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Fox Corp.’s 2020 acquisition of Tubi keeps looking better and better.
The free ad-supported streaming service, combined with the roaring return of live sports on Fox Sports, has helped grow Fox’s revenue 12% to $3.05 billion, the company reported today in its quarterly earnings. In the quarter, Fox Corp.’s first in fiscal year 2022, the streaming service more than doubled its revenue year-over-year and notched 30% growth in Tubi’s preferred metric of total view time (TVT) compared to the prior year, according to Fox Corp. chairman and CEO Lachlan Murdoch.
“The growth at Tubi continues to exceed even our best expectations for the business when we acquired it,” Murdoch told investors Wednesday afternoon. “Tubi will generate significantly more revenue this fiscal year than the cost to purchase the platform in early 2020.”
That means Tubi’s total revenue will exceed the $440 million sticker price Fox Corp. paid for the service in March 2020. But the company did not release more specific figures measuring Tubi’s overall success, instead offering only growth increases and more general statements. Last quarter, Tubi “comfortably” surpassed $100 million in advertising revenue, and total view time in June surpassed 900 million hours, Fox reported reported in August.
There were more specifics disclosed in Fox Corp.’s overall quarterly earnings, where Tubi and Fox Sports helped boost advertising revenue from the company’s television segment, which also includes Fox’s network business.
Ad revenue increased 17% in the quarter to $819 million, per the company’s quarterly filings, while advertising revenue in its cable segment ticked up slightly year-over-year.
Fox will continue leaning into what is working on its television side. After the success of tentpole sporting events like Major League Baseball and the beginning of the fall NFL football season, Fox has acquired the television rights to the UEFA European Championship beginning next June, bringing 1,500 matches to the company’s linear side through 2028. The six-year deal marks the first time since 2008 that UEFA has changed linear homes; previously, ESPN held the rights to the soccer matches.
Tubi’s original programming push
On the streaming side, Fox will continue investing modestly to encourage additional user growth.
Tubi’s early push into original programming that began this fall is off to a promising start, Murdoch said, especially as the company looks for cost-efficient ways to grow users. Of the first four original films that Tubi developed and released—“very inexpensive made-for-TV movies,” Murdoch said—two of them have been able to recoup the production costs in a matter of months.
The streamer will continue pursuing the strategy of developing cheap programming and monetizing it with ads going forward. Fox Corp. will also continue building out ad-supported always-on channels to help drive time spent on the streamer, including with Tubi’s news-centric channel, which has notched 130% viewership growth compared to a year ago, and a just-debuted sports-centric channel aimed at increasing total view time on the service.
And the company’s recent acquisition of tabloid news brand TMZ “gives us an array of possibilities,” including extending the TMZ brand to other parts of Fox’s business such as branded content on Tubi, Murdoch said.
Fox’s other extension into free streaming, the ad-supported app and streaming service Fox Weather, is also notching growth since debuting in late October. In its first week, the app has been downloaded more than 1 million times, with users generating 28 million pageviews and spending more than 42 million minutes engaging with programming, Murdoch told investors. Whether that early interest translates into long-term stickiness, though, remains to be seen.
There remains frustratingly little public information about Fox’s foray into the subscription streaming business with its cable news outpost, Fox Nation. Total subscriber count was up 25% compared to one quarter ago, and up 130% compared to a year ago, Murdoch said, and the reality series Cops, which became available Oct. 1, has become one of the best-performing titles on the service. But the company remained otherwise mum on the service’s total subscriber count, as it has in previous quarters, meaning it’s hard to measure the extent of growth on the service and how it measures up to other SVOD offerings.
On the linear side, Fox has benefitted from a strong upfront season and an even stronger scatter market, Murdoch said. Scatter pricing is averaging around 20% higher than upfront pricing, with entertainment and sports higher than that and news a little lower. In particular, betting services and crypto companies, as well as financial advertisers, are helping to drive that growth, Murdoch said.
While some local advertisers are reporting lower revenues due to the election cycle, the company is preparing for a financial windfall when the midterms roll around in 2022. “We believe the midterm elections and contests next year will be truly staggering,” Murdoch said.
