Fox Earnings: Relatively Good Results Yet Again, but Long-Term Risk Remains

Fox reported a very good fiscal third quarter, with the firm continuing to largely withstand declining industry trends better than peers. We expect this outperformance will become even more pronounced later this calendar year—in Fox’s fiscal 2025—as Fox has relatively more exposure to political advertising spending. We’re still uneasy with Fox’s long-term dependence on the traditional pay-TV bundle. While management reaffirmed its dedication to the traditional bundle, it highlighted progress the firm is making with its free streaming service, Tubi, and the recently formed sports streaming joint venture with Disney and Warner Bros. Discovery. We’re maintaining our $43 fair value estimate, as we continue to see the firm as undervalued but with high uncertainty.