Fox Corporation (FOX) Bundle
Understanding Fox Corporation (FOX) Revenue Streams
Understanding Fox Corporation’s Revenue Streams
For the three months ended September 30, 2024, Fox Corporation reported total revenues of $3,564 million, an increase of $357 million or 11% compared to $3,207 million in the same period of the previous year.
Breakdown of Primary Revenue Sources
The revenue streams are categorized primarily into three segments: Cable Network Programming, Television, and Corporate and Other. The detailed breakdown for the most recent quarter is as follows:
| Segment | Revenue (in millions) | Change (in millions) | Percentage Change |
|---|---|---|---|
| Cable Network Programming | $1,597 | $210 | 15% |
| Television | $1,953 | $173 | 10% |
| Corporate and Other | $65 | $11 | 20% |
| Eliminations | ($51) | ($37) | Not Meaningful |
| Total Revenues | $3,564 | $357 | 11% |
Year-over-Year Revenue Growth Rate
Comparing year-over-year performance, the revenue growth rate demonstrates a consistent upward trend driven by increased advertising and affiliate fee revenues:
- Affiliate Fee Revenue: Increased by $103 million or 6% to $1,843 million.
- Advertising Revenue: Increased by $129 million or 11% to $1,329 million.
- Other Revenues: Increased by $125 million or 47% to $392 million.
Contribution of Different Business Segments to Overall Revenue
The contribution of different business segments to the overall revenue for the three months ended September 30, 2024, is outlined below:
| Segment | Percentage of Total Revenue |
|---|---|
| Cable Network Programming | 45% |
| Television | 55% |
| Corporate and Other | Less than 1% |
Analysis of Significant Changes in Revenue Streams
The notable changes in revenue streams include:
- The Cable Network Programming segment experienced a 15% increase in revenue, attributed to higher affiliate fees and advertising.
- Television segment growth was primarily driven by higher political advertising revenue related to the 2024 elections, which contributed approximately $120 million.
- Other revenues surged by 47%, largely due to increased sports sublicensing revenue.
This comprehensive analysis of Fox Corporation's revenue streams showcases a robust growth trajectory supported by strategic advertising and affiliate revenue enhancements across its key segments.
A Deep Dive into Fox Corporation (FOX) Profitability
A Deep Dive into Fox Corporation's Profitability
Gross Profit, Operating Profit, and Net Profit Margins
For the three months ended September 30, 2024, the company reported:
- Gross Profit: $1,546 million
- Operating Profit: $1,546 million
- Net Profit Margin: 23.2%
- Net Income: $832 million
Trends in Profitability Over Time
Comparing the financial results year-over-year:
- Gross Profit increased from $1,454 million in 2023 to $1,546 million in 2024, representing a growth of 6%.
- Operating Profit rose from $1,389 million in 2023 to $1,546 million in 2024, reflecting an increase of 11%.
- Net Income saw a significant rise from $415 million in 2023 to $832 million, marking an increase of 100%.
Comparison of Profitability Ratios with Industry Averages
The following table compares the company's profitability ratios with industry averages:
| Metric | Fox Corporation (2024) | Industry Average |
|---|---|---|
| Gross Profit Margin | 43.4% | 40.0% |
| Operating Profit Margin | 43.4% | 35.0% |
| Net Profit Margin | 23.2% | 15.0% |
Analysis of Operational Efficiency
Operational efficiency metrics for the latest quarter indicate:
- Operating Expenses: $2,018 million, an increase of 8% from $1,862 million in the previous year.
- Selling, General and Administrative Expenses: $502 million, up from $480 million, a 5% increase.
- Adjusted EBITDA for the quarter was $1,048 million, compared to $869 million in the same quarter last year, indicating a growth of 21%.
Gross Margin Trends
The gross margin trend over the past quarters is as follows:
| Quarter | Gross Profit Margin |
|---|---|
| Q3 2023 | 45.3% |
| Q4 2023 | 44.0% |
| Q1 2024 | 43.4% |
Debt vs. Equity: How Fox Corporation (FOX) Finances Its Growth
Debt vs. Equity: How Fox Corporation Finances Its Growth
The financial structure of Fox Corporation primarily consists of both debt and equity financing, which plays a crucial role in its growth strategy. As of September 30, 2024, the company reported a total long-term debt of $6.6 billion and short-term borrowings of $600 million. This indicates a significant reliance on debt financing to support its operations and growth initiatives.
The debt-to-equity ratio, a key measure of financial leverage, stands at 0.58 as of September 30, 2024. This ratio is calculated by comparing total debt of $7.2 billion (short-term and long-term) against total equity of $11.3 billion. This ratio is below the industry average which typically hovers around 1.0, suggesting that the company maintains a conservative approach to leveraging its capital structure.
In terms of recent debt activity, Fox Corporation has issued senior notes amounting to $600 million with a fixed interest rate of 3.05%, due in April 2025. Additionally, the company has an unused five-year unsecured revolving credit facility of $1.0 billion that matures in June 2028. This flexibility allows Fox Corporation to manage its cash flow efficiently while maintaining operational liquidity.
Fox Corporation's credit ratings reflect its financial health, with Moody’s rating its senior debt at Baa2 and Standard & Poor’s at BBB, both with stable outlooks. These ratings indicate a moderate level of credit risk, suggesting the company is viewed as a reliable borrower in the eyes of lenders.
The company balances its debt financing with equity funding through strategic stock repurchases and dividends. During the three months ended September 30, 2024, Fox Corporation repurchased approximately 6 million shares for around $250 million. Additionally, it declared a semi-annual dividend of $0.27 per share on both its Class A and Class B common stock. This consistent return of capital to shareholders indicates a commitment to maintaining shareholder value while managing debt levels prudently.
| Debt Type | Amount (in billions) |
|---|---|
| Long-term Debt | $6.6 |
| Short-term Borrowings | $0.6 |
| Total Debt | $7.2 |
| Total Equity | $11.3 |
| Debt-to-Equity Ratio | 0.58 |
In conclusion, Fox Corporation's strategic management of its debt and equity structure positions it for growth while maintaining financial stability. The company’s approach to balancing these financing methods is indicative of its long-term planning and commitment to enhancing shareholder value.
Assessing Fox Corporation (FOX) Liquidity
Assessing Fox Corporation's Liquidity
Current and Quick Ratios
The current ratio for Fox Corporation as of September 30, 2024, is calculated as follows:
Current Assets: $7,793 million
Current Liabilities: $3,005 million
Current Ratio: 2.59
The quick ratio, which excludes inventories from current assets, is:
Quick Assets: $7,793 million - $795 million = $6,998 million
Quick Ratio: 2.33
Analysis of Working Capital Trends
Working capital is defined as current assets minus current liabilities.
Working Capital (September 30, 2024): $7,793 million - $3,005 million = $4,788 million
The working capital has increased from the previous quarter (June 30, 2024), where it was:
Working Capital (June 30, 2024): $7,501 million - $2,952 million = $4,549 million
This indicates a positive trend in liquidity, with an increase of approximately $239 million in working capital over the quarter.
Cash Flow Statements Overview
For the three months ended September 30, 2024, the cash flow statement shows:
| Cash Flow Category | 2024 (in millions) | 2023 (in millions) |
|---|---|---|
| Net Cash Provided by Operating Activities | $158 | $1 |
| Net Cash Used in Investing Activities | ($78) | ($58) |
| Net Cash Used in Financing Activities | ($347) | ($386) |
| Net Decrease in Cash and Cash Equivalents | ($267) | ($443) |
| Cash and Cash Equivalents End of Period | $4,052 | $3,829 |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, the company has approximately $4.1 billion in cash and cash equivalents and an unused five-year $1.0 billion unsecured revolving credit facility. The company is in compliance with all covenants under the revolving credit facility and does not anticipate any noncompliance.
Key cash flow insights indicate a significant increase in net cash provided by operating activities, primarily due to higher Segment EBITDA and political advertising revenue from the 2024 elections.
Is Fox Corporation (FOX) Overvalued or Undervalued?
Valuation Analysis
To assess whether the company is overvalued or undervalued, we can analyze key valuation metrics such as the price-to-earnings (P/E) ratio, price-to-book (P/B) ratio, and enterprise value-to-EBITDA (EV/EBITDA) ratios.
Price-to-Earnings (P/E) Ratio
As of September 30, 2024, the company had a diluted earnings per share (EPS) of $1.78. The stock price was approximately $39.22. This results in a P/E ratio of:
P/E = Stock Price / EPS = $39.22 / $1.78 ≈ 22.0
Price-to-Book (P/B) Ratio
As of September 30, 2024, the total stockholders' equity was $11.276 billion and the total shares outstanding were 222.25 million. The book value per share is:
Book Value per Share = Total Equity / Shares Outstanding = $11.276 billion / 222.25 million ≈ $50.67
The P/B ratio is then calculated as:
P/B = Stock Price / Book Value per Share = $39.22 / $50.67 ≈ 0.77
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The enterprise value (EV) can be approximated by adding the market capitalization and total debt, then subtracting cash. The total debt as of September 30, 2024, was $7.199 billion and cash and cash equivalents were $4.052 billion. The market capitalization can be calculated as:
Market Cap = Stock Price Shares Outstanding = $39.22 222.25 million ≈ $8.71 billion
Thus, EV = Market Cap + Total Debt - Cash = $8.71 billion + $7.199 billion - $4.052 billion ≈ $11.86 billion
For the three months ended September 30, 2024, Adjusted EBITDA was $1.048 billion. The EV/EBITDA ratio is:
EV/EBITDA = EV / Adjusted EBITDA = $11.86 billion / $1.048 billion ≈ 11.32
Stock Price Trends
Over the past 12 months, the stock price has ranged from a low of $30.00 to a high of $45.00. The current price of $39.22 indicates a significant recovery from the lows observed earlier in the year.
Dividend Yield and Payout Ratios
The company declared a semi-annual dividend of $0.27 per share, leading to a dividend yield of:
Dividend Yield = Annual Dividend / Stock Price = ($0.27 2) / $39.22 ≈ 1.38%
The payout ratio based on the current earnings is:
Payout Ratio = Dividend / EPS = ($0.27 2) / $1.78 ≈ 30.34%
Analyst Consensus on Stock Valuation
As of the latest reports, the analyst consensus rating for the stock is a Hold, with a target price range of $40.00 to $45.00.
| Valuation Metric | Value |
|---|---|
| P/E Ratio | 22.0 |
| P/B Ratio | 0.77 |
| EV/EBITDA Ratio | 11.32 |
| Stock Price (Current) | $39.22 |
| 52-Week Low | $30.00 |
| 52-Week High | $45.00 |
| Dividend Yield | 1.38% |
| Payout Ratio | 30.34% |
| Analyst Consensus | Hold |
Key Risks Facing Fox Corporation (FOX)
Key Risks Facing Fox Corporation
The financial health of the company is influenced by various internal and external risk factors. Below are the key risks impacting its operations and financial performance:
Industry Competition
The media and entertainment industry is highly competitive, with significant pressure from digital platforms and streaming services. In the three months ended September 30, 2024, the company reported a revenue increase of $357 million or 11%, but this growth is challenged by the rapid evolution of content consumption preferences among consumers.
Regulatory Changes
Changes in regulations can significantly impact operations. The company has to navigate a complex landscape of federal and state regulations that govern broadcasting and telecommunications. As of September 30, 2024, the company was in compliance with all covenants under its $1.0 billion unsecured revolving credit facility, indicating a proactive approach to managing regulatory risks.
Market Conditions
Market conditions, including economic downturns, can affect advertising revenues and consumer spending. The company experienced a $129 million or 11% increase in advertising revenue primarily due to heightened political advertising in the context of the 2024 elections. However, a downturn could reverse this trend, impacting overall financial health.
Operational Risks
- The company reported an increase in operating expenses of $156 million or 8%, mainly due to higher sports programming rights amortization.
- Restructuring and impairment costs totaled $26 million for the three months ended September 30, 2024.
Financial Risks
Financial risks include interest rate fluctuations and credit risks. The company’s interest expense increased by $8 million or 19% in the same period, indicating sensitivity to rising rates.
Strategic Risks
The company is involved in ongoing evaluations of acquisitions and dispositions, which may involve significant cash outflows. As of September 30, 2024, the company had approximately $4.1 billion in cash and cash equivalents, providing some buffer against strategic missteps.
Mitigation Strategies
Management actively monitors risk exposure and compliance with regulatory requirements. The company has also established a $7 billion stock repurchase program to support share price stability and return value to shareholders.
Summary of Key Financial Metrics
| Financial Metric | Q3 2024 | Q3 2023 | Change ($ millions) | Change (%) |
|---|---|---|---|---|
| Net Income | $832 | $415 | $417 | 100% |
| Operating Expenses | $2,018 | $1,862 | $156 | 8% |
| Interest Expense | $50 | $42 | $8 | 19% |
| Adjusted EBITDA | $1,048 | $869 | $179 | 21% |
The information encapsulates the multifaceted risks faced by the company, along with their financial implications, providing investors with a comprehensive understanding of the company’s risk landscape.
Future Growth Prospects for Fox Corporation (FOX)
Future Growth Prospects for Fox Corporation
Analysis of Key Growth Drivers
The company's growth is fundamentally supported by several key drivers:
- Product Innovations: The introduction of new programming and digital content through platforms like Tubi has significantly enhanced viewership and advertising revenue.
- Market Expansions: Expansion into international markets and digital platforms continues to open new revenue streams.
- Acquisitions: The company actively evaluates potential acquisitions to enhance its portfolio and market reach.
Future Revenue Growth Projections and Earnings Estimates
For the three months ended September 30, 2024, total revenues increased to $3,564 million from $3,207 million in the same period of 2023, reflecting an 11% growth.
| Period | Total Revenues (in millions) | Growth Rate | Net Income (in millions) |
|---|---|---|---|
| Q3 2024 | $3,564 | 11% | $832 |
| Q3 2023 | $3,207 | - | $415 |
Strategic Initiatives or Partnerships Driving Future Growth
The company is focusing on several strategic initiatives:
- Partnerships: Collaborations with major sports leagues for broadcasting rights are expected to drive revenue growth, particularly during high-profile events like the upcoming UEFA European Championship and CONMEBOL Copa América.
- Digital Expansion: Continued investments in Tubi and other digital platforms are anticipated to capture a larger share of the streaming market.
Competitive Advantages Positioning for Growth
Fox Corporation maintains several competitive advantages that facilitate growth:
- Strong Brand Recognition: The company's established brand presence in news and sports programming enhances viewer loyalty and advertising rates.
- Diverse Revenue Streams: The mix of revenues from affiliate fees, advertising, and sublicensing provides stability and growth potential.
- Financial Health: The company reported approximately $4.1 billion in cash and cash equivalents as of September 30, 2024, allowing for flexibility in capital investments and acquisitions.
Segment Performance Insights
Analysis of segment performance for the three months ended September 30, 2024:
| Segment | Revenues (in millions) | Segment EBITDA (in millions) | Change in Revenues (%) |
|---|---|---|---|
| Cable Network Programming | $1,597 | $748 | 15% |
| Television | $1,953 | $372 | 10% |
| Corporate and Other | $65 | ($72) | 20% |
In summary, the company's performance in the cable network programming segment has shown the most significant growth, with a 15% increase in revenues compared to the previous year, driven by higher affiliate fees and advertising.
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Updated on 16 Nov 2024
Resources:
- Fox Corporation (FOX) Financial Statements – Access the full quarterly financial statements for Q1 2025 to get an in-depth view of Fox Corporation (FOX)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Fox Corporation (FOX)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.