It's been nearly three years since the Walt Disney Co. (DIS) purchased the majority of Fox Corp (FOXA) .
The Mickey Mouse company paid $71.3 billion to buy 20th Century Fox Television as well as 20th Century Fox Studios, FX, Fox Networks Group and other entities.
What was left over was the Fox Broadcasting Co., Fox Television stations, Fox News Channel, Fox Business and the Fox Sports divisions.
Fox's nearly $18 billion market cap is just a fraction of what it used to be before the sale, but after three years of flying under its new banner, the company's long-term vision is starting to take shape.
Fox Corp will rely on Fox Sports to lead the way forward along with Fox News and Tubi. The company's ad-supported, free-to-watch scripted television streaming option doesn't have the same gravitas that its former television studio had with iconic shows like The Simpsons, but it is still holding its own.
Tubi has more than 42,000 titles in its library and reported record quarterly viewership during the most recent quarter. Tubi delivered 18 of its top 20 viewership days in history in the most recent quarter.
"I can recall our Investor Day when we saw all of you or most of you in person and kicked off the new Fox, now already a few years ago," CEO Lachlan Keith Murdoch said on a call with analysts.
"Some of you asked then correctly, could the new streamline Fox aggressively grow its top line revenues? And while we committed to you then that we would add $1 billion of television distribution of revenue by calendar 2022, we all knew the proof would be in the pudding. So it's pleasing that this quarter we again delivered a healthy distribution and advertising revenue growth across our brands and complemented by further stellar growth at Tubi."
Sports and News Lead the Way for Fox
Fox figured that its most valuable assets were its news and sports divisions, and three years after the Disney sale that bet is being justified.
Fox News Channel finished the first quarter of 2022 as cable's most watched network, news or otherwise, in primetime and total viewers.
Fox News was the only cable news network to post viewership gains year over year in total viewership. It topped CNN and MSNBC combined in total day and with total viewers and in the key demographic of 25 to 54 year old's for nine consecutive months.
"Fox News is effectively competing with the free to air broadcasters in terms of audience. So it's actually usually beating or many nights of the week sort of beating broadcast networks. And we expect them, our pricing power to continue to strengthen with performance like that," Murdoch said.
"From both from an advertising perspective and from our television distribution or retransmission revenue perspective, we think we're well-positioned, particularly in a year or cycle where we're coming up to, I think over the next two years, two-thirds of our distribution revenue coming up for renewals."
Fox Sports Is Entering a New Era
Sports has been a staple at Fox since the early days in 1994 when it acquired the broadcast rights to the NFL.
That acquisition led to the launch of the company's Fox Sports division and the company's relationship with the NFL has been a key plank ever since.
Fox announced that it has reached a deal with NFL legend Tom Brady, hiring him as a lead analyst once his playing days are done.
The New York Post reported that the deal for Brady is for 10 years and a whopping $375 million.
Last year, Fox and the NFL signed a new 11-year media rights deal that will keep the league on Fox networks every Sunday during the season through at least 2033.
As the old contract expires, Fox is tied to the NFL financially for another decade, but the cost of doing business is going up.
Fox is reportedly paying about $2 billion annually throughout the life of the deal. That seems like a steep price tag until you realize that Fox is paying for the top audience draw in entertainment.
NFL games made up 75 of the top 100 most-watched broadcasts in the U.S. in 2021, according to a study by Sports Business Journal.
Sports events in general also dominated, accounting for 95% of the top 100 TV broadcasts last year.
Fox lost the broadcast rights to Thursday Night Football to Amazon (AMZN), which gains coverage of the games a year earlier than planned. But Fox is spinning that as a tailwind for the company worth hundreds of millions of dollars.
"So you called out Thursday Night Football dropping off so that I think we said in the past that releases around $350 million to $400 million to the bottom line for us net. But then you've got all the other things that that play into next year for us say the Super Bowl political and you've got the FIFA World Cup and then you've got two with some momentum that's showing top line. So, where – we couldn't be better positioned for fiscal 2023 from a television segment perspective," Murdoch said.
