Docoh
Loading...

FOX Fox

Filed: 5 May 21, 4:03pm

Exhibit 99.1

 

 

LOGO

EARNINGS RELEASE FOR THE QUARTER ENDED MARCH 31, 2021

 

 

FOX REPORTS THIRD QUARTER FISCAL 2021

NET INCOME OF $582 MILLION,

EARNINGS PER SHARE OF $0.96

REVENUES OF $3.22 BILLION

AND ADJUSTED EBITDA OF $899 MILLION

NEW YORK, NY, May 5, 2021 – Fox Corporation (Nasdaq: FOXA, FOX) (“FOX” or the “Company”) today reported financial results for the three months ended March 31, 2021.

The Company reported quarterly net income of $582 million as compared to the $90 million reported in the prior year quarter. The increase in net income was primarily due to the change in fair value of the Company’s investments recognized in Other, net in the prior year quarter. Net Income attributable to Fox Corporation stockholders was $567 million ($0.96 per share) as compared to the $78 million ($0.13 per share) reported in the prior year quarter. Adjusted net income attributable to Fox Corporation stockholders1 was $523 million ($0.88 per share) as compared to the $568 million ($0.93 per share) reported in the prior year quarter.

Total quarterly revenues were $3.22 billion as compared to the $3.44 billion reported in the prior year quarter, primarily due to the absence of the prior year broadcast of Super Bowl LIV. Affiliate revenues increased 10% with 18% growth at the Television segment and 6% growth at the Cable Network Programming segment. Advertising revenues were $1.20 billion as compared to the $1.57 billion reported in the prior year quarter, primarily due to the absence of the prior year broadcast of Super Bowl LIV, partially offset by the consolidation of Tubi, Inc. (“Tubi”) and the impact of additional NFL regular season and playoff broadcasts in the current year quarter.

Quarterly Adjusted EBITDA2 was $899 million as compared to the $920 million reported in the prior year quarter as 7% growth at the Cable Network Programming segment was more than offset by the absence of the prior year broadcast of Super Bowl LIV at the Television segment.

Commenting on the results, Executive Chairman and Chief Executive Officer Lachlan Murdoch said:

“The company continues to deliver operationally and financially with our year-to-date Revenues and EBITDA pacing well ahead of last year, despite the impact of COVID and the comparison against a Super Bowl year. Consistent with our expectations, FOX News reclaimed its leadership position as America’s number one cable news network and the most watched cable network in primetime, while FOX Sports reached a landmark agreement with the NFL to extend our Sunday NFC rights package with expanded digital rights. These strategic milestones, coupled with a slate of complementary, high-growth, digital-focused assets, led by continued record growth at Tubi, provide a powerful platform to grow our business for the long-term.”

 

1 

Excludes net income effects of Impairment and restructuring charges, adjustments to Equity (losses) earnings of affiliates, Other, net and tax provision adjustments. See Note 1 for a description of adjusted net income and adjusted earnings per share attributable to Fox Corporation stockholders, which are considered non-GAAP financial measures, and a reconciliation of reported net income and earnings per share attributable to Fox Corporation stockholders to adjusted net income and adjusted earnings per share attributable to Fox Corporation stockholders.

2 

Adjusted EBITDA is considered a non-GAAP financial measure. See Note 2 for a description of Adjusted EBITDA and a reconciliation of net income to Adjusted EBITDA.

 

Page 1


LOGO

EARNINGS RELEASE FOR THE QUARTER ENDED MARCH 31, 2021

 

 

 

REVIEW OF OPERATING RESULTS

 

   Three Months Ended
March 31,
  Nine Months Ended
March 31,
 
   2021  2020  2021  2020 
   $ Millions 

Revenues by Component:

     

Affiliate fee

  $1,719  $1,559  $4,770  $4,389 

Advertising

   1,198   1,570   4,449   4,621 

Other

   298   311   800   875 
  

 

 

  

 

 

  

 

 

  

 

 

 

Total revenues

  $3,215  $3,440  $10,019  $9,885 
  

 

 

  

 

 

  

 

 

  

 

 

 

Segment Revenues:

     

Cable Network Programming

  $1,471  $1,467  $4,284  $4,221 

Television

   1,695   1,926   5,601   5,548 

Other, Corporate and Eliminations

   49   47   134   116 
  

 

 

  

 

 

  

 

 

  

 

 

 

Total revenues

  $3,215  $3,440  $10,019  $9,885 
  

 

 

  

 

 

  

 

 

  

 

 

 

Adjusted EBITDA:

     

Cable Network Programming

  $850  $792  $2,202  $2,032 

Television

   135   224   407   261 

Other, Corporate and Eliminations

   (86  (96  (239  (256
  

 

 

  

 

 

  

 

 

  

 

 

 

Adjusted EBITDA3

  $899  $920  $2,370  $2,037 
  

 

 

  

 

 

  

 

 

  

 

 

 

Depreciation and amortization:

     

Cable Network Programming

  $16  $15  $41  $44 

Television

   26   17   77   46 

Other, Corporate and Eliminations

   36   25   98   74 
  

 

 

  

 

 

  

 

 

  

 

 

 

Total depreciation and amortization

  $78  $57  $216  $164 
  

 

 

  

 

 

  

 

 

  

 

 

 

 

3 

Adjusted EBITDA is considered a non-GAAP financial measure. See Note 2 for a description of Adjusted EBITDA and a reconciliation of net income to Adjusted EBITDA.

 

Page 2


LOGO

EARNINGS RELEASE FOR THE QUARTER ENDED MARCH 31, 2021

 

 

 

CABLE NETWORK PROGRAMMING

 

   Three Months Ended
March 31,
  Nine Months Ended
March 31,
 
   2021  2020  2021  2020 
   $ Millions 

Revenues

     

Affiliate fee

  $1,068  $1,006  $2,969  $2,902 

Advertising

   283   304   1,023   895 

Other

   120   157   292   424 
  

 

 

  

 

 

  

 

 

  

 

 

 

Total revenues

   1,471   1,467   4,284   4,221 

Operating expenses

   (505  (554  (1,725  (1,866

Selling, general and administrative

   (122  (126  (374  (342

Amortization of cable distribution investments

   6   5   17   19 
  

 

 

  

 

 

  

 

 

  

 

 

 

Segment EBITDA

  $850  $792  $2,202  $2,032 
  

 

 

  

 

 

  

 

 

  

 

 

 

Cable Network Programming reported quarterly segment revenues of $1.47 billion in the current year quarter. Affiliate revenues increased $62 million or 6% as compared to the prior year quarter, driven by contractual price increases, including the impact of distribution agreement renewals. Advertising revenues were $283 million as compared to the $304 million reported in the prior year quarter as continued strength in linear pricing at FOX News Media was more than offset by a slower news cycle in the current year quarter. Other revenues were $120 million as compared to the $157 million reported in the prior year quarter, primarily due to lower sports sublicensing revenues and the absence of pay-per-view boxing in the current year quarter.

Cable Network Programming reported quarterly segment EBITDA of $850 million, an increase of $58 million or 7% from the amount reported in the prior year quarter, primarily due to lower expenses at FOX Sports. The lower expenses at FOX Sports were primarily the result of lower studio show production costs, including the absence of the prior year’s Super Bowl week studio shows, and lower sublicensed sports rights.

 

Page 3


LOGO

EARNINGS RELEASE FOR THE QUARTER ENDED MARCH 31, 2021

 

 

 

TELEVISION

 

   Three Months Ended
March 31,
  Nine Months Ended
March 31,
 
   2021  2020  2021  2020 
   $ Millions 

Revenues

     

Advertising

  $915  $1,266  $3,426  $3,726 

Affiliate fee

   651   553   1,801   1,487 

Other

   129   107   374   335 
  

 

 

  

 

 

  

 

 

  

 

 

 

Total revenues

   1,695   1,926   5,601   5,548 

Operating expenses

   (1,359  (1,486  (4,613  (4,713

Selling, general and administrative

   (201  (216  (581  (574
  

 

 

  

 

 

  

 

 

  

 

 

 

Segment EBITDA

  $135  $224  $407  $261 
  

 

 

  

 

 

  

 

 

  

 

 

 

Television reported quarterly segment revenues of $1.70 billion as compared to the $1.93 billion reported in the prior year quarter as higher affiliate and other revenues were more than offset by lower advertising revenues due to the absence of the prior year broadcast of Super Bowl LIV. Affiliate revenues increased $98 million or 18%, driven by increases in fees from third-party FOX affiliates and higher average rates at the Company’s owned and operated television stations. Other revenues increased $22 million or 21%, primarily due to higher content revenues at FOX Entertainment and Bento Box. Advertising revenues were $915 million as compared to the $1.27 billion reported in the prior year quarter as the impact of the consolidation of Tubi, the addition of the rotating NFL Divisional playoff game and the timing of the NFL’s Week 17 doubleheader in the current year quarter were more than offset by the absence of the prior year broadcast of Super Bowl LIV.

Television reported quarterly segment EBITDA of $135 million as compared to the $224 million reported in the prior year quarter as the revenue trends noted above were partially offset by lower expenses. The lower expenses were primarily due to the absence of the prior year broadcast of Super Bowl LIV.

 

Page 4


LOGO

EARNINGS RELEASE FOR THE QUARTER ENDED MARCH 31, 2021

 

 

 

SHARE REPURCHASE PROGRAM

On November 6, 2019, the Company announced the authorization of a $2 billion stock repurchase program. To date, the Company has repurchased $1.01 billion of its Class A common stock and $417 million of its Class B common stock.

IMPACT OF COVID-19

The outbreak of the COVID-19 pandemic has resulted in widespread and continuing negative impacts on the macroeconomic environment and disruption to the Company’s business. Weak economic conditions and increased volatility and disruption in the financial markets pose risks to the Company and its business partners, including advertisers whose expenditures tend to reflect overall economic conditions. The COVID-19 pandemic has caused some of the Company’s advertisers to reduce their spending, and future declines in the economic prospects of advertisers or the economy in general could negatively impact their advertising expenditures further. Depending on the duration and severity of the weak economic environment, it could lead to changes in consumer behavior, including increasing numbers of consumers canceling or foregoing subscriptions to multi-channel video programming distributor services, that adversely affect the Company’s affiliate fee and advertising revenues. In addition, the Company’s business depends on the volume and popularity of the content it distributes, particularly sports content. Following the COVID-19 outbreak, sports events to which the Company has broadcast rights were cancelled or postponed and the production of certain entertainment content the Company distributes was suspended. Although most sports events and productions have resumed, there may be additional content disruptions in the future, and depending on their duration and severity, these disruptions could materially adversely affect the Company’s future advertising revenues and, over a longer period, its future affiliate fee revenues. To the extent the pandemic further negatively impacts the Company’s ability to air sports events, it could result in a significantly greater adverse effect on the Company’s business, financial condition or results of operations than the Company has experienced thus far. In addition, shifting sports schedules may negatively impact the Company’s ability to attract viewers and advertisers to its sports and entertainment programming.

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “may,” “will,” “should,” “likely,” “anticipates,” “expects,” “intends,” “plans,” “projects,” “believes,” “estimates,” “outlook” and similar expressions are used to identify these forward-looking statements. These statements are based on management’s current expectations and beliefs and are subject to uncertainty and changes in circumstances. Actual results may vary materially from those expressed or implied by the statements in this press release due to changes in economic, business, competitive, technological, strategic and/or regulatory factors and other factors affecting the operation of the Company’s businesses, including the impact of COVID-19 and other widespread health emergencies or pandemics and measures to contain their spread. More detailed information about these factors is contained in the documents the Company has filed with or furnished to the Securities and Exchange Commission (the “SEC”), including the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2020.

Statements in this press release speak only as of the date they were made, and the Company undertakes no duty to update or release any revisions to any forward-looking statement made in this press release or to report any events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events or to conform such statements to actual results or changes in the Company’s expectations, except as required by law.

To access a copy of this press release through the Internet, access Fox Corporation’s corporate website located at http://www.foxcorporation.com.

CONTACTS

 

Joe Dorrego, Investor Relations   Megan Klein, Press Inquiries 
212-852-7856   310-369-1363 

Dan Carey, Investor Relations

212-852-7955

  

 

Page 5


LOGO

EARNINGS RELEASE FOR THE QUARTER ENDED MARCH 31, 2021

 

 

 

CONSOLIDATED STATEMENTS OF OPERATIONS

 

   Three Months Ended
March 31,
  Nine Months Ended
March 31,
 
   2021  2020  2021  2020 
   $ Millions, except per share amounts 

Revenues

  $3,215  $3,440  $10,019  $9,885 

Operating expenses

   (1,885  (2,061  (6,399  (6,620

Selling, general and administrative

   (437  (464  (1,267  (1,247

Depreciation and amortization

   (78  (57  (216  (164

Impairment and restructuring charges

   —     —     (35  (9

Interest expense

   (98  (89  (296  (269

Interest income

   —     8   3   33 

Other, net4

   61   (632  752   (345
  

 

 

  

 

 

  

 

 

  

 

 

 

Income before income tax expense

   778   145   2,561   1,264 

Income tax expense

   (196  (55  (632  (347
  

 

 

  

 

 

  

 

 

  

 

 

 

Net income

   582   90   1,929   917 
  

 

 

  

 

 

  

 

 

  

 

 

 

Less: Net income attributable to noncontrolling interests

   (15  (12  (32  (40
  

 

 

  

 

 

  

 

 

  

 

 

 

Net income attributable to Fox Corporation stockholders

  $567  $78  $1,897  $877 
  

 

 

  

 

 

  

 

 

  

 

 

 

Weighted average shares:

   593   612   598   619 

Net income attributable to Fox Corporation stockholders per share:

  $0.96  $0.13  $3.17  $1.42 

 

 

4 

Other, net presented above includes Equity losses of affiliates.

 

Page 6


LOGO

EARNINGS RELEASE FOR THE QUARTER ENDED MARCH 31, 2021

 

 

 

CONSOLIDATED BALANCE SHEETS

 

   March 31,
2021
  June 30,
2020
 
Assets:  $ Millions 

Current assets:

   

Cash and cash equivalents

  $5,765  $4,645 

Receivables, net

   2,153   1,888 

Inventories, net

   685   856 

Other

   91   97 
  

 

 

  

 

 

 

Total current assets

   8,694   7,486 
  

 

 

  

 

 

 

Non-current assets:

   

Property, plant and equipment, net

   1,626   1,498 

Intangible assets, net

   3,156   3,198 

Goodwill

   3,403   3,409 

Deferred tax assets

   3,853   4,358 

Other non-current assets

   2,175   1,801 
  

 

 

  

 

 

 

Total assets

  $22,907  $21,750 
  

 

 

  

 

 

 

Liabilities and Equity:

   

Current liabilities:

   

Borrowings

  $749  $—   

Accounts payable, accrued expenses and other current liabilities

   2,236   1,906 
  

 

 

  

 

 

 

Total current liabilities

   2,985   1,906 
  

 

 

  

 

 

 

Non-current liabilities:

   

Borrowings

   7,201   7,946 

Other liabilities

   1,412   1,482 

Redeemable noncontrolling interests

   225   305 

Commitments and contingencies

   

Equity:

   

Class A common stock, $0.01 par value

   3   3 

Class B common stock, $0.01 par value

   3   3 

Additional paid-in capital

   9,555   9,831 

Retained earnings

   1,912   674 

Accumulated other comprehensive loss

   (392  (417
  

 

 

  

 

 

 

Total Fox Corporation stockholders’ equity

   11,081   10,094 

Noncontrolling interests

   3   17 
  

 

 

  

 

 

 

Total equity

   11,084   10,111 
  

 

 

  

 

 

 

Total liabilities and equity

  $22,907  $21,750 
  

 

 

  

 

 

 

 

Page 7


LOGO

EARNINGS RELEASE FOR THE QUARTER ENDED MARCH 31, 2021

 

 

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

   Nine Months Ended
March 31,
 
   2021  2020 
   $ Millions 

Operating Activities:

   

Net income

  $1,929  $917 

Adjustments to reconcile net income to cash provided by operating activities

   

Depreciation and amortization

   216   164 

Amortization of cable distribution investments

   17   19 

Impairment and restructuring charges

   35   9 

Equity-based compensation

   112   101 

Other, net

   (752  345 

Deferred income taxes

   528   255 

Change in operating assets and liabilities, net of acquisitions and dispositions

   

Receivables and other assets

   (382  (395

Inventories net of program rights payable

   257   167 

Accounts payable and accrued expenses

   88   (178

Other changes, net

   (182  (59
  

 

 

  

 

 

 

Net cash provided by operating activities

   1,866   1,345 
  

 

 

  

 

 

 

Investing Activities:

   

Property, plant and equipment

   (333  (192

Acquisitions, net of cash acquired

   —     (611

Proceeds from dispositions, net

   93   45 

Sale of Investments

   —     349 

Purchase of investments

   (86  —   

Other investing activities, net

   (3  12 
  

 

 

  

 

 

 

Net cash used in investing activities

   (329  (397
  

 

 

  

 

 

 

Financing Activities:

   

Repurchase of shares

   (713  (600

Non-operating cash flows from (to) The Walt Disney Company

   113   (70

Settlement of Divestiture Tax prepayment

   462   —   

Dividends paid and distributions

   (182  (321

Purchase of subsidiary noncontrolling interest

   (67  —   

Other financing activities, net

   (30  5 
  

 

 

  

 

 

 

Net cash used in financing activities

   (417  (986
  

 

 

  

 

 

 

Net increase (decrease) in cash and cash equivalents

   1,120   (38

Cash and cash equivalents, beginning of year

   4,645   3,234 
  

 

 

  

 

 

 

Cash and cash equivalents, end of period

  $5,765  $3,196 
  

 

 

  

 

 

 

 

Page 8


LOGO

EARNINGS RELEASE FOR THE QUARTER ENDED MARCH 31, 2021

 

 

 

NOTE 1 – ADJUSTED NET INCOME AND ADJUSTED EPS

The Company uses net income and earnings per share (“EPS”) attributable to Fox Corporation stockholders excluding net income effects of Impairment and restructuring charges, adjustments to Equity (losses) earnings of affiliates, Other, net, and tax provision adjustments (“Adjusted Net Income” and “Adjusted EPS” respectively) to evaluate the performance of the Company’s operations exclusive of certain items that impact the comparability of results from period to period.

Adjusted Net Income and Adjusted EPS may not be comparable to similarly titled measures reported by other companies. Adjusted Net Income and Adjusted EPS are not measures of performance under GAAP and should be considered in addition to, and not as substitutes for, net income attributable to Fox Corporation stockholders and EPS as reported in accordance with GAAP. However, management uses these measures in comparing the Company’s historical performance and believes that they provide meaningful and comparable information to management, investors and equity analysts to assist in their analysis of the Company’s performance relative to prior periods and the Company’s competitors.

The following table reconciles net income and EPS attributable to Fox Corporation stockholders to Adjusted Net Income and Adjusted EPS for the three months ended March 31, 2021 and 2020:

 

   Three Months Ended 
   March 31, 2021  March 31, 2020 
   Income  EPS  Income  EPS 
   $ Millions, except per share data 

Net income

  $582   $90  

Less: Net income attributable to noncontrolling interests

   (15   (12 
  

 

 

   

 

 

  

Net income attributable to Fox Corporation stockholders

  $567  $0.96  $78  $0.13 

Other, net5

   (61  (0.10  627   1.02 

Tax provision

   17   0.03   (137  (0.22

Rounding

   —     (0.01  —     —   
  

 

 

  

 

 

  

 

 

  

 

 

 

As adjusted

  $523  $0.88  $568  $0.93 
  

 

 

  

 

 

  

 

 

  

 

 

 

 

 

5 

Other, net presented above excludes Equity losses of affiliates.

 

Page 9


LOGO

EARNINGS RELEASE FOR THE QUARTER ENDED MARCH 31, 2021

 

 

 

NOTE 2 – ADJUSTED EBITDA

Adjusted EBITDA is defined as Revenues less Operating expenses and Selling, general and administrative expenses. Adjusted EBITDA does not include: Amortization of cable distribution investments, Depreciation and amortization, Impairment and restructuring charges, Interest expense, Interest income, Other, net and Income tax expense.

Management believes that information about Adjusted EBITDA assists all users of the Company’s Unaudited Consolidated Financial Statements by allowing them to evaluate changes in the operating results of the Company’s portfolio of businesses separate from non-operational factors that affect net income, thus providing insight into both operations and the other factors that affect reported results. Adjusted EBITDA provides management, investors and equity analysts a measure to analyze the operating performance of the Company’s business and its enterprise value against historical data and competitors’ data, although historical results, including Adjusted EBITDA, may not be indicative of future results (as operating performance is highly contingent on many factors, including customer tastes and preferences and the impact of COVID-19).

Adjusted EBITDA is considered a non-GAAP financial measure and should be considered in addition to, not as a substitute for, net income, cash flow and other measures of financial performance reported in accordance with GAAP. In addition, this measure does not reflect cash available to fund requirements and excludes items, such as depreciation and amortization and impairment charges, which are significant components in assessing the Company’s financial performance. Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies.

The following table reconciles net income to Adjusted EBITDA for the three and nine months ended March 31, 2021 and 2020:

 

   Three Months Ended
March 31,
  Nine Months Ended
March 31,
 
   2021  2020  2021  2020 
   $ Millions 

Net income

  $582  $90  $1,929  $917 

Add:

     

Amortization of cable distribution investments

   6   5   17   19 

Depreciation and amortization

   78   57   216   164 

Impairment and restructuring charges

   —     —     35   9 

Interest expense

   98   89   296   269 

Interest income

   —     (8  (3  (33

Other, net

   (61  632   (752  345 

Income tax expense

   196   55   632   347 
  

 

 

  

 

 

  

 

 

  

 

 

 

Adjusted EBITDA

  $899  $920  $2,370  $2,037 
  

 

 

  

 

 

  

 

 

  

 

 

 

 

Page 10