Ladies and gentlemen, thank you for standing by. Welcome to the FOX Corporation Fourth Quarter Fiscal Year 2023 Earnings Conference Call. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session. [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 2023 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 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. And with that, I'm pleased to turn the call over to Lachlan.

Thanks, Gabby, and thanks everyone for joining us this morning. With this morning's earnings release, we closed out a very strong fiscal 2023, fueled by successes across every aspect of our business. While Steve will cover the details of the fourth quarter in just a moment, for the full year we generated record annual revenue and EBITDA. Notably, we reported revenue growth of 7%, including 12% advertising growth, supported by major tentpole events like the midterm election, Super Bowl LVII and the FIFA Men's World Cup, as well as outstanding growth of Tubi and 3% affiliate growth led by the first one-third of our distribution renewal cycle. These results demonstrate that FOX's differentiated strategy continues to deliver engaged audiences at scale for our advertising and distribution partners across our sports and news verticals, while also driving exceptional growth across our digital businesses. In a world of increasing audience fragmentation FOX's collective linear and digital viewership was up 8% year-over-year. The onscreen reflection of that strategy was clearly apparent throughout fiscal '23 across our networks and platforms. FOX's broadcast of Super Bowl LVII was the most watched TV show of all time. Our Thanksgiving Day game was the most watched NFL regular season game of all time and the US-England match was the most watched US Men's World Cup match of all time. FOX News maintained its lead as both a top-rated national cable news channel, as well as the top-rated network across the entire cable ecosystem and ranks as the number two national network in all of US Television. And on the streaming front, Tubi made its debut in Nielsen's The Gauge, growing total consumption in fiscal 2023 by 79%, making it the number one AVOD player with consumption levels equal to a top five cable network. Tubi's fiscal '23…

Thanks, Lachlan, and good morning, everyone. Fox delivered strong financial results for fiscal 2023 with total company revenue growth of 7% and record EBITDA. Advertising revenues across the company were up 12% led by a 17% increase in our television segment, made all the more impressive when comparing against revenues generated from last year's broadcast to Thursday night football. This growth was driven by a banner year of events including the record-breaking Super Bowl LVII, FIFA Men's World Cup and the midterm election cycle along with the considerable momentum we are driving at Tubi. We completed approximately one-third of our distribution renewals this year, supporting the lift in our total company affiliate fee revenues of 3%. As signaled previously, the impact from these initial renewals primarily benefited our television segment leading to an 8% increase year-over-year. Total company other revenues saw a 5% increase, the result of the full year impact of MarVista, TMZ and Studio Ramsay Global which were acquired in fiscal 2022 along with the higher FOX Nation subscription revenues. From a bottom line perspective, this robust company-wide revenue growth was the key driver of the 8% increase in full year EBITDA to $3.19 billion. Net income attributable to stockholders was $1.24 billion or $2.33 per share, up versus $1.21 billion or $2.11 per share reported in fiscal 2022. As you may recall, other net was impacted this year by charges associated with the FOX News Media litigation and the gain associated with the change in fair value of the company's investment in Flutter. Excluding this impact and other non-core items, full year adjusted net income increased 17% to $1.87 billion with adjusted EPS up 26% to $3.51 per share. Turning to our fiscal fourth quarter results, Fox delivered total company revenues of $3.03 billion which is consistent…

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

[Operator Instructions] Your first question comes from the line of Phil Cusick from JPMorgan. Please go ahead.

Hi, guys. A couple of quick ones, if I can. First, ESPN talking about looking for partners. Given your portfolio of sports rights, could a sports-centric JV makes sense for FOX? And alternatively would a league investment in a peer or competitor run into legal issues? And then second, can you just give us any update on the overall ad environment including demand for linear and -- versus digital? Thank you.

Hi, Phil. Hi, good morning. Thanks for the questions. So as regards, FOX Sports and our sports portfolio and any sort of direct-to-consumer proposition I think the -- our business is fundamentally very similar to ESPN's. And so, we face the same strategic priorities as they do and probably looking at doing -- looking at similar paths forward, as we go forward with our portfolio. The thing that we put first and foremost is, really to protect our premium sports content and place it in front of consumers, wherever we can. At the moment, that premium content drives the most value from being behind a paywall, within the traditional cable and satellite pay-TV universe. And we think that pay-TV ecosystem, continues to be of tremendous value for our businesses and really drives the value of FOX Sports and that content, and will for a long time to come. Having said that, as consumer demands change, consumer tastes change, we will endeavor to put our content and our brands in front of consumers in whichever manner, makes the most sense for them, provided that it remains behind a pay wall and we get full value for those rights and those brands. But it's very important to say, it's not an either-or proposition. It's not a -- we don't envision a moment, when you leave a pay-TV universe and quickly transition to a direct-to-consumer universe, we think you'll enter a phase where both are important. You're not choosing between one or the other or ultimately, the consumer might choose between one or the other, but we'll be well positioned in any distribution mechanism. So as -- I can't answer your question on the legal ramifications, of having league investors in AM in a platform. But I can give you an update, on the broader advertising environment. We're very pleased with our upfront from a national advertising perspective. Our upfront results, were very pleasing. We were able to drive both pricing and volume, across our key categories of news and sports. And obviously, you've heard about the tremendous growth at Tubi, this past quarter and in fact all year. Categories that really impacted the upfront, were like positive -- in August for national remaining with national auto mobiles, very strong category for us travel in the upfront very strong in pharmaceuticals. From a local perspective, if you look at a local pacing, ex-political obviously, we've got a year-on-year comparison with very strong political year, last year. Ex-political, we're pacing flat to slightly up. That includes some of the local digital revenues. And those categories similar auto was very strong. Financial service was strong. Health, but offset by softness in sort of retail telecom, and we know as we've talked about in past quarters our wagering. So overall, we're very pleased with where we are and we think we're going to have a pretty decent second half -- calendar second half.

Your next question comes from the line of Jessica Reif from Bank of America. Please go ahead.

Thank you. Just moving back to the balance sheet. I know, you've commented in your prepared remarks, but litigation aside, you really do have the strongest balance sheet. And at this point, it feels -- it seems like there are attractive assets possible, attractive assets at depressed multiples. Can you give us a little bit more of your thought process in terms of what you – what areas are interesting to you, or is it really just about returning capital to shareholders? And then on content, you mentioned the sports step-up with the NFL, but overall content spend like entertainment, are you rethinking, how you're spending on entertainment both overall content spend up or down in coming years?

Thanks very much, Jessica. On the balance sheet and Steve can chime in, but we continue to agree with you wholeheartedly, that I think we have the best balance sheet in the business. It gives us tremendous flexibility moving forward in both how we return capital to shareholders, whether it's through dividends or share repurchases. I think Steve mentioned in his remarks, I mean we repurchased $2 billion worth of shares this past year. That's probably an elevated level because as we look across the landscape, we didn't see any attractive M&A opportunities this past year that particularly caught our attention. We are always looking for businesses that fit our portfolio that will be attractive growth businesses for the business. But we take this with a – what's the word dispassion – dispassionate kind of view in terms of what's going to drive the best sort of long-term shareholder value. So we balance up return of capital and sort of accretive value opportunities on pretty much a daily basis. So Steve, do you want to add anything to that?

Yes. No, I think that's exactly right, Lachlan. The balance sheet that we've assembled gives us the flexibility to look at everything and we'll ultimately do what delivers ultimately the best value for shareholders. Jessica just on your content spend question. Next year is a bit of – the year-on-year change is heavily influenced by the fact that we don't have a Super Bowl running through the amortization line of our content costs. But if you look sort of through that, we would expect content spend to increase. We've got increasing rights amortization costs of the sports business. The entertainment business from a linear perspective probably holds steady, if you normalize for the strike. It will probably be down, given the strike. But then we're going to continue to invest in content at Tubi. Some of that is passive in the form of revenue share payments but we'll also be active in terms of production and licensing costs and use as a relatively sort of low growth but continued growth in increased spend in content. So hopefully, that gives you enough color there.

Operator, next question, please.

Next question comes from the line of John Hodulik from UBS. Please go ahead.

Thanks. You guys recently announced that you'll be winding down FOX Bet. So I guess three quick ones. Sort of first any financial implications to that? Has your view on the sort of sports betting opportunity in the US changed? And anything you could tell us about your sports betting strategy going forward? Thanks.

Thanks, John. Why don't I start back to front with the strategy and the shuttering of FOX Bet, the joint venture at least end – and Steve can jump in on the financial implications. So yes, as we announced last week, it was announced last week, Flutter exercised its right to terminate the FOX Bet joint venture. They have every right to do this. They were the operator and really the entire funder of FOX Bet. And when they reached a certain benchmark investment, they had the right to cancel that joint venture and really chose to focus on their other brand FanDuel, which is America's number one sports wagering site. So while it's fair to say we were disappointed by this outcome, ultimately we aspire to be operators of a wagering – sports wagering business. Now we did anticipate it. And I can't stress more that we are extremely pleased with the financial outcome and the value creation through FOX Bet that we have generated for all of our shareholders. And to explain that, I should just step back a moment and remind everyone of a couple of things. FOX Bet, we didn't spend any capital in FOX Bet. That was entirely funded by Flutter. And we had the option to pick up 50% of FOX Bet upon licensing if we became a licensed betting operator in the United States. So while we didn't put any cash into the FOX Bet joint venture, I think, we've derived -- we were extremely successful and we derived significant value from it. One of the remaining elements of value coming out of FOX Bet is the brand of FOX Bet Super 6, which is the most successful free-to-play wagering business in the United States and offers a tremendous funnel for wagering sites…

Yes. That's a pretty comprehensive overview and financial overview. So financially just to reiterate as Lachlan mentioned we weren't funding the business at all. So there's no change to us from that perspective. There were some pretty small, sort of, commercial payments between FOX Bet and Fox, which will be -- which are immaterial to us in the grand scheme of things and is potentially ameliorated by the fact that we're now sort of free to look at other partnerships. So from that perspective I think it's a bit of a push either way. And then as Lachlan mentioned we absolutely preserve the value of the FanDuel option which is very valuable to us as well as the value of our holding in the headstock. But, I think, Lachlan covered it pretty well in his opening remarks.

Operator next question please.

Your next question comes from the line of Ben Swinburne from Morgan Stanley. Please go ahead.

Thanks. Good morning. Lachlan can you talk a little bit more about the long-term strategy around Tubi, particularly, on the programming side how you see that product evolving over a multiyear period? And I don't know if --I apologize if you guys have already talked about it but any sense of, sort of, the impact from EBITDA Tubi? Is that still in investment mode? Like when do you see that turning profitable? And I was just curious if you could talk about the Big Ten quickly with the additional expansion whether that's going to have a notable financial impact as you guys go into the season as the Big Ten becomes I think the Big 16 now? Thank you.

Thanks, Ben. Look first on Tubi the – obviously, Anjali she starts September 1 and we're looking forward to her adding her expertise and experience to the business. And obviously with any incoming CEO, I'm sure you'll see it with fresh eyes and find fresh opportunities. If you look at the Tubi business today, the TBT growth has really been everything. It's grown tremendously rapidly and strongly. And then what that's done is then that's obviously driven advertising opportunities and revenue. TBT growth continues to grow at a faster pace than revenue. So you see fill rates not actually keeping up to pace with TBT growth, which is a good thing, because there's actually more opportunities to place our clients' advertising than we can fill at the moment and that's really driven by the strong viewership growth. I think over time, and I should also say with the viewership growth I think one of the key differentiators for Tubi, if you look across the AVOD market is that it's primarily built on an on-demand platform. So our viewers are actively -- proactively clicking on content to watch. And so we know, they're engaged and we know they're in front of their screens watching that content. This is very different from just a fast channel where someone might tune in the channel and then leave it on and it auto plays in the background. There's an absolute room and a place for fast channels. Tubi has a fast channel service within it. But I think 90% of his viewing is actually from video-on-demand people proactively clicking on that content and coming to us to watch that movie or that TV show. And the library of those movies and TV shows continues to grow. I think this time last quarter, we had 55,000 titles. We now have 60,000 titles which equates to roughly 200,000 hours of individual movies and TV shows for our consumers to enjoy. So that will continue. I think one of the areas that we'll be looking at is expanding the categories that we're strong in. There's certain sort of content categories and verticals that we are super serving and other ones that we can continue to -- there's some low-hanging fruit to continue to monetize. Steve, do you want to talk to the EBITDA investment?

Yeah. Sure. So Ben, I'm not sure, if you caught it in the opening remarks. In terms of Tubi the investment for the full year was sort of in the low to mid negative 200 range, which is similar to where we had it in fiscal 2022. The quarter we were actually better we were better by nearly $30 million. As we look to 2024 Tubi's an absolute shining light from our growth portfolio our digital portfolio. And given the momentum, we're seeing in the business, whether it be what we just saw in Q4 what we're seeing already in July, it sort of behooves us to continue to invest in that business. And so you should expect to see the same net investment level or even a bit more going into fiscal 2024, but that will be offset as we look at the broader growth portfolio by things like nation weather USFL sort of coming back a bit in terms of investment. So -- but we were pretty excited and sort of very convinced of Tubi so we're going to continue to maintain our leadership position there.

And just finally on the Big Ten as regards to University of Oregon and University of Washington coming into the Big Ten conference, look, we just think these additions will only strengthen our call it football franchise across FOX Sports, but particularly our partnership and it is a partnership in the Big Ten Network. So we think it's very positive for us across the board.

Operator, we have time for one more question.

Okay. That question comes from the line of Robert Fishman from MoffettNathanson. Please go ahead.

Good evening. After seeing some of the news earlier this year with CBS and its affiliates negotiating with the vMVPDs can you just help us think about how Fox's relationship is with affiliates today? And with this backdrop, if you can talk about your confidence about continuing to grow affiliate fees despite the elevated levels of cord cutting? Thank you.

Thank you very much, Robert. So look, our relation with affiliates is very strong. We catch up with them regularly. And we understand the headwinds facing broadcast television. And we're without -- in our station group right we see -- have all the same issues that they have. So we're simpatico with them in both the opportunities and the risk of the headwinds in that business. We are pretty -- what's the word vocal or proud of the fact that we've protected our key sports franchises for pay- TV environment, but also the -- for our affiliates, our distribution our most important distribution partners. We don't take our NFL games and put them anywhere else. We keep them exclusive for our distribution partners. And I think that's understood and very well received. And because of that, I think we will be able to continue to drive the sort of industry-leading pricing, both in a pay universe and free universe. And that pricing will certainly continue to ameliorate or balance any reduction in subscriber erosion and subscribers across the universe. So, that's where we feel we are with our affiliates. And I think, we're in a pretty good place for them.

Great. At this point we are out of time. But if you have any further questions, please give me or Dan Carey a call. Thank you once again for joining today's call.

Thank you.

Ladies and gentlemen, that does conclude your conference for today. Thank you for your participation and for using AT&T Executive Teleconference. You may now disconnect.