Cable news and media network Fox (NASDAQ:FOXA) missed Wall Street’s revenue expectations in Q1 CY2025, but sales rose 26.8% year on year to $4.37 billion. Its non-GAAP EPS of $1.10 per share was 22.6% above analysts’ consensus estimates.
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FOX (FOXA) Q1 CY2025 Highlights:
- Revenue: $4.37 billion (26.8% year-on-year growth)
- Adjusted EPS: $1.10 vs analyst estimates of $0.90 (22.6% beat)
- Adjusted Operating Income: $761 million vs analyst estimates of $639.7 million (17.4% margin, 19% beat)
- Operating Margin: 17.4%, down from 22.9% in the same quarter last year
- Market Capitalization: $23.78 billion
StockStory’s Take
Fox’s first quarter performance was shaped by the high-profile broadcast of Super Bowl LIX, which CEO Lachlan Murdoch described as generating over $800 million in gross advertising revenue and becoming the most-watched telecast in U.S. history. Management credited strong advertising demand, especially from a surge in new brand advertisers at Fox News and rapidly rising digital engagement, for driving revenue. Tubi, Fox’s free ad-supported streaming service, delivered a 35% year-over-year revenue increase and continued to see growth in total viewing time, supported by its appeal to a younger and increasingly mainstream audience. Affiliate revenues also grew, as higher rates and moderating subscriber declines contributed to segment growth. Executives highlighted that these results translated into record free cash flow for the company.
Looking ahead, Fox’s management emphasized the upcoming launch of Fox One, its direct-to-consumer streaming platform, targeting households without traditional cable subscriptions. Lachlan Murdoch stated that Fox One will be priced in line with wholesale rates and is expected to debut before the football season, with distribution partnerships in development. Management also pointed to continued momentum at Tubi and Fox News as key growth drivers, while balancing ongoing digital investments and controlling costs, especially as political advertising and marquee sports events fluctuate year-to-year. CFO Steve Tomsic noted that the company will remain disciplined in capital allocation, weighing further investment in digital platforms against other shareholder returns. The company sees opportunities to expand its digital reach while maintaining support for traditional distribution models.
Key Insights from Management’s Remarks
Management attributed the quarter’s performance to major live events, digital growth, and a focused content strategy, while highlighting execution on both traditional and streaming platforms.
- Super Bowl Advertising Impact: The broadcast of Super Bowl LIX delivered significant advertising revenue and set a new U.S. television viewership record, benefiting both national and local TV stations. This event also served as a promotional lever for other Fox properties, including Tubi.
- Tubi’s Audience and Revenue Growth: Tubi’s revenue grew 35% year-over-year, aided by a notable increase in total viewing time and a successful Super Bowl cross-promotion. Management highlighted that Tubi’s audience skews younger and more diverse, with 65% classified as “cord nevers”—viewers who have never subscribed to traditional pay TV.
- Fox News Advertiser Expansion: Fox News continued to grow its advertiser base, with over 200 new brands joining since the election. Management described this as a durable trend rather than a temporary shift, with both direct response and brand advertising rates increasing substantially.
- Affiliate Revenue Stability: Affiliate fee revenues increased as higher negotiated rates offset the impact of ongoing, but decelerating, subscriber declines. Management referenced improvements in subscriber erosion each quarter, attributing this trend partially to the emergence of “skinny bundles”—streaming packages with fewer channels.
- Digital Engagement and Investment: Digital consumption at Fox News and Tubi broke new records, with Fox News Digital growing page views 18%. Management reiterated their commitment to continued digital investment, especially in Tubi and the soon-to-launch Fox One, to reach new viewers and advertisers across platforms.
Drivers of Future Performance
Fox expects continued digital momentum, expanding direct-to-consumer offerings, and advertiser demand to shape revenue and margin trends in upcoming quarters.
- Direct-to-Consumer Launch: The introduction of Fox One aims to capture the growing cordless market, with management focusing on pricing discipline and partnerships to avoid cannibalizing existing cable subscriptions. This strategy is expected to broaden Fox’s digital reach while supporting traditional affiliate relationships.
- Tubi’s Profitability Path: Management plans ongoing investment in Tubi, citing its strong user engagement and advertising appeal. While profitability is a goal, executives indicated that further investment will be paced to maximize long-term value as Tubi approaches scale.
- Shifting Content Costs and Cyclical Events: Management noted that shifts in the sports calendar, such as the absence of Super Bowl costs and changing political advertising cycles, will impact margin trends. Adjustments to digital investment, particularly between Tubi and Fox One, are expected to be key margin drivers in the next year.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will watch (1) the launch and early adoption of Fox One and its impact on subscriber and advertiser growth, (2) Tubi’s ability to sustain user engagement and move toward profitability as investment moderates, and (3) the extent to which Fox News can maintain its enlarged advertiser base and ratings momentum. The evolution of affiliate fee trends and further digital monetization initiatives will also be pivotal.
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