective of the spins of these businesses. It just -- it should be something that we, as a company, set ourselves in terms of our own internal targets for distribution income.

That makes sense. Maybe turning to Tubi. Tubi has been a consistent outperformer. Any color you can give us on how ad growth has trended so far this quarter? And how are you thinking about growth in that platform from here?

Tubi has been an enormous success for us. You would have seen in Q1, we were plus 18% engagement, plus 27% in ad revenue, which are enormous numbers, right, for a platform that's actually starting to get to scale. So right now, I think if you take our Q1 revenue and annualize, we're at $1.2 billion run rate -- annualized run rate, and it will only grow from there, right? Q2 is a bit of a funky quarter.

We're still seeing that kind of double-digit engagement growth. But Q2 last year, we had a pretty reasonable whack of political revenue at Tubi. So you won't get that plus 18 plus 27 dynamic happening. But the advertising trend -- the engagement trends, which is the basis for everything continues to be there. And the advertising trends are there. It's just Q2. But if I look at it from a full year perspective, we feel very confident about how Tubi is placed and how that revenue is tracking.

And could you talk a little bit about what you're seeing in terms of CPMs? We talked with -- we had the ad panel this morning, they talked about continued pressure, modest pressure and eventual turning in that, just given all the inventory and competition, especially on the free side. Just what are you seeing in terms of both demand and pricing sort of CTV CPMs?

Yes. When -- there's been a bunch of big kind of big streaming platforms that have introduced ad-supported tiers. When we heard the kind of CPMs that were coming out with, we thought if Tubi could get to both my God, Tubi is a very, very big business. Tubi has always been priced on sort of a better value than many of those start.

And so as those -- as our peers' pricing has pared back, Tubi has come back a touch, but it's always been sort of on a sort of euphemistically has been a value-based pricing approach. And Tubi's revenue growth hasn't been coming from CPM growth. It's largely been coming from improving fill rate, improving engagement, obviously. So whilst we understand the whole streaming market has seen CPM sort of rollbacks, Tubi hasn't had -- hasn't been as afflicted by that as others because it just started at a at probably a more realistic level.

And getting back to fill rate. So fill rate will sort of be the -- or has been the driver or will continue to be the driver -- I guess, and engagement, like you said. So any view on sort of change in trends or when you could see the sort of supply-demand equation start to normalize or improve?

No, I think the way we look at it is, first and foremost, we want the Tubi viewership experience to be kind of something that the viewer wants to come back to, right? So we almost have a self-imposed limit of kind of mid-single-digit minutes an hour of advertising space that's allocated. And that changes, right, depending on -- we can toggle that up or down depending on the life cycle of the viewer and all the rest of it. But that's kind of where we want to average out to.

And then we sort of play with the variables around engagement growth versus -- and engagement and fill rate or engagement and ad load are related, right? So we toggle with that relationship, and then we toggle with the relationship around ad load, fill rate and CPM. And so we've been able to manage that to continue to grow that advertising revenue, so plus 27% by toggling those around.

From a monetization perspective, we totally think we're undermonetized from a Tubi perspective, which goes to the opportunity as we look forward because we think we can continue to grow fill rate. We can -- and if CPMs begin to sort of stabilize and eventually grow, then that's total upside for Tubi. So we feel pretty good with how we're managing that -- those sort of different variables. And we still think that there's a ton of upside in that monetization journey.

Great. So Tubi reached profitability this past quarter. How sustainable is that? And how quickly can we see margins reach the sort of 20% to 25% level that you guys have spoken to?

I'd like to think it's very sustainable, right, because we didn't -- we haven't invested in the business for it not to be. You'll see -- listen, I wouldn't commit here to sort of say every quarter from here on forward is going to be profitable. But listen, this is -- we lost the better part of $200 million on Tubi last fiscal year. We will lose a significantly lesser amount in the coming year.

And this -- and being breakeven in Q1 is a significant milestone for the service. And so it's a huge tick. It's a huge tick for the management team there led by Anjali. And I think from -- as I said, not every quarter will naturally be positive for us. There will be seasonality and we'll dip into investment as the year progresses. But we totally feel as though Tubi is on that pathway to being on an annual basis, breakeven really soon.

And then I don't want to give a time frame for how we -- we've talked about 20%, 25% sort of EBITDA margins on Tubi, and we sort of absolutely see a pathway towards that. But we want to keep flexibility as -- in terms of the time it takes for us to get to there because we want to retain flexibility because if we see opportunities to sort of grow faster and maybe spend a little bit more money, then we will. But I think it's an amazing milestone that we achieved in Q1, and I think that it's up and to the right for us from a revenue and profitability perspective for Tubi.

And sort of putting all the digital together, it seems the total digital net investment is trending better than the $350 million drag you previously suggested for the year. Any help in sort of sizing that -- what you're seeing in terms of?

I think too much has been said of it, to be quite honest. Like in the context of the size of our business, we said $350 million 2 years ago, and then that came down to the high 200s. We said $350 million for this year. I think it's inside of that. But it's inside of that, like if we -- I think you've got to give us the benefit of the doubt to be able to invest in positive IRR projects in the business.

Now I think as we sit here today, we'll be inside of $350 million for sure. But if we see opportunity and we can see sort of really attractive investment cases, we'll do so. But we feel like -- I think when you look at Tubi is doing better than we expected, Fox One is doing better than we expect, and they're the 2 sort of big drivers there. It's all for the right reasons that it's sort of the $350 million is the outside, but I think too much is made of the number.

Got it. Makes sense. Maybe one question on sports betting. Just talk about the process in sort of getting licensed in each state. What does that mean once that process is done? And maybe when do you think it's going to be done? And then anything you could help us with in terms of the strategy for sort of long term on the sports betting side?

So maybe I'll start with the second one first, right? So for people who don't know, we have an investment in Flutter at the topco level, which is worth -- I think today, it's worth $900 million. And we also have an option over Flutter's FanDuel business of 18.6% of it, I should say. And when you look at Street forecast of where they have FanDuel valued within the kind of constellation of assets within Flutter, you look at our strike price versus where sort of 18.6% today.

So the kind of spread between the strike price and what for want of a better phrase, the median value that the Street puts on FanDuel is worth $2.5 billion to us. So $2.5 billion at the auction level and another $900 million at the headco level. And so it's $3.4 billion of value that we have in sports betting with large. So our strategy is like we have been believers in sports betting. We've seen how it's developed in overseas markets that are native to some of the management team at Fox.

And we've been believers since they built for it. And so we have sort of long term -- our long-term strategy here is to hold that asset. And so in order to hold the asset, we have to get licensed. Flutter operates in sort of the mid-20s kind of number of states, and we're in a conversation with each one of those states about that licensing process. The fact that at a Fox ownership level, the cleanup of the Murdoch trust issues is super helpful. It just makes that kind of string of licensing requirements that potentially goes up to that kind of at that shareholder level, it becomes more simplified.

It just means fewer people need to be.

Exactly. And so that makes our life easier. So we'll constructively work our way through it. The option has a deadline date for the end of 2030. And so we've got 5 years to exercise that option. So you should fully expect we're total believers in the category that we're going to get licensed in order to fully harvest that value.

Pan Shop then what -- I mean, so how do you sort of tie those assets together and sort of extract value? Is it -- you launch your own -- you have some experience with FOX Bet, but do you launch your own service? ESPN have some fits and starts with their betting strategy.

Yes. I think, listen, FOX Bet ESPN had whatever its issues were. And I think FOX Bet was caught up in the fact that it was FOX Bet was the younger brother to FanDuel and what happened and what happened there. So that's in our rearview mirror. But no, we think that we don't necessarily want to operate a sports betting license on our own, right? We think that we have enormous respect for what Flutter brings to the table in terms of sports betting prowess. And so we're happy as a sports business to have that kind of -- to bring the sports broadcasting element to it. But we're happy to be sort of like an investor in something that we see as having decades of growth ahead of them.

Got it. Maybe shifting to capital allocation. You announced a $1.5 billion ASR last quarter. Any updates you can provide on the status of the program? And how should we think about the $1 billion per year in buybacks that you guys have historically executed on?

Yes. So listen, I think from a capital allocation perspective, we have -- we see a lot of value in our stock, right? And so you've seen us before we announced the $1.5 billion ASR, we're at $6.9 billion of purchases up until that time with the $1.5 billion, we'll be at $8.4 billion. And I think the ASR will take the better part of the fiscal year to complete. We're already in market with it. But -- so it takes to $8.4 billion. If you add the dividends that we've paid since the start of Fox, will now be well north of $10 billion of capital returned to shareholders.

So that's a pretty significant move in that direction. You should expect us to continue to be balanced with capital deployment going forward. I think if anything, we've been imbalanced as we sit here today because the vast majority of our capital has gone back to shareholders, and there's been a relative -- all of our organic investment has been funded out of free cash flow. And in terms of inorganic investment, we're kind of -- we're less than $2 billion on a net basis.

And so -- but you should expect us to -- while the stock is where it's at -- when we look at our stock, we think it trades kind of -- when you adjust for all the below-the-line assets, it trades at like 6x EBITDA. We think it's still fantastic buying at that level because we think that the assets that we have amazingly unique. And so we'll continue to buy back stock. And if we see an opportunity inorganically, we obviously won't be shy there. But we -- we look at everything. But 7 years after the launch of FOX, like the best place for our capital has been to buy back our own stock really cheap.

And just in summary, along those lines, what are some of the opportunities that you guys look at on a sort of day-to-day basis? And Fox has the scale to keep performing the way it has over the last few years, hitting all-time highs seemingly each week. Just given what you're seeing in terms of the landscape, the spins, the mergers, do you think that there's -- given present course and speed and sort of your investment view of the world, do you have the assets to continue with this kind of the performance?

If anything, since 2019, I don't think we feel any better about the quality of the assets in the portfolio. So from -- we want for nothing from a portfolio perspective. We have a pristine balance sheet. We have fantastic free cash flow that's delivered by those assets. And so to go to your point, we look at everything, it's an extremely high bar.

And so if there was something that took our core verticals to another level, which is sports and news or if there was something that would benefit from the other thing, which is our capacity to aggregate reach and really, really passionate reach, we look at it, but nothing has ticked all the boxes. And so -- but we feel like we're in a fantastic position, both from a portfolio perspective and a balance sheet perspective to be able to pivot however we want to.

Perfect. I'll leave it right there. Steve, thanks for joining again.

Thank you for having us.

Ladies and gentlemen, thank you for standing by. Welcome to the Fox Corporation's First Quarter Fiscal Year 2026 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

I'll now turn the conference over to Chief Investor Relations Officer, Ms. Gabrielle Brown. Please go ahead, Ms. Brown.

Thank you, [ Charlie ]. Good morning, and welcome to our fiscal 2026 first quarter earnings call. Joining me on the call today are Lachlan Murdoch, Executive Chair and Chief Executive Officer; John Nallen, President and Chief Operating Officer; and Steven Tomsic, our Chief Financial Officer. First, Lachlan and Steve will give some prepared remarks on the most recent quarter, and then we'll take questions from the investment community.

Please note that this call may include forward-looking statements regarding Fox Corporation's financial performance and operating results. These statements are based on management's current expectations, and actual results could differ from what is stated as a result of certain factors identified on today's call and in the company's SEC filings.

Additionally, this call will include certain non-GAAP financial measures, including adjusted EPS and adjusted EBITDA, or EBITDA as we refer to it on this call. Reconciliations of non-GAAP financial measures are included in our earnings release and our SEC filings, which are available in the Investor Relations section of our website. We also refer to free cash flow, which we define as net cash provided by operating activities less capital expenditures.

And with that, I'm pleased to turn the call over to Lachlan.

Thank you, Gaby, and thank you all for joining us this morning to discuss our fiscal first quarter earnings.

Fiscal 2026 started strong across our businesses with revenue growth of 5% and EBITDA growth of 2%. Advertising revenue grew 6% during the quarter despite not having last year's political revenue with robust trends at news, sports, entertainment and Tubi. This is supported by a gain in engagement across the portfolio, which distinguishes us from our peers and, again, underscores the strength of our brands and the leading positions they hold in our ecosystem.

Distribution revenue grew by 3%, with subscriber declines remaining below 7% for the third consecutive quarter. The momentum in Q1 is continuing into Q2, led by a very healthy advertising market for us, stemming from both the upfront and from a strong scatter market. In fact, we are enjoying the most robust advertising market we have seen for some time.

Also, in this quarter, we launched FOX One. Though it's only been 2 months, we are encouraged by the enthusiastic response to the product. Subscriber trends have exceeded our expectations with those subscribers coming through direct acquisition and partnerships. We continue to believe that our content is best served as part of a bundle, whether it's in the pay-TV bundle or a direct-to-consumer bundle as it provides value and choice to the consumer.

At FOX, we are distribution agnostic. We are committed to ensuring our networks and content reach as many households as possible. With that in mind, we launched 2 FOX One bundle partners earlier this month, ESPN and Verizon. These will build upon the strong momentum we have achieved with our groundbreaking Amazon Prime channels partnership. Kudos to everyone at Amazon from Andrew Jassy down for their tremendous and brilliant support of the service. You all have done just a tremendous job.

Unsurprisingly, in terms of engagement, we have a balanced mix on FOX One with news driving audience and reach during the week and sports events doing the same over the weekend. Across all forms of distribution, interest and engagement in FOX's portfolio of live sports is increasing. FOX Sports kicked off the fall season with solid momentum. The NFL on FOX is off to a great start, averaging almost 22 million viewers in September, a 12% increase over last season and FOX's best start to an NFL season ever.

And FOX's America's Game of the Week ranked as TV's #1 show through the end of September with an average of 30 million viewers. And our schedule only looks better from here right through to the NFC championship at the end of the season. Interest in college football continues to reach new heights as well. Through the end of September, FOX's Big Noon Saturday window averaged over 6 million viewers, up 22% over last season. The strong start was punctuated by nearly 17 million viewers trading into watch Ohio State versus Texas, the most watched week 1 college football game ever on any network.

Like with the NFL, we head back -- we head into the back half of the college season with a strong roster of Big Ten and Big 12 matchups, highlighted by the Michigan, Ohio State game and capped off by both the Big Ten and Mountain West Conference championship games.

And while we thought last year's Dodgers-Yankees World Series would be a tough act to follow, Major League Baseball has once again performed well for us. Regular season ratings were up 3%. And as we go into game 6 of a spectacular World Series, our total post-season advertising revenues will likely surpass last year's.

Speaking of revenue, Tubi achieved 27% revenue growth in the first quarter, driven by an 18% increase in total view time. This overall engagement trend has continued into Q2. Our expansive content library and our differentiated user base have solidified Tubi's position as the top premium AVOD platform in the U.S. And I'm happy to say Tubi reached profitability this past quarter. It's a great milestone, a credit to the Tubi brand to our viewer experience and to the revenue momentum we are seeing. This will likely lead to a partial moderation in the overall net investment we expected to deploy across our digital initiatives this year.

FOX News sustained its strong ratings and audience momentum throughout the quarter. FOX News, once again, cemented its status as the most watched cable network in total day and in Primetime. Even more impressive, FOX News is the most viewed network in all television in weekday prime calendar year-to-date. This engagement and share led to the highest first quarter ad revenue in FOX News Media history with higher pricing across both direct response and national advertising during the quarter.

Breaking news coverage throughout the quarter also drove strong engagement at FOX News Digital, fueling growth in page views and minutes versus last year. FOX News Digital closed the quarter with over 6.5 billion social media video views, its highest total ever.

The strong Q1 results we have just reported, coupled with the ongoing trends we are seeing across the company, give me great confidence in the positive outlook for FOX. This is particularly underpinned by the strength of the advertising market, our leadership position across news and sports and by Tubi reaching quarterly profitability earlier than expected.

Coming off a record fiscal 2025, fiscal 2026 will, again, highlight the uniqueness of our strategy, the quality of our assets, our ability to deliver on screen and financially and the overall strength of our financial position. This confidence is clearly demonstrated by this morning's announcement of a $1.5 billion accelerated share repurchase transaction. Consistent with our track record, we remain committed to delivering value for our shareholders in a thoughtful and disciplined manner.

And now let me turn it over to Steve for more on the results.

Thanks, Lachlan, and good morning, everyone.

FOX has made a strong start to fiscal 2026, highlighted by robust total company revenue growth of 5%. Advertising revenues were up 6% over the prior year, even with the tough comparison to the start of last year's record political cycle, driven by continued momentum at Tubi, strength in pricing at news and pricing and ratings growth at sports.

Distribution revenues, which now include both affiliate fees for our linear channels as well as subscription fees for our direct-to-consumer streaming services grew 3% over the prior year. Content and other revenues grew 12%, primarily due to higher entertainment content deliveries in the quarter.

Total company expenses were up 6% year-over-year, largely due to investments in our digital-led growth initiatives and higher entertainment programming costs. This was partially offset by lower sports programming costs.

As a result, quarterly EBITDA grew 2% to $1.07 billion. Net income attributable to stockholders of $599 million, or $1.32 per share, compares to the $827 million, or $1.78 per share, reported in the prior-year period. Excluding non-core items, adjusted net income was $686 million and adjusted EPS was $1.51, equating to a year-over-year increase of 4%.

Now turning to our operating segments, where at our Cable Networks, revenue grew 4% over the prior year. Cable advertising revenues were up 7%, driven by robust pricing at FOX News, which more than offset the advertising impact from the absence of Copa America at our cable sports networks. Cable distribution revenues grew 3% in the quarter, as pricing growth from our affiliate renewals outpaced the impact from industry subscriber declines, which continue to run at under 7%. Cable content and other revenues increased $13 million, led by higher sports sublicensing revenues.

Cable expenses grew 2%, primarily due to higher sports programming rights and production costs led by international soccer rights. This was partially offset by lower news gathering costs relating to our coverage of last year's presidential election cycle. All in, EBITDA at our Cable segment was $800 million, an increase of 7% over the prior-year quarter.

Turning to our Television segment, where we delivered 5% growth in revenues. Television advertising revenues were up 6%, driven by continued growth at Tubi and strong sports pricing and engagement led by the NFL. This was partially offset by the absence of last year's political advertising revenues. Television distribution revenues grew 2% over the prior-year quarter as healthy growth in fees across FOX owned and affiliated stations more than offset the impact from industry subscriber declines.

Looking forward, with stable to improving subscriber erosion trends, we expect continued total company distribution revenue growth for the full year. Reflecting the flow of our commercial terms with distributors, in fiscal 2026, we would expect this growth to be driven by our Cable segment. Television content and other revenues increased 17%, primarily a result of higher content revenues tied to our entertainment production studios.

Expenses at the Television segment grew 4% year-over-year, driven by higher entertainment programming costs and higher content costs at Tubi. This growth was partially offset by lower sports programming costs, primarily from the absence of WWE and last year's broadcast of the UEFA Euros. All in, quarterly EBITDA at our Television segment grew 7% to $399 million.

Now turning to cash flow. Free cash flow was negative $234 million in the quarter. This is consistent with the seasonality of our working capital cycle, where the first half of our fiscal year is characterized by a concentration of payments for sports rights and the buildup of advertising-related receivables, both of which reversed in the second half of our fiscal year.

We remain active with our share buyback program, where we have repurchased a further $300 million so far this fiscal year. In addition, as you will have seen in this morning's release, underscoring our confidence in the outlook for the business and our commitment to create value for shareholders, we will enter into a $1.5 billion accelerated share repurchase transaction, consisting of $700 million of Class A common stock and $800 million of Class B common stock.

This transaction will commence tomorrow, and we anticipate it being completed during the second half of fiscal 2026. This is all supported by the strength of our balance sheet, where we ended the quarter with approximately $4.4 billion in cash and $6.6 billion in debt.

And with that, I'll turn the call back over to Gaby.

Thank you, Steve. And now we would be happy to take questions from the investment community.

[Operator Instructions] We have a question from John Hodulik of UBS.

Maybe just a couple of questions on the digital efforts. First, any other color you could provide on FOX One in terms of -- I know you don't want to give sub numbers, but just sort of sub uptake, the engagement you're seeing? What are people watching on the platform? And did you guys see an acceleration in growth when you launched the ESPN bundle?

And then on Tubi, congrats on turning positive there from a margin standpoint. How should we think of the long-term margin trajectory on that platform?

Thanks, John. So starting on FOX One, look, it's early days. The launch was only a couple of months ago. But the uptake has, as I mentioned before, absolutely exceeded expectations. Perhaps it shouldn't have exceeded expectations because it's a great platform. The team has done a brilliant job in developing a tremendous service. And obviously, the content and the brands are absolutely a premium.

So -- but having said that, we are incredibly pleased with its -- with the early days and its progress from a subscriber and from an engagement point of view. You see a healthy mix between sports and news viewing, also obviously, some entertainment viewing, but really, the engagement is driven by sports over the weekend and news viewing during the week.

And we would see no deceleration of that as we go through the busy autumn sports season. We're seeing subscriber acquisitions flowing very effectively and efficiently through both football, be it NFL or college football, and also with post-season baseball. So it's very pleasing and then it's pleasing to see those subscribers and viewers also engaging with our other content on the platform, primarily news.

As for -- I think the other question was on Tubi. Look, we've said it before, we expect margins to -- we're pleased with hitting profitability in this past quarter. I think you've got to expect some seasonality with that, but certainly growing profitability where we expect Tubi to be a meaningful contributor to EBITDA in the medium term. And we would expect those margins to be in the 20% to 25% range ultimately.

We have a question from Michael Morris of Guggenheim.

I wanted to ask you first about the stronger pricing on FOX News and really trying to understand where you see this pricing relative to your potential and what's driving the strength in pricing there. I think at the end of last year, you discussed some -- a pretty large number of incremental advertisers coming in with interest. And so trying to understand where we are in the cycle on pricing and what you think the potential is.

And then second, you did mention a moderation in the investment level given the success that you're seeing at Tubi, which is great. Would you be willing to give us some parameter of where you think that may come in, perhaps relative to the investment levels last year or something else that can help us size what you're thinking at this point?

Thank you very much, Michael. I'll handle both questions.

On FOX News pricing, the strength of FOX News pricing really, obviously, comes from the share that we're achieving in the marketplace. Consistent with the past quarters, I think in total day for the -- for Q1 and sort of in P2+, we're up 63% share versus our news competitors. And I think for Primetime, we're up 65% -- we're at 65% share versus our news competitors.

But equally important is we are the #1 channel in all of television year-to-date. Obviously, as you go into fall and you have fall entertainment programming and football, they're tough comps coming. But #1 year-to-date in all of television is a tremendous achievement. And you have to remember that our CPMs are effectively half of what broadcasts are. So advertisers and clients -- we're still on?

Yes, you're still connected.

I thought I heard a good bye. So I was on a roll.

So look, our advertising is about half of what the networks are able to achieve from a CPM point of view. So it's a very efficient buy for our clients who are experimenting on the channel and are coming back and continue to spend more. I think we've about 350 new national clients on FOX News this year, and they continue to spend and, in most cases, increase their spend.

So pricing, that's driving pricing up, both from a direct perspective with partnerships, but also indirect, direct response where we're seeing very, very healthy, very strong pricing. And we don't see that -- there's no reason for that to change -- that momentum to change.

In terms of moderation of our investment level in our new businesses, to be hitting profitability earlier than expected will absolutely moderate the conservative number that Steve gave last quarter. We're very pleased by that. But we will continue to invest in these businesses as we see fit. It's a modest investment for us in our future, and we will continue to invest where we think it's important strategically to build those businesses.

Your next question is from the line of Michael Ng of Goldman Sachs.

I just have one and a quick follow-up. Just on the comment around distribution growth for the company for this year, I was wondering if you could just expand a little bit on what you think the key drivers of the stable to improving subscriber erosion trends are, and how important is FOX One to your outlook on distribution growth.

And then just as a follow-up, I was just wondering if you could explain a little bit more about the ASR, why now and also why the composition between Class As and Bs just given the more limited float on Bs.

Great. Thanks, Mike. On distribution growth, I think what we're seeing is we're seeing the early days of a benefit flowing through from skinny bundles, which we are participating in all of them. I think we're beginning to see -- and this is the third quarter now of sort of reduced subscriber erosion, which is pleasing as we see sort of subscriber erosion ameliorate to some degree.

And it's a combination of the consumer having more flexibility and getting the ability to -- where they don't want to be in an overall bundle to participate in these skinny bundles. And, again, what really drives these skinny bundles are bundles that are based around entertainment and news and sports.

So we're -- I think it's pleasing to see. And, also, obviously, the digital distributors continue to do well. FOX One really won't have a material impact on that. It is additive to our subscriber numbers because we are targeting subscribers that are outside of the bundle that are cord cutters or cord nevers. But as we've said before, our aspirations in FOX One remain in the low- to mid-single-digit millions of subscribers. So overall, it's not -- it's certainly, in the short term, going to have a material impact.

Steve, do you want to?

Yes. And just to elaborate, Mike, in terms of that distribution growth, as I -- just to reiterate in what I said, we absolutely -- given where subscriber trends are growing and, to Lachlan's point, FOX One, we expect to be totally additive to where we're at. We're expecting total company distribution revenue to grow this year.

At the TV segment, given the timing of our rate increases, we'd expect that our full year FY '26 TV affiliate revenue to be at or about where we were in '25. But given those timing of those rate increases, we'd expect overall TV -- overall total company distribution revenue growth to be up in '27 coming from both segments. So we feel pretty good about where the book is there.

And then to capture your question on ASR, listen, in terms of the splits -- the way the ASR will work is related to the entry into the transaction tomorrow. We'll get 80% of the shares back on settlement, so straight away. And then it will take the better part of the current fiscal year to work through that.

The split between the As and the Bs, I think it talks to the fact that the Bs are currently trading at a 10% or 11% discount to the As. So there's just an outright efficiency of buying with respect to the Bs versus the As. And then if you look at the balance of our ASR -- not our ASR, our buyback activity since then, right now, at about $6.9 billion cumulatively bought back of which $5.9 billion has been the As and only $1 billion has been the Bs. So we think that's the appropriate mix for the balance of the fiscal year.

We have a question from Jessica Reif Ehrlich of Bank of America.

So I guess the first question is, even with the accelerated share buyback, you have tons of balance sheet flexibility. Can you just talk about how you may use that? Do you think your asset mix will change in coming years? And it seems pretty clear there will be M&A in the industry. How would you participate or not like just the impact on FOX?

And then on advertising, Lachlan, you talked about strength in both upfront and scatter. Can you give us some color? You gave some color on FOX -- on the news side, just on the broader advertising, sports and entertainment and Tubi, that would be great.

Sure. Jessica, Steve can speak specifically to the balance sheet, but you're 1,000% correct. As usual, it's an industry-leading balance sheet. We're very proud of it, and we work hard to maintain its strength. But having said that, ultimately, have to be utilized and utilized with M&A.

We continue to look at all opportunities that come to us and that we identify internally as well. And we would expect to be doing more M&A over the coming period. Having said that, there's nothing on the table now. And so -- but we think M&A is going to be an important part of our growth going forward. We'll continue to be very disciplined with it. We're looking at areas where we believe there are tailwinds rather than headwinds. So you won't see us investing in things that have like high exposure, for instance, to the cable industry or certainly anything in sort of entertainment sort of cable assets. So that's broadly how we're viewing it and how we're filtering the opportunities that we assess.

And from an advertising point of view, Jessica, as I mentioned, this is the -- since 2019, since new FOX was created, this is the strongest advertising market we have seen in our kind of verticals. And the reason I make that sort of especially related to what we're seeing is because I think our verticals in live news and live sports, in particular, are really the beneficiaries of sort of the broad reach that we have and money flowing from linear entertainment, particularly linear cable entertainment revenue into the broad reach of live sports and live news supplies.

Having said that, we also -- Tubi has had incredibly strong revenue growth. And so it's really sort of across the board. If I look specifically national advertising, very strong in pharma in the quarter, financial services and in tech driven by AI companies advertising. In sports, NFL is strong. And even this World Series will -- we believe, if it didn't last night, will in Game 6, likely surpass our revenue for post season last year. So sports and college football is also going very well.

FOX News has seen strong price increases in their direct response advertising as well as for the big premium sort of branded advertising on the platform. Local stations, if anything, has improved from -- as a trend, where we said the market for local stations was mixed in the past. It's less mixed now. And that's a really positive thing we've seen. We saw very strong pharma advertising in the quarter for local stations. And then where the weakness is the stations are sort of restaurants, I think some telecom is slightly weaker and [ auto ] is sort of flattish. So we're very pleased with the outlook of the stations.

Tubi -- this time last year, Tubi had a lot of political revenue, which we called out because of its targeting and because of its audience, which is very hard to reach for advertisers. It attracted a significant amount of political advertising. But despite that, we're still seeing tremendous growth in Tubi. So we're pleased with the advertising outlook and particularly where we sit within that ecosystem.

Operator, we have time for one more question.

We have a question from Ben Swinburne of Morgan Stanley.

Maybe taking another stab just at the investment levels this year. I think Steve's conservative estimate last quarter was $350 million, I believe, for '26. I don't know if maybe you'd give us an update based on how you guys are trending so far?

And then, Lachlan, kind of back to FOX One, just anything you called out and thanked Prime Video for their contribution. But just anything interesting or surprising to you in how, I guess, sort of you're acquiring FOX One customers when you look at all the different options and channels? I know it's early, but I would be interested.

So let me start with FOX One. Thanks, Ben.

So the -- I don't think it's that surprise. Partnerships are very important. And, obviously, partnerships we launched with ESPN and Verizon, we think they're going to be a big part of FOX One's growth. But I have to say, and I should just say, again, Amazon has just been a brilliant partner as the launch has done a tremendous job in distributing the product and acquiring subscribers. So we give them a huge amount of credit and appreciate their partnership.

And from a content perspective or a broad perspective, it's probably not surprising that sports and all sports are tremendous attraction on the product and really drive some -- a lot of uptake over the weekends. And then that flows into sort of those people once they're on the platform, accessing news and entertainment content during the week.

So this -- the sports season and then the busy autumn sports season for us is a really important period to drive subscriber acquisitions. So look, it's early days, but we couldn't be more pleased with how well FOX One is doing. That's a real credit to the team.

I guess, I have to hand this over to Steve [indiscernible].

Yes. So Ben, you're spot on. We did call it $350 million on the Q4 call for what we expected to see in fiscal '26. I think as we sit here today, we think that as we sort of qualified, we think we thought that was a conservative estimate. We still think it's a conservative estimate. But I think too early in the year to sort of put you on to a different number.

Great. At this point, we are out of time. But if you have any further questions, please give me or Charlie Costanzo a call. Thanks so much for joining us today.

Thanks, everyone.

Ladies and gentlemen, that does conclude the Fox Corporation First Quarter Fiscal Year 2026 Earnings Conference Call. Thank you.

Great. Apologies for the delay here. Welcome to the Fox fireside chat, the Goldman Sachs Communacopia & Technology Conference. I have the privilege of introducing Lachlan Murdoch, who is the Chairman and CEO of FOX. Thank you so much for joining us.

Mike, thank you very much for having me. And also, I'm sorry about the delay.

Yes. Maybe to kick...

How fast can you talk?

I can go as fast as you can go. Maybe we can just start out big picture, strategy, talk about the interplay of FOX One, Tubi, the linear assets?

Sure. Thank you. Look, big picture, our businesses are firing on all cylinders. We've got tremendous momentum across both our -- all of our brands and advertising revenue and also our distribution revenues. So it's going incredibly well. The strategy was set back in 2019 when we sold majority of our entertainment assets to Disney. And that strategy has proven to be prescient in its success and where we've positioned ourselves in the media ecosystem. So it's going incredibly well. We've launched new businesses and invested, I think, prudently. The interplay between FOX One and Tubi really gives us more distribution opportunities to reach consumers and customers and viewers where we wouldn't ordinarily be able to reach them.

So Tubi reaches an incredible audience. There're 60 million cordless customers in the United States. It's a tremendous target market for us, and Tubi has really hit it out of the park in addressing them. It's also on the path to profitability in the near future.

And what we're doing is we are -- as it gets towards profitability, we're reinvesting that capital in FOX One, which also is a direct -- is our first sort of scale direct-to-consumer business. It has, in the first few weeks, already exceeded expectations.

Great. Earlier this week, the company announced a resolution of the matter related to the Murdoch Family Trust. To the extent that you're willing to talk about it, how should investors interpret what that means for the company?

Sure, I'm happy to talk about it. It's great news for investors. It gives us a clarity about our strategy going forward. It ensures that our strategy will be consistent, it's clear and it's very sustainable. So I think it's great news for investors. In 2019, as I mentioned, when we sold our assets to Disney and really set this new path for the company, since then, we've increased our revenue by over $5 billion -- or nearly $5 billion, about $2 billion of that comes from advertising, increased advertising revenue and about $2 billion from distribution revenue. Due to that, we've increased our EBITDA by nearly $1 billion, and we've returned $8.5 billion to investors.

We can continue to do that now. We can be very focused on returning capital to investors, driving our profitability and really importantly, investing in our core brands and especially in our great journalism. So we are very pleased to be able to move forward and remain focused on the path that we're on.

Great. I'd love to ask you a little bit about FanDuel. The company has an option to acquire nearly 19% of FanDuel. Maybe you can just discuss the time line, how FanDuel can fit into the broader sports strategy and how sports betting could help the FOX Sports strategy be differentiated relative to others in the marketplace?

Sure. We have 2 key investments in sports wagering. Obviously, the 18.6% option in FanDuel, which we will exercise before 2030. That investment, today, if you take the median sell-side analysts sort of valuations, we are $3.1 billion in the money in that option. And then we have 2.5% of its parent company, Flutter, and that's worth in the market at $1.1 billion. If I add the 2 of those together, it's worth about $9 to $10 per share on our stock price. So we think they're tremendous investments. We are very committed to them. And we are committed to becoming a licensed company so that we can exercise that option.

We've already engaged with 26 states for licensing. That process is at its initial stages. It can be complicated, but I have to say, and pursuant to your previous question, the resolution of the control of the company through the family trust actually will make that licensing process much more simple. So we think that's an important step for us as well.

That's great. Shifting gears to FOX One, the direct-to-consumer product launched on August 21 at $19.99 per month. Can you talk a little bit about the FOX One go-to-market strategy, early indications of the consumer demand and market reaction? And maybe you can loop into that the bundle with ESPN.

Great. So Fox One launched only a few weeks ago. It's very early days. So I don't want to read too much into our success and our data over the last few weeks. But suffice to say that its take-up has been -- has exceeded our expectations. What you can see on FOX One is that news is really helping drive audience and reach Monday to Friday, but then with sports, but starting with our college football in this first week and now with the NFL, gives it a tremendous audience and viewership and acquisition capabilities over the weekend. So the balance between news and sport, which is also -- there's a lot of overlap in those audiences, has been very successful.

We are seen as amongst all of the direct-to-consumer media platforms out there as really an essential service. And so we have had approaches and we're in conversations with many other platform providers about bundling with them. And you'll see as we move forward, the -- our ability to and our intent to bundle with other providers to offer consumers the greatest choice and the greatest value.

ESPN bundle launches October 2. It will be $39.99 per month, and we think it will be an essential bundle, the essential sports bundle for sports fans in America.

Great. And on advertising, could you just describe how you're seeing the current state of advertising? You guys concluded the upfronts with double-digit volume increases. So it's been quite good for you all, but maybe you can talk about the market, what verticals you're seeing, some strength and weaknesses?

Sure. Absolutely. We had an incredibly strong upfront. I can only really talk to what I know intimately, which is our advertising where we sit in the advertising market rather than the broader advertising trends for perhaps some other genres and other services. But for us, our advertising demand is very strong, very strong. We see this across sports. We see it across news. Sports being driven by our premium portfolio of sports rights, whether it's the NFL, college football, baseball and of course, the FIFA World Cup at the end of the year. News is driven by our ratings, which remain incredibly strong, and we see no reason for that to change. Entertainment, our broadcast network and FOX Broadcast has had the strongest scatter pricing increases and double-digit scatter price increases than we've seen in years. And Tubi goes from strength to strength the beginning of this fiscal year, has maintained its momentum with advertisers.

It's a -- and we might come back to talk about the CTV market, but it's in a very unique position, Tubi. It's obviously a free service, which is the best brand position possible. But it offers -- it reaches over 2/3 of its audience to a cordless market to people that are not in the traditional cable or broadcast ecosystem. And so that's a market that's very hard to reach and very critical for advertisers.

Yes. And maybe in the last couple of minutes that we have, could you just talk about what the strategic priorities are at for FOX at this juncture?

Sure. Look, obviously, growth in our traditional brands. FOX News finished the last fiscal year as the #1 channel in all of cable, not in news, in all of cable, which is a tremendous position to be in. But the first 2 months of this year, in July and August, we finished as the #1 network in all of television in the United States. So we beat all of our broadcast competitors. This is a great position to be in, particularly because our CPMs for our advertising are half of what broadcast is, the broadcast networks. And so this is the best deal ever for advertisers. We have advertisers flooding on to the service and the ones that are on the service are spending more and more. It's a tremendous amount of value for them.

So we'll continue to focus on our traditional brands. We've talked briefly before about sports. And then we're investing, I think, prudently in our digital growth, whether it's our digital platforms, online, whether it's FOX One, whether it's Tubi and we're now growing in Fox Latin America.

Great. Lachlan, thank you so much for the time. It's a pleasure and a privilege to have you on stage here with us.

Great. Thank you very much, Mike. Thank you. Thank you.

Ladies and gentlemen, thank you for standing by. Welcome to the Fox Corporation Fourth Quarter Fiscal Year 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

I will now turn the conference over to Chief Investor Relations Officer, Ms. Gabrielle Brown. Please go ahead, Ms. Brown.

Thank you, Carly. Good morning, and welcome to our fiscal 2025 fourth quarter earnings call. Joining me on the call today are Lachlan Murdoch, Executive Chair and Chief Executive Officer; John Nallen, Chief Operating Officer; and Steve Tomsic, our Chief Financial Officer. First, Lachlan and Steve will give some prepared remarks on the most recent quarter, and then we'll take questions from the investment community.

Please note that this call may include forward-looking statements regarding Fox Corporation's financial performance and operating results. These statements are based on management's current expectations, and actual results could differ from what is stated as a result of certain factors identified on today's call and in the company's SEC filings.

Additionally, this call will include certain non-GAAP financial measures, including adjusted EPS and adjusted EBITDA, or EBITDA as we refer to it on this call. Reconciliations of non-GAAP financial measures are included in earnings release and our SEC filings, which are available in the Investor Relations section of our website. We also refer to free cash flow, which we define as net cash provided by operating activities, less capital expenditures.

And with that, I'm pleased to turn the call over to Lachlan.

Thank you very much, Gabi. Before we start, I preemptively apologize for my coughing, the end of a cold, which Gabi and Steve are thrilled to be locked in a shady closet with me, but I'm -- you guys should all be thankful that your -- this is telephonic. Well, Gabi, thank you very much, and thank you all for joining us this morning as we discuss our fourth quarter and full year earnings results.

Fiscal 2025 was another outstanding year for FOX, demonstrating the strength operationally and financially across all of our businesses and delivering our best year yet. The year was highlighted by our strong financial performance with revenue growth of 17% to $16 billion, EBITDA growth of 26% to $3.6 billion, adjusted EPS growth of 39% to $4.78 per share and free cash flow growth of 100% to $3 billion, all records for FOX.

We also generated record political advertising revenue of well over $400 million across the FOX platforms. FOX's broadcast of Super Bowl LIX broke viewership and advertising records as the most watched telecast in U.S. history, generating over $800 million of gross advertising revenue. And engagement at FOX News led to a record audience share, reaching over 70% of the cable news audience at times during the year.

Our noteworthy fiscal 2025 results were underpinned by a 26% lift in total advertising revenue to $7 billion. The momentum we have reported over the first 3 quarters of our fiscal year continued unabated during the fourth quarter, with 7% growth over last year, despite tougher comparisons from last year's UEFA Euro and Copa America soccer tournaments.

As we look to fiscal '26, the overall advertising market for FOX continues to be healthy and robust, as evidenced by our recently concluded upfront where we achieved record-setting double-digit volume growth and strong pricing growth across our portfolio. The power of our brands and our ability to deliver engaged audiences at scale across our platforms is exceptionally strong.

Nowhere is that scale and engagement more evident than at FOX News. FOX News ended the fiscal year as it began as the most watched cable network in total day and in prime time. In the fourth quarter, total day audience was up 25% in total viewers and 31% in the demo, while maintaining over 60% share of the cable news audience.

And now for the second quarter in a row, FOX News was the second most watched network in Monday through Friday prime in all of television, surpassing all but 1 broadcast network. But it's not only linear news driving that performance. FOX News Digital achieved new records for engagement during the quarter with over 1.5 billion YouTube views and over 3.7 billion social media video views, our highest totals ever.

Engagement trends are off to a good start in the first quarter of this new year, with FOX News finishing as the highest rated television network in America for the month of July, no doubt, aided by must-watch programming by Jesse Watters Primetime and Gutfeld!, the leading late night program on television.

FOX Sports once again submitted its position, finishing the year first among all networks in live sports. That engagement was driven by an impressive portfolio of sporting events, including a riveting Major League Baseball post season, the launch of FOX COLLEGE FOOTBALL FRIDAYS, the NFL on Fox and, of course, the record-breaking Super Bowl LIX.

And while our fourth quarter has a lighter sports calendar, FOX's first presentation of the Indianapolis 500 was an unqualified success, averaging over 7 million viewers, a 41% gain over last year and the most watched running of the race in 17 years.

The power of live sports remains unmatched, and our sports portfolio is an increasing demand by advertisers and viewers alike. We expect that to continue as we charge ahead to autumn when we welcome back post-season baseball, the NFL and College Football on FOX. FOX's Big Noon Saturday kicks off on August 30, with a highly anticipated rematch of last season's college football playoffs semi-final Texas versus Ohio State.

By then, you will be able to watch our entire sports portfolio, along with our news and entertainment programming on FOX One, our direct-to-consumer streaming platform. FOX One is a truly innovative digital offering launching across the U.S. on August 21 for $19.99 per month. While FOX One will be marketed to cordless market, current pay TV subscribers will also have access to FOX One on an authenticated basis.

And yes, we will be offering bundling opportunities that make sense to achieve our targeted objectives. We have said before that our aspiration for FOX One subscribers are modest, and our measured investment toward this initiative will match these long-range goals.

Speaking of the cordless market, Tubi notched multiple achievements in fiscal 2025, including delivering the most streamed Super Bowl in history, exceeding 100 million monthly active users, generating over $1.1 billion in revenue and reaching an all-time high of 2.2% share of total U.S. television viewing. The sustained momentum we have seen at Tubi throughout this fiscal year continued into the fourth quarter with 17% growth in total view time, along with favorable progress in our direct response and partner channels, combining to drive revenue growth of 32% in the quarter.

Tubi's hard-to-reach audience resonates with advertisers looking to tap into the cordless market, as evidenced by this year's upfront results that saw Tubi volume grow over 35% year-on-year, while holding rates stable in a competitive connected TV market.

Fiscal 2025 was a decent year for FOX and a clear demonstration of the efficacy of our differentiated strategy, and there's more to come. On these calls, we have long said that we aspire to engage with our viewers wherever it suits them best. The traditional cable bundle remains our favorite distribution channel, as we believe it continues to provide exceptional value to consumers.

Tubi, with 2/3 of its users cordless and outside of the bundle, serves a massive market hungry for free premium content, and soon FOX One will additionally service another important audience segment, those wanting a paid targeted offering encompassing all FOX brands. These pillars of our distribution strategy provide us access to the largest audience possible and will underpin our growth in the years ahead.

We enter fiscal 2026 with solid operational and financial momentum across our company, and we look forward to another exciting year that will see the launch of FOX One in just a few weeks, the renewal of 1/4 of our distribution revenue, a healthy advertising environment and, of course, FOX broadcast of the FIFA Men's World Cup beginning later this fiscal year.

Underscoring our confidence in the trajectory of the business, this morning, we are announcing a $5 billion increase to our share repurchase authorization. With our balance sheet have never been stronger, we expect to continue repurchasing our shares while still accommodating our continued program of organic investment and preserving flexibility to thoughtfully invest in new businesses.

And with that, let me turn it over to Steve.

Thanks, Lachlan, and good morning, everyone. With a strong fourth quarter, capping off and shaping up to be a strong year, FOX delivered record financial results in fiscal '25, with record total company revenues of over $16 billion, growing 17% year-over-year and record adjusted EBITDA of $3.6 billion, growing an impressive 26% year-over-year, converting to record free cash flow of $3 billion.

Advertising revenues across the company were up 26%, with strong growth at both our Television and Cable Network Programming segments. This growth was driven by both our banner year of events, including record-breaking advertising revenues for both Super Bowl LIX and the Presidential election cycle as well as strength in our underlying core, highlighted by accelerating Tubi growth, robust news pricing and engagement growth and very healthy advertiser demand for our sports programming.

We successfully completed renewals with distributors, representing approximately 1/4 of our overall affiliate revenues this year, with the financial benefits of these renewals driving 5% growth in total company affiliate fee revenues, led by 7% growth at the Television segment. Total company other revenues were up 47% year-over-year, driven by higher sports sublicensing revenues at our Cable Network segment. As we have previously mentioned, this growth in revenue was largely offset by a corresponding increase in rights costs with no material impact on year-over-year overall EBITDA growth.

Total company expenses increased 14%, largely due to higher sports rights amortization and production costs, including costs associated with Super Bowl LIX and the sublicensing revenues I just mentioned.

Net income attributable to stockholders was $2.3 billion or $4.91 per share, up versus the $1.5 billion or $3.13 per share reported in fiscal '24. Excluding noncore items, full year adjusted net income was $2.2 billion, and adjusted EPS was $4.78 per share, up 39% year-over-year.

Turning to our fiscal fourth quarter. FOX delivered another quarter of impressive results, highlighted by a 6% increase in total revenues and 21% growth in adjusted EBITDA. Our advertising revenues increased 7%, led by continued growth at Tubi and strong engagement and pricing at News. Total company affiliate fee revenues grew 3% over the prior year quarter, once again demonstrating the strength of our brands and focused portfolio of channels. Other revenues grew 33%, driven by higher content revenues.

Net income attributable to FOX stockholders was $717 million or $1.57 per share as compared to the $319 million or $0.68 per share reported in the prior year period. Excluding noncore items, adjusted net income was $581 million, and adjusted EPS was $1.27, up 41% compared to the $0.90 per share recorded in the prior year.

Now let's turn to the Q4 performance of our operating segments, starting with the Cable Network Programming segment, which delivered 7% revenue growth and 6% EBITDA growth. Cable advertising revenues grew 15% over the prior year, driven by the strength in FOX News engagement and supported by healthy national and direct response pricing. Cable affiliate fee revenues grew 2% over the prior year period, as pricing gains from our affiliate renewals outpaced the impact from net subscriber declines, which were consistent with the prior quarter at under 7%.

Cable other revenues grew 39%, led by higher Fox Nation subscribers. Revenue growth at the Cable segment was partially offset by a 7% increase in expenses, primarily attributable to an increase in sports rights amortization and production costs.

Turning to our Television segment, which delivered 6% revenue growth. Advertising revenues at Television grew 3% over the prior year, led by continued growth at Tubi, which more than offset the tough comparison against the UEFA European championships and CONMEBOL Copa America in the prior year. Television affiliate fee revenues increased 4% in the quarter, as healthy growth in fees across both FOX owned and affiliated stations more than offset the impact from industry subscriber declines. Television other revenues were up 34% year-over-year, primarily due to higher content revenues tied to our entertainment production studios.

Expenses at the Television segment decreased 5%, primarily reflecting the absence of the prior year broadcast of the UEFA Euros. All in, EBITDA at our TV segment was $308 million, an increase of over 100% as compared to the prior year quarter.

Turning to cash flow, where we generated robust quarterly free cash flow of nearly $1.4 billion. This strong quarterly free cash flow delivery is consistent with the seasonality of our working capital cycle, where the first half of our fiscal year reflects the concentration of payments for sports rights and buildup of advertising-related receivables, both of which reverse in the second half of our fiscal year.

Before we get to capital allocation and balance sheet, it is worth noting some key items for this coming fiscal year. From an affiliate revenue perspective, in fiscal 2026, we have another relatively light year of renewals, with approximately 1/4 of our total company distribution revenues up for renewal. In fiscal '26, we expect to continue to invest in our digital-led growth initiatives. The excellent progress we have made at Tubi reinforces our confidence in Tubi's path to profitability, and its obvious asset value underscores the opportunity to drive ROI from our digital investments more broadly.

Tubi delivered moderate improvement in profitability in fiscal '25, in line with the expectations we laid out at the start of the year, and we anticipate a more substantial improvement in Tubi profitability in fiscal '26, which will be weighted toward the second half of the year. This total improvement will support our initial incremental investment in new opportunities, including LatAm sports and, more notably, the launch of FOX One, which will be more concentrated in the first half of our fiscal year, as we launch this offering this month.

From a cyclical event perspective, we look forward to our broadcast of the 2026 FIFA Men's World Cup, which will span our fiscal fourth quarter of '26 and first quarter of '27. We are encouraged by the momentum we are already generating and expect this North American World Cup to drive strong results for FOX.

And finally, as we look at free cash flow, the strong working capital tailwind from the Super Bowl in fiscal '25 will give way to working capital timing headwinds from the World Cup, where rights payments for the tournament will land in fiscal '26, while advertising receivables will be collected early in fiscal '27.

In terms of capital allocation, in fiscal '25, we repurchased an additional $1 billion through our share buyback program and made approximate $245 million in dividend payments. As Lachlan mentioned, underscoring our commitment to return capital to shareholders, today, we announced both an incremental buyback authorization of $5 billion and an increase in our semiannual dividend to $0.28 per share.

With the payment of this dividend and taking into account share repurchase activity since year-end, we will have cumulatively returned $8.5 billion of capital to our shareholders since the spin. This includes $6.65 billion of share repurchases, representing 31% of our total shares outstanding since the launch of the buyback program in November 2019. This is all supported by the strength of our balance sheet where we ended the quarter with approximately $5.4 billion in cash and $6.6 billion in debt.

With that, I'll turn the call back over to Gabi.

Thank you, Steve. And now we will be happy to take questions from the investment community.

[Operator Instructions] We have a question from Ben Swinburne with Morgan Stanley.

I'm going to ask Steve a question because I can't ask Lachlan a question. I'd be cruel. Hope you feel better.

Steve, you gave us a lot of good color thinking about fiscal '26. I know you're not going to guide. I'm sure you also know that consensus is expecting like, I think, a 10% decline in EBITDA. Obviously, you lap political on the Super Bowl. But I don't know if your revenue trends have been this strong in a long time.

So I'm just wondering if there's any way you can help us think about fiscal '26, maybe a little more specifically. One way might be just to talk about the sort of net drag on EBITDA from investment. If you sort of put it all together, all the puts and takes, that digital drag in '26 versus '25 or anything else you can tell us to help us think about your expectations for EBITDA in the year ahead.

Sure thing, Ben. And thank you for sparing Lachlan. Yes, there's a ton of puts and takes for '26. And you're right, listen, when we're -- when we assemble our plan for '26, it starts with the really strong foundation of what the underlying momentum in the business is, particularly with respect to audience and advertising demand for our sports and news verticals. So that's the starting point.

From an affiliate revenue perspective, as I've called out, it's relatively light in this coming fiscal year. So only 1/4 of the book is up for renewal. So we'll be more driven by where subscribers land over the course of the year. And if you look at sort of the next thing that sort of drives the results into next year, we've got a lot of moving parts from a cyclical event perspective. So we'll obviously have the political headwinds. And particularly, we'll see that in the TV segment from the stations, and that's a real sort of first quarter, second quarter phenomenon for us.

And so to give you some dimensioning of that, like I think the stations in the first half of the year in fiscal '25 did $270 million in political revenue. So we'll be swimming against that. We've obviously got Super Bowl in Q3, which will be an ad revenue negative for us. But from an EBITDA perspective, it's a bit of a push. And then we complete the year from a cyclical event perspective. We've got FIFA, which we have high hopes for in Q4 of the coming fiscal year and Q1 of the next fiscal year. The other put and take is MLB. We have massive MLB in Q1 and Q2 of fiscal '25. We hope for a blockbuster postseason again, but who knows.

And then to sort of address your digital growth, you'll remember, I think at the start of fiscal '24, we called out an envelope of about $350 million of EBITDA deficit that would be used towards funding our digital growth initiatives. And you will remember that we had expected that investment envelope to decrease in fiscal '25, and it has largely on the back of things like Tubi improving profitability.

And so I think when you look at fiscal '26 from that digital investment perspective, you should expect Tubi to improve quite a lot, but then -- and that will happen in the back half of our fiscal year. And then Q1 and Q2, we'll be looking to invest in things like Latin America and Fox One.

And when you put that all together, I think we're -- on a conservative sort of forecasting basis, I'd imagine that sort of collective investment portfolio moves back towards that $350 million mark.

We have a question from John Hodulik with UBS.

I don't know if this is for Lachlan or maybe Steve can handle it, but just an update on the cable advertising trends and the efforts to sort of expand the advertising base and the receptivity you're getting from advertisers there.

And then maybe, Steve, can you just follow up on the LatAm comments? Just what's the strategy there? I don't know if you can give us a sense of how much spending, but just what the plan is and the potential growth opportunities in LatAm.

Thanks, John. On the cable advertising trends, and we'll probably talk more later, someone asked about the sort of overall advertising market. But if you're speaking specifically about the incredibly positive momentum at FOX News, advertising is very strong, both from an upfront perspective, from a CPM perspective and direct response. So -- and this is all obviously driven off tremendous ratings.

I think in the fourth quarter, our P2+ ratings were up in both total day and prime about 25% and even better in the kind of all important demo 25 to 54, which we obviously sell to where in total day, we were up 31%. And in prime time, we were up, I think, 34%. So these -- this rating strength has really flown directly through to the 25% of our advertising revenue increase.

I think as you go forward and think about sort of the quarters ahead, obviously, this time last year, there was the kind of horror of the Butler assassination attempt on July 13 against then candidate Trump and then Biden dropping out of the race, I think, in a couple of weeks later, July 21. And so there was a big uplift in ratings then, which we've been able to sustain since then. But the comps do get harder.

Having said that, if you think about our share in July, so as we've started this first quarter, our share has actually marginally increased against our competitors. So in P2+ in total day, I think we're up to 64% of our cable news audience share versus MSNBC at 21%, CNN at 15%. And also in prime, the numbers are roughly the same. So we feel very good about maintaining our share and our elevated ratings, to be frank. And obviously, that will flow through to the advertising revenue line.

On LatAm, and Steven can talk to the numbers, but we're very excited about our purchase of Caliente TV, our streaming service in Mexico. The FOX brand remains incredibly strong, both in Mexico and Latin America, and we see it as an opportunity for us to sort of further grow with a relatively modest investment spend in those markets.

Steve, do you want to...

Yes. So John, in the quarter, so LatAm is kind of being 2 things for us. We've organically assembled some sports rights there, which impacted the P&L in this fiscal year and in this quarter, and that's in the sort of the low to mid-10s in terms of expenses on those. And then very recently, you would have noticed we acquired Caliente TV, which gives us a running start -- or a really fast start in terms of -- it's already got an SVOD platform there and already has distribution arrangements.

And so we would expect some investment spend over the course of this current fiscal year, but then once we get monetization into a sort of full force, then we'll start to see that come back to us.

We have a question from Michael Morris with Guggenheim.

Two, if I could, please. First, I just wanted to ask on Tubi. Appreciate the color and the strength you're seeing there. You're outpacing the broader CTV market pretty meaningfully. So I'd love to hear any detail on why you think you've been able to do that and how you feel about the ability to continue to beat the market in the coming year.

And then just bigger picture. There's been some press reports that ESPN and NFL might enter an agreement that would give the NFL an ownership stake in ESPN. And I'm curious if you could comment at all on what that might mean for FOX Sports and your relationship with NFL or sports leagues more broadly.

Thanks, Mike. So first, on Tubi, you're correct. Tubi is competing very well in the CTV market. This is obviously for a number of reasons that I think we've spoken about before, the core technology, the ad technology. I think we've now grown the library to over 300,000 movies and television titles. So it's clearly by a wide margin of the largest television and movie library in the country.

It reaches 2/3 of its users are outside of the traditional cable bundle. They're cordless. This is a very difficult market for advertisers to reach. And so it makes Tubi's engagement with our users incredibly valuable and coveted by our clients.

So all of these things come together to really make it a tremendous and exciting product that we are -- we were enjoying the growth of and then the growth that we see continuing into the future. Obviously, in the quarter, we've announced 17% total viewing time growth in the fourth quarter. We believe this sort of growth is relatively sustainable, and 32% revenue growth in the quarter and -- which is our highest growth of any of our segments. Tubi now, I think, achieves in the upfront -- about 25% of our upfront committed revenue. So it's really become a significant part of the business.

And if you look at our competitors, I think that stat on the cordless market, we reach more cordless viewers than sort of any of our competitor set. So it's not something that's actually simply applicable to the CTV market. The Tubi audience really does skew cordless and younger. And we saw that very much in the -- in our Super Bowl broadcast or [ summer ] cast earlier in the year.

Our median age watching the Super Bowl was 38 years old. It was younger and more female significantly than the broadcast audience. I think 40% of audience was between 18 and 34. And really, it was with the help of Tubi that really pushed the audience for the Super Bowl to the record highs of 128 million viewers that the Super Bowl achieved. I don't think broadcast would have achieved that -- statistically, broadcast wouldn't have achieved that alone without Tubi simulcasting the streaming. So we're incredibly excited about Tubi as we go forward.

On the NFL and the rumored -- I don't know if they'll announce something tomorrow, but the rumored investment into ESPN, we have tremendous relationship with the NFL. We appreciate that they -- they're fans of the broadcast and cable networks, and we look forward to working with them and deepening our relationship with them as we move forward.

We have a question from Michael Ng with Goldman Sachs.

I just wanted to follow up with Steve on the comments around the collective investments for fiscal '26. I think that implies at least $100 million to maybe $150 million of additional investments in LatAm and Fox One next year, just given the $50 million to $75 million improvement this year and the comments you made about Tubi profits further improving next year.

I just wanted to ask, is that kind of like the ballpark of the incremental investment levels that we're talking about? And maybe you can just help frame some of the expected returns on those investments, whether that be for LatAm or FOX One subscribers to just give a little bit more transparency there.

Thanks, Mike. So to go through your math, but in terms of the investment, I think where we were for this -- when you look at it collectively across the P&L, if I look at our digital growth investments, which isn't just Tubi, it's Tubi plus things like Nation, weather, across the portfolio, we're a touch under 300 across those for fiscal '25.

And what I'm basically saying is as we get improvement in those kind of businesses, those growth businesses have become more mature, we'll give some of that back toward these new initiatives and, in particular, FOX One and Latin America, where the collective goes back towards that $350 million mark. Now how we break that up and how we see that going through, I think we'll look at over the course of the year. But that's kind of the envelope we're looking at.

And then when you look at, I think, return profile, I think you should expect, like, Tubi is probably the best benchmark that we have, right, which is we've been investing in that. And as we have continued to see growth in that business and opportunity to continue to build in it, we've continued to invest in it. And now we're seeing at a point where we can continue to drive the growth and start to see sort of real meaningful profitability improvement over -- and that's been over 3 to 4 years. I imagine for both of those 2 new investments, whether it be Latin America or FOX One, you should be thinking around that same sort of profile.

Can I just answer that in a non-math? Part of your question has a non-math answer, just on FOX One because FOX One is the larger piece of the new investment. And it's important just to remember that none of the investment in FOX One is original programming or exclusive programming to that platform. FOX One will encompass all of our existing FOX content with the addition as well of the Fox Nation content on a tier. But none of that will include any incremental and sort of a sticky sort of additional spend.

So the new spend in FOX One, other than some overhead and some relatively modest tech costs, is really the marketing and launch costs of FOX One. And it's important to remember that our subscriber expectations or aspirations for FOX One are modest. And therefore, our marketing spend, we can -- is relatively modest compared to our peers as well, and it's something that we can toggle up and down depending on how FOX One is going and if we're meeting our relatively modest goal.

So I think that's an important context when we think about both the initial upfront cost of launching FOX One, but the sustainability of that business and the return profile of that business going forward.

We have a question from Jessica Reif Ehrlich with Bank of America Securities.

I guess, the first question is your balance sheet. Even if you did your full -- newly announced buyback, you still have flexibility. And clearly, the industry is going to do M&A in the current year or the coming year. How will FOX participate or not? Your investment needs, as you guys just outlined, very specifically, very modest at $350 million.

So just curious, it seems like it's finally going to happen maybe as soon as next week. So that's one. And then LatAm, maybe just to go back to something you mentioned on advertising, just kind of bigger picture. You guys are like clearly outpacing the market. And so you gave us some color on Tubi and FOX News. Just overall television, what are you guys seeing?

Yes. Sorry, Jessica. At the beginning of your question, I coughed. Your first question is on M&A overall and whether or not how we participate in any M&A activity, but the short answer is we don't have anything to announce. We look at all sorts of opportunities. We have a very high internal benchmark for the use of our capital. And so obviously, we reject out of hand anything that we think would not be a prudent use of that and our shareholders' capital as well.

So -- but we're always looking at opportunities, but we haven't found anything yet that sort of surpasses our sort of benchmarks in terms of what we feel we need to do to inorganically kind of grow the business. So we're pretty focused on our organic growth at the moment.

In terms of the overall ad market, the ad sales are across the business, very strong. Again, we've talked before about the ad market that we see versus the ad market maybe that the rest of the market sees. It is a little bit different because of the fortune of being so focused on the segments that we're in, particularly live news, live sports and, obviously, a successful free streaming platform such as Tubi.

Ad sales nationally, Jessica, are very strong, really led by pharma category, financial services category, consumer packaged goods category. And this really played out in the upfront where we saw double-digit volume increases and strong pricing growth across all of our businesses.

I think we've called out earlier that FOX Sports had the record-breaking upfront. If you exclude the impact of the Super Bowl. I'm thinking over $2 billion committed in the upfront. Tubi saw a 35% volume increase with stable pricing. I think the stable pricing on Tubi is important to call out because the CTV market is -- I know other people have mentioned this on their earnings calls, the CTV market is incredibly competitive, but Tubi has been competing and winning very strongly in that market.

I think while that market -- this is as an industry comment, while that market is competitive, it will remain the beneficiary of advertising revenue shifting from linear cable entertainment programming into digital and, frankly, also into news and then to sports. So the CTV market, the people you're fighting for that advertising revenue, we're the beneficiary of that, but we see the volume of advertising dollars continue to stream into that market pretty heavily.

Our sports upfront, as I mentioned, was very strong and remains healthy. It's a single data point, but we had record revenue for the Major League All-Star game. The demand far outstripped the supply of our spots in that game. The NFL, College Football all are pacing very well. And we're incredibly encouraged by the demand that kind of -- incredible demand for the FIFA World Cup later on in the year.

News, we've talked about before, DR pricing is up by 30%. Scatter pricing in news is up 54% above the upfront. So all very good. The local market is the one that remains mixed with gains from, again, like National, a strong pharmaceutical segment, but that's offset by telecom. And I believe, restaurants are offsetting those gains in pharmaceutical.

And then just finally, and we talked about Tubi, but on entertainment, very healthy with double-digit increases in scatter pricing. So the advertising market is robust for us and strong, and it really is propelling us forward.

We have a question from Steven Cahall with Wells Fargo.

So first, Lachlan, sorry to make you speak, but you did mention that there could be some bundles coming for FOX One. I was just wondering how you think about different partners there. One partner has probably the most sports rights. There are some others who could be kind of complementary to your afternoon NFL package. And also how you think about sort of integrating apps versus just having them be sort of more pricing bundles for consumers.

And then over on the TV side of things. The FCC has been much more vocal around, I think, what it's kind of expecting in terms of reverse comp and splits between networks and affiliates. Do you think things have changed in this outlook for your network business and your relationship with affiliates? And is there any meaningful financial impact we need to think about for the next couple of years from that?

Thanks, Steve. Let me start with the -- obviously, within the order of your question with FOX One and bundling. We will bundle FOX One with other services. That's absolutely in our marketing and sort of launch plans, but it will also be obviously available, the $19.99 as a standalone service.

One thing is with the bundles that we're cognizant of, there's 2 factors. One is to offer the consumer the most convenient package of our content and channels and others that they desire to subscribe to. And so the most convenient, the most sort of valuable bundles that you could put together, we'll be in a position to help them do that. But we're also very focused at keeping FOX One as a very targeted service, that's targeted on the cordless audience. And sometimes, those 2 things can conflict with each other.

So we want to stay very targeted, but we also want to make it easy for our consumers and our viewers to gain our content, whether it's in conjunction with other services or not. We don't really see -- and you'll understand this on the 21st when you see FOX One. We don't really see this as a service that is -- that you can compare to a separate bundle of channels only. The FOX One user interface is incredibly innovative. It can be very highly personalized and relies on some really very sort of clever technology to offer something that's truly unique in the marketplace. So we see FOX One as all of our brands, all of our content, but in a truly kind of unique and, I think, important user interface that will be very cutting edge.

On FCC and affiliate, we are -- well, first of all, I should say, on the FCC, we're very pleased that under the new leadership of the FCC, the FCC is pro-local stations, is pro-competitive. They bring a lot of fresh ideas to the regulatory environment, and we're very pleased to see that.

As regards to how it affects our affiliates, we remain, I think, the most affiliate-focused company -- certainly broadcasting company in this country. And we don't really see it impacting in any way with our affiliate relationships. If anything, it could improve them.

I should mention, because it joins the 2 questions together. FOX One will uniquely combine both our FOX content, but our local affiliate's content. If you're FOX One -- our aspiration is if you're a FOX One subscriber, you will be getting your local sports and local news not just through our owned and owned stations, but our affiliate stations as well available to you on that app. So we're excited and we're very happy to be pro our local affiliate groups and local independent stations. I think that's an important place for us to be in the marketplace.

Great. At this point, we're out of time. But if you have any further questions, please give me or Charlie Costanzo a call. Thanks again for joining us today.

Thank you.

Thanks, everyone. Thank you.

Ladies and gentlemen, that does conclude the Fox Corporation fourth quarter fiscal year 2025 earnings conference call. Thank you.