Fox Corporation reported fiscal Q2 2026 total revenue of $5.18 billion, a 2% increase year-over-year, driven by a 4% rise in distribution revenue and a 1% increase in advertising revenue despite tough political comparisons. Adjusted EPS came in at $0.82, with Adjusted EBITDA declining to $692 million due to higher sports programming costs and investments in digital initiatives. Key performance drivers included record-breaking advertising revenues across sports (NFL, MLB) and Fox News achieving its highest second-quarter ad revenue ever, supported by scatter pricing increases of 46-47%. Strategic highlights featured the Tubi streaming platform delivering record revenue (up 19%) and achieving EBITDA profitability for the second consecutive quarter, while the new Fox One streaming service exceeded expectations with no observed cannibalization of traditional subscribers. Management expressed high confidence entering the second half of the fiscal year, citing a robust advertising market and the upcoming FIFA World Cup, while returning significant capital to shareholders through $1.8 billion in share buybacks 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% (from $781M) |
| Adjusted EPS | $0.82 | -1.2% (from $0.83 est/implied) |
| Tubi Revenue Growth | N/A | +19% |
| Cable Advertising Revenue | N/A | +7% |
| Subscriber Decline | -6.3% | Improving |
| Share Repurchases (Quarter) | $1.8 billion | N/A |
Management emphasized that the company is experiencing 'the most robust advertising market we have seen for some time,' signaling a strategic pivot away from reliance on political cyclicality to core market strength. This is evidenced by Fox News adding 200 new advertisers in the first half alone and achieving record Q2 ad revenue despite the absence of a prior-year political cycle. The 46-47% increase in scatter pricing indicates significant pricing power and leverage in the upcoming upfront negotiations, reinforcing the 'must-have' nature of Fox's live content.
The successful launch and scaling of Fox One represents a critical strategic shift in distribution, mitigating linear subscriber declines. Management noted that Fox One 'exceeded our expectations' and has not cannibalized traditional subscribers, allowing them to target cord-cutters and cord-nevers directly. With low-to-mid-single-digit millions of subscribers expected in the next few years, Fox One is becoming a key lever for stabilizing distribution revenue, which grew 4% this quarter, and improving the overall subscriber trend to a decline of just 6.3%.
Tubi has evolved from a growth experiment to a profitability engine, achieving EBITDA profitability for the second consecutive quarter with record revenue growth of 19%. The strategic focus on on-demand content (95% of consumption) and a younger, diverse demographic (70% cord-cutters/nevers) positions Fox to capture ad dollars that are leaving linear TV. Management's focus on Tubi's 'most streamed quarter' and 27% growth in view time signals that streaming is now a core earnings driver rather than just a speculative investment.
Fox is leveraging its 'live' advantage to defend and expand its market position against digital competitors. Management highlighted that Fox Sports leads in live sports viewership and Fox News is #1 across all political parties, creating a 'trusted destination' moat. The upcoming FIFA World Cup was confirmed as profitable, and management expressed confidence in offsetting rising NFL rights costs through portfolio rebalancing, suggesting a disciplined capital allocation strategy that prioritizes high-ROI live assets over general entertainment content.
Adjusted EBITDA declined by $89 million year-over-year to $692 million, compressing from $781 million in the prior year despite revenue growth. This margin compression was attributed directly to 'higher sports programming and production costs' and 'growth-driven spend at our digital-led growth initiatives.' Investors should monitor if the investments in Fox One and Tubi, combined with rising sports rights costs (specifically the upcoming NFL renewal), will sustainably pressure margins before digital scales sufficiently to offset them.
The Television segment reported a significant drop in EBITDA, falling to $143 million from $205 million in the prior year, a decline of roughly 30%. Management attributed this to 'lower revenues tied to our entertainment production studios' due to timing of deliveries and higher sports costs. While entertainment revenue was up, the volatility in studio production revenue and the heavy cost burden of sports rights on the Television segment P&L creates a potential earnings headwind if content delivery schedules slip.
Free Cash Flow turned negative to the tune of a $71 million deficit, attributed to the seasonality of sports rights payments and working capital buildup. While management expects this to reverse in the second half, the increasing capital intensity of sports rights (exacerbated by the NFL rights step-up) requires constant vigilance regarding cash flow generation. The company is relying on strong H2 performance to fund the aggressive $1.8B share buyback program and new dividend.
Management acknowledged that subscriber declines, while improving to 6.3%, are still negative. The defense of 'skinny bundles' as a savior relies heavily on distributor adoption and packaging strategies that Fox does not fully control. If skinny bundles fail to gain traction or if distributors aggressively deconstruct the bundle further, the improvement in subscriber trends could reverse, putting further pressure on the legacy distribution cash cow.
Overall: Management exhibited a highly confident and enthusiastic demeanor throughout the call, frequently using superlatives such as 'record-breaking,' 'unmatched,' and 'astounding' to describe performance. Lachlan Murdoch was particularly bullish on the advertising market and the company's digital transition, while Steve Tomsic provided grounded, detailed financial backing to the strategic optimism. There was no detectable shift to defensiveness during the Q&A, even when pressed on rising NFL costs.
Confidence: HIGH - Management used specific, verifiable metrics to back their claims (e.g., '46 or 47%' pricing increase, '170%' social media growth) and made definitive statements about future profitability (e.g., World Cup will be profitable). The language was decisive, with minimal hedging regarding core operations.
Expecting 'low to mid-single-digit millions of subscribers' over the next 3-4 years.
Confirmed the World Cup will be profitable.
Expecting a 'robust political advertising cycle' with Fox News as a primary beneficiary.
Fox expects to be a 'net beneficiary' of skinny bundles.
Hedging & Uncertainty: Management used very little hedging regarding current performance, utilizing definitive terms like 'unabated healthy trends' and 'record-breaking.' However, slight hedging appeared around future cost structures, specifically regarding the NFL rights renewal where Lachlan Murdoch stated, 'we have the ability to offset a portion of any kind of cost increases,' rather than promising full mitigation. The phrase 'we don't want to speculate' was used regarding NFL negotiations, a standard hedge to avoid guiding on specific contract terms before they are finalized.
most robust advertising market we have seen for some time - Lachlan Murdoch, Executive Chair and CEO
up sort of an embarrassing, 46 or 47% year on year - Lachlan Murdoch, Executive Chair and CEO
exceeded our expectations - 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 feel that we're in a very good position, going forward into this political cycle - Lachlan Murdoch, Executive Chair and CEO
Analyst Sentiment: Analysts were highly engaged with the success of the digital assets (Fox One, Tubi) and the sustainability of the advertising strength. Questions were constructive, focusing on growth mechanics (monetization of NFL, CTV political spend) rather than defensive cost-cutting.
Management Responses: Management was responsive and detailed, providing specific metrics (e.g., 200 new advertisers, 46% scatter pricing) to support their bullish stance. Lachlan Murdoch dominated the answers on strategy, while Steve Tomsic clarified accounting treatments (Fox One P&L placement).
Cable advertising pricing strength and the gap between news and broadcast CPMs.
The financial impact and monetization strategy for the upcoming NFL rights renewal and World Cup.
Fox One subscriber traction, seasonality, and P&L integration.
Tubi's ad revenue growth drivers and its role in the political advertising cycle.
The impact of 'skinny bundles' on subscriber decline rates and affiliate fee economics.
Fox Corporation is successfully navigating the secular decline of linear TV by pivoting to high-growth digital streaming assets (Tubi, Fox One) while leveraging its unrivaled portfolio of live sports and news. The Q2 results demonstrate that the core advertising business is resilient and growing, with Fox News generating record pricing power (46-47% scatter growth) that defies broader market fears. Tubi has proven it can be a scalable, profitable advertising platform, reaching EBITDA positivity two quarters ahead of many expectations, while Fox One is providing a new lever for distribution growth without cannibalization. Although rising sports rights costs (NFL) present a margin headwind, management's confidence in offsetting these costs via portfolio strength and the robust ad market is reassuring. Combined with an aggressive capital return strategy ($1.8B buybacks + new dividend) and a balance sheet supporting these moves, FOXA offers a compelling risk/reward. The stock appears to be undervalued given the hidden asset value of its FanDuel/Flutter stakes (~$7/share) and the accelerating digital momentum.
Management described the current advertising market as the 'most robust... seen for some time,' with 8 of the top 10 ad categories up significantly, led by financial services and insurance.
Linear subscriber declines are improving (down 6.3%) due to the emergence of 'skinny bundles,' which Fox views as a net positive as they are paid for their channels in these bundles.
Fox anticipates a 'robust political advertising cycle' benefiting both local stations and potentially Fox News on a national level.
Management views prediction markets and sports betting as a growing advertising revenue opportunity, highlighting the significant value of their stakes in Flutter and FanDuel.