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Fox Corp. (FOXA) to Report Q2 Earnings: What's in Store?

Zacks Equity Research

Fox Corporation FOXA is set to report second-quarter fiscal 2020 results on Feb 5.

Notably, Fox became a standalone, publicly-traded company on Mar 21, 2019, following the merger of Disney and Twenty-First Century Fox, Inc.

Fox’s portfolio now comprises Twenty-First Century Fox’s news, sports and broadcast businesses. These include FOX News, FOX Business, FOX Broadcasting Company (the FOX Network), FOX Sports, FOX Television Stations Group, sports cable networks like FS1, FS2, FOX Deportes and Big Ten Network, and certain other assets.

The Zacks Consensus Estimate for the second quarter improved 33.3% over the past 30 days to loss of 4 cents per share.

Moreover, the consensus mark for revenues is currently pegged at $3.65 billion.

Notably, the company beat the Zacks Consensus Estimate in the trailing three quarters, with positive surprise of 14.1% on average.

Let’s see how things have shaped up for the upcoming announcement.

Fox Corporation Price and EPS Surprise

Factors to Consider

Fox’s portfolio strength across entertainment, sports and news content is expected to drive the company’s second-quarter fiscal 2020 results. The company’s strong offerings are driving user growth and this trend is likely to have continued in the to-be-reported quarter.

Moreover, Fox’s investments in expanding its network are aiding in ratings growth, a trend which is likely to have continued in the to-be-reported quarter.

Notably, the addition of WWE to the Fox network boosted ratings for the company, with WWE’s Friday SmackDown debuting to an average audience of nearly 4 million viewers on Oct 4.

Additionally, the company’s successful renewals of distribution and affiliate agreements is expected to have driven top-line growth. Notably, Fox has renewed distribution agreements with Charter Communications CHTR, DISH Network DISH, and Cox, as well as affiliate agreements with agreements with Nexstar, Gray, and TEGNA TGNA.

Moreover, the healthy advertising market is driving ad pricing, particularly for sports and entertainment content, which is expected to have driven its advertising revenues.

However, expenses pertaining to the company’s acquisition of Credible Labs is expected to be reflected in the second-quarter results.

Further, the lack of political-ad spending is expected to have dampened advertising revenues in the to-be-reported quarter.

Key Q2 Developments

Fox backed FOX Bet announced a partnership with Philadelphia 76ers, an NBA franchise, on Nov 25. The company expects the deal to generate awareness about the brand and app, and thus, drive top-line growth over the long haul.

In December, Fox announced the launch of FOX News Channel and FOX Business Network on DISH Network’s Sling TV service. This deal is expected to expand Fox’s distribution capabilities in the near term.

Zacks Rank

Fox currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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