Sports betting boosts Fox revenue, busts Fox income

Fox Corp. flipped into the red in the second quarter of its 2022 fiscal year, losing $73 million compared to the $230 million profit it reported in the year-ago quarter. That yielded a net loss per share attributable to Fox shareholders of $.15, versus a per-share profit of $.37 a year earlier.

Over the three months that ended Dec. 31, 2021, Fox reported total revenue of $4.4 billion—9% above the year-ago quarter—with advertising income accounting for $2.4 billion and affiliate fees for $1.7 billion.

The latter showed stronger growth than the former, with affiliate income jumping by 10% and ads increasing by 6%. On Fox’s 40-minute earnings call Wednesday, CFO Steve Tomsic and CEO Lachlan Murdoch noted that the ad-revenue bump happened in a quarter that lacked the year-ago quarter’s nearly $250 million in political-ad revenue.

“Our local advertising revenues have now fully recovered from the impact of COVID and are up over pre-pandemic levels,” Murdoch said. Sports-betting spots led that growth.

But while the sports-book business boosted Fox’s income, it also depressed the company’s bottom line. Tomsic said on the call that the quarterly loss (mysteriously attributed in the earnings release to “the change in fair value of the Company’s investments recognized in Other, net”) reflected a drop in the value of Fox’s investment in the Irish sports-betting firm Flutter Entertainment.

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Murdoch crowed about Fox News’ industry-leading ratings, including a 55% share of total day cable news viewership in the quarter. “Fox News’ audience was also the most politically diverse, with more independents and Democrats tuning into the network than to our competitors,” he commented.

Fox Sports benefited from high football viewership, with a third of the minutes spent viewing college and NFL football during the 2021 regular season happening on Fox. The channel will see Thursday Night Football become an Amazon streaming exclusive in the next season, but Fox is bullish on the launch next April of the U.S. Football League, in which it’s invested a reported $150 million.

As he has on prior calls, Murdoch touted the growth of Fox’s digital properties without citing total audience numbers. The CEO said the Fox Nation streaming-video service saw a 30% growth in subscribers over the year-ago quarter with “very low churn,” and the new Fox Weather service, newly available on Amazon Fire TV, Roku Channel and YouTube TV, “is off to a great start.”

Murdoch offered similar praise for Tubi, the ad-supported TV service that Fox bought for $440 million in 2020. With the quarter featuring 54 of Tubi’s top 100 revenue days and 55 of its top 100 viewer days, he said “Q2 represented Tubi’s best-performing quarter ever, and December its best performing month.”

Tubi had 3.6 billion hours of video streamed in 2021, up 40% from 2020, with its list of titles now above 41,000.

Murdoch said those figures showed the validity of Fox’s decision to avoid the vast investments in original content at streaming rivals like Amazon and Netflix and instead focus on its AVOD business model.

“There are no competing priorities internally, and no revenue transfer from other assets in our portfolio,” he said. “Tubi revenue is truly incremental for us.”