Fox Corp. CFO Steve Tomsic said that the company isn’t feeling the same pain in its advertising business that many of its competitors are seeing.
Speaking at the UBS Global TMT Conference in New York, Tomsic said that while Fox, led by CEO Lachlan Murdoch, isn’t immune from the advertising pressures facing the rest of the industry, its focus on sports and news, combined with the growth of Tubi, have helped mitigate those problems.
“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 really 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].”
On the entertainment side of the business, Tomsic downplayed the Fox network’s entertainment assets (he said network entertainment is “increasingly becoming the smallest component of our advertising book”), noting that it is one of the areas facing pressure, 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 is translating into really, really strong growth in terms of 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 was 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 addressed the proposed merger between Fox Corp. and News Corp., which is said to be facing some opposition from major shareholders outside of the Murdoch family.
While he said he couldn’t speak for Rupert Murdoch, Tomsic said that the Murdoch family has always been focused on “creating value for shareholders” and “always doing what is the value-generating approach for the company and for all of our shareholders.”
Ultimately, he said, the special committees on the boards will reach a decision, and the market can decide if it is the right move or not.