Fox Corp FOXA reported fourth-quarter revenue and earnings Tuesday that were ahead of estimates on the back of news and affiliate renewals, according to Needham.
The Fox Analyst: Laura Martin maintained a Hold rating on Fox.
The Fox Thesis: The company faces low revenue risk ahead, with 70% of its affiliate revenues being renewed in fiscal 2020 and only 5% coming up for renewals in each of the next two fiscal years, Martin said in the Wednesday note. (See her track record here.)
EBITDA margins in the cable network segment came in much better than expected due to “higher Fox News ratings and the absence of live sports costs,” the analyst said.
Ad revenues contracted by 8%, with advertisers cutting their budgets and the absence of new content production leading to lower ratings, she said.
The company reported a record high in political ad revenue for the latest quarter and expects this to ramp up over the next few quarters, Martin said.
Fox exited the quarter with $4.6 billion in cash and $7.9 billion in debt, the analyst said, while adding that the company repurchased $600 million in Class A and B shares in fiscal 2020 after undertaking no buybacks in the previous year.
Needham reduced the revenue and earnings estimates for fiscal 2021 from $12.06 billion to $11.97 billion and from $2.19 to $1.98 per share, respectively.
FOXA Price Action: Class A Fox shares were down 6.07% at $25.05 at last check Wednesday.
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Photo by Seth Werkheiser via Wikimedia.
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