Fox’s big bets on football and sports gambling continued to pay off in the most recent fiscal quarter, as the company saw its national and local ad sales revenue increase 6% to $2.41 billion.
Commercial inventory, which accounted for 54% of Fox’s overall second-quarter revenue ($4.44 billion), got a big shot in the arm from the broadcast flagship’s NFL and Big Ten coverage, as well as increased spend by legit bookmakers. While Fox doesn’t break out its sports TV deliveries, the combined ad sales haul for its NFC-heavy Sunday NFL package, Thursday primetime games and college football slate likely topped the $2 billion mark during the period.
Fox’s regular-season NFL coverage averaged 18.6 million viewers, per Nielsen, while the Sunday afternoon “America’s Game of the Week” showcase notched its 13th straight year as TV’s most-watched standalone program. The Fox national package averaged 23.1 million viewers, edging CBS’s suite of 10 coast-to-coast broadcasts by some 1.55 million viewers.
Not included in Fox’s Q2 grab was the NFC Championship Game, which scared up a season-high 50.2 million viewers and a 23.4 household rating. The Rams’ 20-17 victory over the division rival 49ers netted nearly $150 million in national ad sales. According to Fox CEO Lachlan Murdoch, the demand for air time in the NFC capper was such that the ad sales team was able to bring on “21 advertisers … that were not present a year ago.” Among the newcomers were Slack, NerdWallet and Caesars Entertainment, per iSpot.tv data.
The Big Ten also did some heavy lifting, as the TV turnout for Fox’s “Big Noon” matchup averaged 5.76 million linear-TV viewers per week, up 13% versus the inaugural 2019 season. The biggest draws in the early college football window were Michigan-Michigan State on Oct. 30 (9.29 million viewers) and the resumption of the Ohio State-Michigan rivalry, which drew 15.9 million viewers on the Saturday after Thanksgiving.
Speaking to analysts during the company’s earnings call, Murdoch this morning noted that the network’s share of college football impressions has tripled since 2016, the last year prior to the Big Ten rights acquisition. Murdoch said Fox now commands 22% of all in-season college football impressions, up from 7% six years ago.
Murdoch went on to talk up Fox’s investment in sports betting, saying that the legal-wagering boom went a long way toward making up for softness in local automotive spend. “Sports-wagering revenue is our leading category of growth and really is significantly driving the revenue increases across our station group, [in markets] where wagering is legal,” Murdoch said. “We’re pacing up over 100% in the sports-wagering category today. We have already written over 50% more local sports betting revenue at this point of the fiscal year than we did across all of fiscal ’21.”
When asked how the ongoing arbitration with Flutter over Fox’s FanDuel stake might shake out, Murdoch said he expects things to be sorted out by mid-summer. This lines up with at least one analyst’s expectations; in a note to investors issued shortly after the Fox call, MoffettNathanson’s Robert Fishman indicated that “the recent pullback in public valuations for sports betting companies” should help grease the skids, with a resolution likely to arrive “in the coming months.”
Fishman believes that a standalone FanDuel should boast a valuation of some $14 billion. Should Flutter proceed with its delayed FanDuel IPO, Fox’s 18.6% stake should be worth around $2.5 billion.
Fox this year expects sports betting to generate over $100 million in advertising revenue, which would make it one of the company’s most lucrative categories. As Fishman noted, this windfall is being generated even though wagering on sports is only legal in a handful of Fox’s affiliate markets. Legitimized gambling has been rubber-stamped in four of the states in which Fox runs owned-and-operated local stations.
Murdoch later clarified that Fox’s investment in sports betting is designed to increase the value of the company’s TV business. Live sports and shoulder programming account for around 85% of the flagship broadcast network’s annual commercial impressions, and as more fans board the betting bus, their engagement with Fox’s sports properties will only increase.
Before ringing off, Murdoch addressed the impending USFL relaunch, saying the startup is being advised by the NFL as it implements its rules and procedures. Fox holds a minority stake in the USFL, which kicks off its spring season on April 16. Because it is not shouldering the USFL burden on its own, Fox expects getting the league up and running shouldn’t be too arduous, with the EBIDTA hit expected to be in the $25-to-$65 million range.
Fox’s broadcast TV division in 2021 booked $7.74 billion in revenue, up 10% versus the year-ago $7.05 billion. The cable networks unit, which includes FS1 and Fox News Channel, took in $6 billion on the year, good for a 6% year-to-year bump.