Fox Corporation reported fiscal Q2 2026 total revenue of $5.18 billion, up 2% year-over-year, driven by a 4% increase in distribution revenue and a 1% rise in advertising revenue despite tough political comparisons. Adjusted EBITDA declined to $692 million from $781 million in the prior year due to higher sports programming costs and investments in digital growth initiatives, while Adjusted EPS came in at $0.82. Key performance drivers included record-breaking sports ad revenue (NFL, MLB, College Football), Tubi achieving its highest revenue and second consecutive quarter of EBITDA profitability, and the successful launch of Fox One. Management highlighted 'unabated healthy trends' in the advertising market, with scatter pricing at Fox News up 46-47%, and announced $1.8 billion in share repurchases and a new $0.28 per share dividend.
| Metric | Value | Change |
|---|---|---|
| Total Revenue | $5.18 billion | +2% |
| Advertising Revenue | N/A | +1% |
| Distribution Revenue | N/A | +4% |
| Adjusted EBITDA | $692 million | -11% |
| Adjusted EPS | $0.82 | -1% vs prior year $0.83 est |
| Cable Ad Revenue | N/A | +7% |
| Tubi Revenue | Record | +19% |
| Share Repurchases | $1.8 billion | N/A |
| Linear Sub Decline | <6.5% | Improving |
Management emphasized that Fox is currently experiencing the 'most robust advertising market we have seen for some time,' with 'unabated healthy trends' continuing into the second half. This strength is evidenced by a 7% increase in cable advertising revenue and scatter pricing at Fox News rising 46-47% year-over-year. The company added 200 new advertisers in the quarter, suggesting that the core news and sports franchises are becoming even more vital to advertisers, reinforcing the investment thesis of Fox as a safe haven for ad dollars in a fragmented market.
Tubi has reached a significant inflection point, delivering record revenue (up 19% YoY) and achieving EBITDA profitability for the second consecutive quarter. Management noted that 95% of consumption is on-demand, attracting a younger, cord-cutting demographic that is hard to reach elsewhere. This signals that Fox's streaming strategy is capital-efficient and accretive to earnings, distinguishing it from peers who are burning cash on streaming initiatives.
The launch of Fox One is exceeding internal expectations just five months in, with management noting 'no noticeable cannibalization of traditional subscribers.' The platform is driving engagement, with news viewers watching nearly three times as many minutes as non-news viewers. This positions Fox to capture the 'cord-never' demographic while maintaining the lucrative linear bundle, effectively de-risking the transition to digital.
Fox is positioning itself as a 'net beneficiary' of the emerging 'skinny bundle' trend. Management explained that they sell their entire bouquet of channels to distributors, who then have flexibility on packaging. This structure ensures Fox gets paid regardless of how the bundle is marketed to consumers, mitigating the risk of revenue erosion as distributors offer sports-only or news-only packages.
Management addressed the upcoming NFL rights renegotiation by highlighting the 'certainty' the new deal provides and their ability to 'rebalance' the sports portfolio to offset cost increases. They also highlighted the FIFA World Cup in June as a profitable event. This signals a disciplined approach to capital allocation regarding sports rights, prioritizing ROI over mere volume of content.
Adjusted EBITDA declined 11% year-over-year to $692 million, primarily driven by higher sports programming and production costs. While management frames this as investment-driven, the compression in margins raises concerns about whether the growth in digital (Tubi, Fox One) can scale fast enough to offset the structural cost inflation of major sports rights like the NFL and World Cup.
The Television segment reported a significant drop in EBITDA to $143 million from $205 million in the prior year, a decline of roughly 30%. Management attributed this to the timing of entertainment content deliveries and higher sports costs. This volatility in the TV segment highlights the reliance on sports economics and the lumpy nature of entertainment content revenue.
Free cash flow turned negative to the tune of a $71 million deficit. While management attributes this to the seasonality of sports rights payments and ad receivables, investors should monitor if the heavy capital expenditure on sports rights and the ramp-up of Fox One will constrain FCF conversion in the second half of the year.
Management acknowledged that linear subscriber declines are still occurring, albeit improving to sub-6.5%. They also chose to exclude Fox One subscribers from the core subscriber count 'out of an abundance of caution,' which obscures the true net addition rate of the ecosystem. If Fox One growth slows or if skinny bundles fail to gain traction, the core linear decline could accelerate.
Overall: Management exhibited a highly confident and enthusiastic demeanor throughout the call, frequently using strong superlatives to describe market conditions and operational execution. Lachlan Murdoch was particularly assertive regarding the strength of the advertising market and the strategic value of Fox's live content portfolio, while Steve Tomsic provided a measured and detailed financial overview. There was no detectable shift to defensiveness during the Q&A, even when addressing EBITDA compression or rising sports costs.
Confidence: HIGH - Management used definitive language ('unabated', 'unmatched', 'astounding') and backed up their optimism with specific metrics such as 46% scatter pricing increases and record revenue figures. Their willingness to aggressively buy back shares ($1.8B in the quarter) further underscores high confidence in cash generation and business stability.
Unabated healthy trends continue; most robust market seen in some time.
Expect a robust political advertising cycle; Fox News positioned as primary beneficiary.
Expect low to mid-single digit millions over the next 3-4 years.
Expected to be profitable.
Fox is a net beneficiary; expects them to be a positive factor in keeping sub declines down.
Hedging & Uncertainty: Management used very little hedging when discussing current performance, utilizing definitive terms like 'unabated,' 'unmatched,' and 'astounding' to describe results. However, hedging appeared when discussing future costs and specific contract terms. For example, regarding the NFL rights, Lachlan Murdoch stated, 'we have the ability to offset a portion of any kind of cost increases,' rather than guaranteeing margin expansion. He also avoided speculating on specific World Cup profitability numbers beyond confirming it would be positive. This suggests confidence in the current business but caution regarding the precise financial impact of upcoming major events.
Scatter pricing is very strong... up sort of an embarrassing, 46 or 47% year on year. - Lachlan Murdoch, Executive Chair and CEO
We are a net beneficiary of skinny bundles. - Lachlan Murdoch, Executive Chair and CEO
Tubi... achieving EBITDA profitability for the second quarter in a row. - Lachlan Murdoch, Executive Chair and CEO
We have the ability to offset a portion of any kind of cost increases. - Lachlan Murdoch, Executive Chair and CEO
We're up about 8% [CAGR]... At Fox. - Lachlan Murdoch, Executive Chair and CEO
Analyst Sentiment: Analysts were highly engaged, focusing heavily on the sustainability of the advertising pricing power and the mechanics of the new Fox One streaming product. Questions were constructive but probing regarding the financial impact of rising NFL rights costs and the specific accounting for Fox One subscribers.
Management Responses: Lachlan Murdoch handled the majority of the Q&A, providing detailed, data-rich answers that reinforced his confidence. He was particularly transparent about ad pricing (calling the growth 'embarrassing') and defensive regarding the structure of skinny bundle deals. Steve Tomsic provided technical clarity on P&L accounting for Fox One.
Cable advertising pricing strength and scatter market dynamics.
The financial impact and subscriber accounting of the Fox One launch.
Strategies to offset rising NFL rights costs.
Tubi's revenue growth drivers and path to profitability.
The impact of 'skinny bundles' on linear subscriber declines.
Fox Corporation is demonstrating exceptional resilience in a challenging media environment, leveraging its must-have live sports and news assets to drive pricing power that far exceeds industry peers. The 46% increase in scatter pricing and the rapid profitability of Tubi prove that the company can monetize digital audiences without sacrificing margins. The successful launch of Fox One and the aggressive $1.8B share repurchase program signal management's confidence in the cash flow generation capabilities of the core business. While near-term EBITDA faces pressure from sports rights costs, the strategic positioning for the upcoming political cycle and World Cup, combined with a 'net beneficiary' status in the skinny bundle transition, provides a strong setup for sustained growth. The hidden asset value in FanDuel/Flutter further enhances the investment case.
Fox is experiencing the most robust ad market in years, with 8 of the top 10 ad categories up significantly, led by financial services and insurance.
Management anticipates a robust political advertising cycle, with Fox News positioned to capture national spend due to its cross-party viewership dominance.
Linear declines are improving (sub-6.5%) due to the emergence of 'skinny bundles,' which Fox views as a net positive rather than a threat.
Management views prediction markets and sports betting as a growing advertising revenue opportunity, leveraging their stake in FanDuel.