Fox Network Entertainment a “Small and Reducing” part of the portfolio, CFO claims
When it comes to ad dollars, “visibility is lower and the money’s coming in later,” CFO Steve Tomsic says.
According to Fox Corp. CFO Steve Tomsic, the corporation is not experiencing the same difficulties in its advertising sector as many of its rivals are.
Tomsic stated at the UBS Global TMT Conference in New York that while Lachlan Murdoch, the CEO of Fox, is not exempt from the advertising constraints hitting the rest of the business, the company’s emphasis on sports and news, together with the expansion of Tubi, have helped to alleviate those issues.
“It feels like the market is really heterogeneous at the moment. I think the one thing that is thematic probably across all advertising players is visibility is lower and the money’s coming in later. But then I look at our book, and the bid for sports continues to be there,” Tomsic said, noting strong results for the World Cup and upcoming Super Bowl. “And so we feel good about where sports is, news linear continues to be quite strong for us. I think the pockets where we see areas of weakness is — to a certain extent — digital news and programmatic, and to a certain extent, DR [direct response advertising].”
In the entertainment sector of the company, Tomsic downplayed the Fox network’s entertainment assets, noting that it is one of the areas under pressure (he said network entertainment is “increasingly becoming the smallest component of our advertising book”) but suggested that growth at Tubi was helping to more than make up for those declines.
“We’ve seen extraordinary growth in viewership [at Tubi], which translates into really, really strong growth in advertising revenue. In Q1, we posted ad revenue growth at Tubi at plus 29 percent. And right now, that’s advancing from that position,” Tomsic said.
“It’s weaker there [at the Fox network] but I think the weakness there is less about the market and more about ratings,” Tomsic added. “But again, I said last quarter, it was the first time that Tubi was meaningfully ahead of our entertainment network in terms of ad sales. And so from our perspective, we’ve recognized that that’s a small and reducing component of the portfolio and we continue to build out the pieces where we’ve got real strengths.”
But Fox’s focus on sports has helped lift all parts of the business, led by the NFL and World Cup.
“The market feels variable, but the pricing remains quite strong. So we’re seeing nice premiums to upfront pricing,” Tomsic said “And so it really is mixed across the industry. And I think we feel like we’ve got the best stable of assets to extract the greatest value in this market… to the extent that the money’s coming late, it’s like advertisers are becoming much more careful about where they place their dollars, and they’re becoming much more choosy about where those dollars go.”
Tomsic also discussed the proposed merger of Fox Corporation with News Corporation, which is reportedly being opposed by significant shareholders other than the Murdoch family.
Tomsic claimed that the Murdoch family has always been committed to “creating value for shareholders” and “always doing what is the value-generating method for the company and for all of our shareholders,” despite the fact that he couldn’t speak for Rupert Murdoch.
The special committees on the boards will ultimately make a judgment, he claimed, and the market will then decide whether or not it is the appropriate one.