FOX Q1 2023 Earnings Call Transcript

Participants

Corporate Executives

• Gabrielle Brown, Chief Investor Relations Officer
• Lachlan Murdoch, Executive Chair, Chief Executive Officer
• Steve Tomsic, Chief Financial Officer

Analysts

• Jessica Reif Ehrlich, Bank of America Securities
• Robert Fishman, MoffettNathanson
• Ben Swinburne, Morgan Stanley
• Phil Cusick, JPMorgan Chase & Co.
• Steven Cahall, Wells Fargo & Company
• John Hodulik, UBS Group AG

Presentation

[Operator]

Ladies and gentlemen, thank you for standing by. Welcome to the FOX Corporation First Quarter Fiscal Year 2023 Earnings Conference Call. [Operator Instructions]

I'll now turn the conference over to Chief Investor Relations Officer, Ms. Gabrielle Brown. Please go ahead Ms. Brown.

[Gabrielle Brown, Chief Investor Relations Officer at FOX]

Thank you operator. Good morning and welcome to our fiscal 2023 first quarter earnings call. Joining me on the call today are Lachlan Murdoch, Executive Chair and Chief Executive Officer; John Nallen, Chief Operating Officer; and Steve Tomsic, our Chief Financial Officer. First, Lachlan and Steve will give some prepared remarks on the most recent quarter and then we'll take questions from the investment community.

Please note that this call may include forward-looking statements regarding FOX Corporation's financial performance and operating results. These statements are based on management's current expectations and actual results could differ from what is stated as a result of certain factors identified on today's call and in the company's SEC filings. Additionally, this call will include certain non-GAAP financial measures, including adjusted EBITDA or EBITDA as we refer to it on this call. Reconciliations of non-GAAP financial measures are included in our earnings release and our SEC filings, which are available in the Investor Relations section of our website.

And with that I'm pleased to turn the call over to Lachlan.

[Lachlan Murdoch, Executive Chair, Chief Executive Officer at FOX]

Thanks Gabby and thank you all for joining us this morning to discuss our first quarter results, and Happy Halloween everyone. I was trying to think of a Halloween reference or a joke, but in fact there's nothing scary in these results. Actually fiscal '23 has started off -- by the way that's called a dead joke in my household. Fiscal '23 has started off on a solid footing for us, supported by healthy viewership at sports and news, revenue growth across our platforms and impressive momentum at TUBI.

Financially, we delivered 5% growth in our top line revenues, led by an 8% increase in advertising and 3% growth in affiliate revenues. Our advertising growth in the quarter was driven by strong pricing at FOX News and FOX Sports. Record first quarter political revenues at the local stations and in a quarter where industry-wide digital advertising revenues appear to have been under pressure, to be posted standout revenue growth of almost 30%. These are great results for FOX, however, we recognize that there is a lot of commentary around advertising headwinds as the macro environment evolves. Yes, the broader national advertising market is looking more fluid compared to the time of our last earnings call, however, the macro impact is not uniform across our verticals.

While we have observed some softness in the linear entertainment scatter marketplace, remember that FOX does not over index to network entertainment. So any impact there is nominal to us and has been more than offset by the digital entertainment strength delivered by TUBI. Additionally, despite the economic headwinds, we are seeing continued strength across our linear news and sports portfolios, led by the pharmaceutical, restaurant and streaming categories. These dynamics underscore a flight to quality and the importance of our focus on live content with over two-thirds of our advertising revenue generated by live sports and news.

At our local stations, we generated record political revenues for the September quarter. Second quarter to-date political revenues have also been very strong, given the combination of races and ballot issues across our markets. And I can confirm with a week still to go before election day, we have already beat our fiscal year 2021 record at the local stations excluding the Georgia runoffs. Meanwhile, base market sales at the local stations were stable in the first quarter. It's still too early to gauge how much of an impact the macro uncertainty will have on local base market advertising in the December quarter, but we are encouraged by the continued positive growth we are seeing in the automotive category, but recognized industry-specific dynamics that are impacting sectors such as wagering and government public health advertising.

On the distribution side of our business, we have completed the first rounds of our multi-year affiliate renewal cycle. So far the results are consistent with our expectations and we are pleased that the market recognizes the value of our brands as they deliver for their customers. Turning to our business units. FOX News turned in another stellar performance, finishing the fiscal first quarter as the number one channel on cable and the third most viewed network in Weekday Prime in all of television, behind only NBC and CBS.

FOX Nation had a standout quarter for subscribers and end engagement with total subscription growth north of 45% and total hours watched up almost 70% over last year, making our fiscal first quarter, FOX Nation's highest quarter ever for hours watched. FOX Sports has had a very exciting calendar -- has a very exciting calendar head of it this fall. The NFL on FOX is off to a great start and we're pleased to report that America's game of the week is averaging nearly 23 million viewers, up 9% over last year. The 2022 college football season also got off to an outstanding start with 10.6 million viewers for Alabama, Texas in the season's first big noon Saturday game.

It's no surprise that FOX's big news Saturday remains the number one window in college football with viewership up 15% over last year. And FOX continues to be the primary home for baseball's post season, where our coverage across FOX started in October and culminates with the world series throughout this week. As always, we're barracking for a tight seven game series. You know quite well that we have assembled an array of marquee sports rights and many of them will be on full display later this month during the Thanksgiving weekend, when FOX will play host to four of this year's biggest match-ups. The Giants versus Cowboys on Thanksgiving, the U.S. Men's Soccer Team versus England in the World Cup on Friday, Michigan and Ohio State on Saturday afternoon and of course, we'll present America's game of the week on Sunday afternoon, which is between the Rams and the Chief's. It'll be a terrific game.

This extraordinary holiday weekend slate sets us up nicely as we prepare to broadcast Super Bowl 57 in February. Elsewhere, the story at TUBI is breathtaking, with first quarter revenue growth re-accelerating to almost 30% over last year. This marks the first time that TUBI revenue has surpassed the advertising revenue generated by FOX Entertainment in a meaningful way, and in the December quarter for TUBI looks to be a continuation of that momentum with revenue growth rate currently pacing ahead of the September quarter at nearly 40%. Driving revenue at TUBI is strength across all major KPIs, particularly total viewing time, which was up over 50%. In fact, this was TUBI's highest quarterly viewership ever with TVT reaching 1.3 billion hours. TUBI's impressive progress in growing audience, engagement and monetization is indicating that our investment strategy and operational focus is working nicely.

At FOX Entertainment, we saw some changes last month with Charlie Collier moving on to new challenges. We are happy that Rob Wade has stepped into the role of CEO of FOX Entertainment, and those who know Rob will share my view that he will be a tremendous steward to our entertainment businesses. Our fiscal year is off to quite a start. The September quarter results once again highlight the strength of our leadership brands and we are just getting started on what promises to be a banner year for FOX. We are encouraged by the operating trends across the portfolio and the early returns on our digital investments. When paired with our strong balance sheet and low leverage, the FOX story remains a differentiated one amongst its media peers. And while we continue to be mindful of how the macroeconomic environment evolves during the months ahead, FOX remains well positioned to navigate and outperform through any potential uncertainty.

Finally, let me comment on the announcement we made earlier this month regarding a potential combination of FOX and News Corporation. As has been made public, both FOX and News Corporation have formed separate special committees to explore a potential combination following letters received from my father [Phonetic], Rupert Murdoch and the Murdoch Family Trust. For a combination transaction to proceed, it will need the approval of both special committees and a supportive vote by the majority of the minority non-affiliated shareholders of each company. The special committee has not made any determination at this time and there can be no certainty that the company will engage in such a transaction. Given the importance of the work of the special committees, I'm not in a position to take any questions on the proposed transaction at this time.

And now Steve will take you through the financial highlights of the quarter.

[Steve Tomsic, Chief Financial Officer at FOX]

Thanks Lachlan and good morning everyone. As Lachlan mentioned, we have made a solid start to fiscal 2023, delivering total company revenue growth of 5%. This top line momentum was led by 8% growth in our advertising revenues, where in the quarter we continued to see healthy scatter demand for our leading news and sports properties and generated meaningful revenue reacceleration at TUBI. We also benefited from a record fiscal first quarter for political advertising revenues at our owned and operated television stations.

Notably, we are able to drive 3% affiliate fee revenue growth without the benefit of any significant renewals impacting the quarter and trailing 12-months subscriber losses running at approximately 7%. Quarterly adjusted EBITDA was $1.09 billion, up 3% as our revenue growth was partially offset by higher expenses led by continued investment in our digital initiatives and increased rights amortization at FOX Sports.

Net income attributable to stockholders of $605 million or $1.10 per share compares to the $701 million or $1.21 per share reported in the prior period. Once again, this was impacted by the change in fair value of the company's investment this quarter, which we recognize in other net. Additionally, our effective tax rate was slightly higher in the quarter, primarily due to a re-measurement with our net deferred tax assets associated with the reduction in state taxes. This had no impact on our cash taxes in the quarter. Excluding this impact and other known core items, adjusted EPS was $1.21, up 9% over last year's $1.11.

Turning now to our segments, starting with cable network programming. Cable advertising revenues were up 2% as our market leadership in news continue to drive linear pricing gains at the FOX News channel. This was partially offset by lower programmatic revenues at our digital news properties in the current period as well as the impact of scheduling effects at our National Sports cable networks, where last year's revenues benefited from the Concacaf Gold Cup and Copa America Tournaments. Cable affiliate fee revenues were consistent with the prior quarter.

As we have signaled previously, we're in the early days of our next distribution renewal cycle and we are pleased with the outcomes of our earliest renewals and we continue to expect to see these benefits take effect in the back half of our fiscal year and initially concentrated towards the television segment. Cable and other revenues increased 9% in the quarter, primarily due to higher FOX Nation subscription revenues. EBITDA at our cable segment is $742 million compared to the $774 million reported in the prior year periods and included the impact of elevated breaking news cost and the timing of digital investments at FOX News Media.

At Television, we delivered 8% revenue growth led by an 11% increase in advertising revenues. Our television stations saw a record September quarter for political advertising revenues, while the FOX Network benefited from continued strength in pricing and additional MLB Broadcast of FOX Sports, partially offset by softer ratings. Notably, we saw a sequential reacceleration of growth at TUBI with revenues up 29% to approximately $165 million. This was on the back of a 53% increase in total view time and stable CTM's.

Television affiliate fee revenues were up 6% as healthy growth in fees across all FOX affiliated stations more than offset any impact from subscribe declines. Other revenues increased 5% in the quarter, primarily reflecting the impact of the TMZ and MarVista acquisitions, partially offset by the timing of deliveries of Bento Box. EBITDA at our Television segment was up 14% in the quarter, where we saw the typical seasonal increase in our marquee rights at costs at FOX Sports, including the impact of our MLB renewal, partially offset by lower marketing and programming expenses of FOX Entertainment.

We are clearly making strong progress in both audience growth and monetization at TUBI, which underscores our confidence in the long term value of this asset. So it is worth noting that the EBITDA we delivered in the quarter at the Television segment and FOX more broadly, incorporates an approximately $50 million EBITDA investment in TUBI.

Now turning to cash flow, where we generated $196 million of free cash flow in the quarter, consistent with the seasonality of our working capital cycle, where the first half of our fiscal year is characterized by a concentration of payments for sports rights and the build up of advertising related receivables, both of which reversed in the second half of our fiscal year. From a capital deployment perspective, fiscal year-to-date, we have repurchased a further $300 million via our share buyback program.

We remain committed to utilizing our full buyback authorization of $4 billion having now cumulatively repurchased $2.9 billion, representing approximately 14% of our total shares outstanding since the launch of the buyback program in 2019. Finally, we continue to maintain a very robust balance sheet, where we ended the quarter with approximately $5 billion in cash and $7.2 billion in debt. Fiscal 2023 is now well underway and with a strong program of showcase events still to come, coupled with the strongest balance sheet in the industry, FOX is uniquely placed to navigate any macro uncertainty and deliver value to our shareholders.

And with that I'm happy to turn the call back over to Gabby.

[Gabrielle Brown, Chief Investor Relations Officer at FOX]

Thank you Steve, and now we'll be happy to take questions from the investment community.

Questions and Answers

[Operator]

[Operator Instructions] One moment please for the first question. That will come from the line of Jessica Reif Ehrlich of Bank of America Securities.

[Jessica Reif Ehrlich, Analyst at Bank of America Securities]

Thank you. Good morning. One question. Okay, let me think about this. Well, first on the decline in the Pay TV Universe. Could you talk about how that impacts your affiliate discussions, both cable and retrans on the broadcast side and how you're thinking about maybe hedging your reliance on the Pay TV bundle? And then Lachlan I heard you say, you don't want to talk about News Corp, but obviously it's out there and maybe you can just talk a little bit about why now? What do you think the benefits are from the combination and the balance sheet -- your balance sheet is so incredibly strong, but so is theirs. How do you think about using those balance sheets?

[Lachlan Murdoch, Executive Chair, Chief Executive Officer at FOX]

Hi, good morning Jessica. Thank you very much, and I appreciate keeping your questions short. A number of questions so thank you. I know it's tough cause there's a lot to talk about, but on the decline in the Pay TV universe as Steve called out, we've seen a decline of just about 7%. We're not seeing in sort of the most recent remiss that that decline is getting any worse so it's obviously last year was 5% at this time last year. This year, we've seen this tick down to 7%, but it looks to have stabilized at 7%.

And our focus is really in you know continuing to invest in our brands, particularly News and Sport, which are really essential to the Pay Television bundle. So we're not in a position as I think a lot of the cable, general entertainment channels, which are more at risk to people going to SVOD services and streaming to get that type of content, whereas you know there's only one place that you can get FOX News and there's only one place you can get FOX Sports. So our strategy is to continue to invest and be essential for all of our distributors for their Pay Television bundles.

And we've seen that play out through our renewals. We're at the beginning of our renewal cycle and so it's a massive three year cycle. I think in fiscal '23 34% of our aggregate cable and television segment distribution revenue is up for renegotiation. Next fiscal year it's also 34% up for renegotiation, and in fact fiscal '25 is still 28%. So we almost over the next three years completely renew and refreshing and extend our cable distribution agreements. We are well underway with the first -- having completed the first round of those renewals and I have to say we are extremely pleased with the outcome of those renewals because our distribution partners do value what we bring to the bundle and our commitment to the bundle. So those renewals have gone very well and have met every expectation we've had for them.

The split between cable affiliate revenue and television segment affiliate revenue will shift slightly. I think you'll see the television affiliate segment grow at a faster pace than the cable affiliate revenue and that's just in terms of how we negotiate those agreements with the distributors. In terms of a potential recombination with news corporations, I really can't talk about it. It's actually an independent process going through with the independent committees and it's not for me to discuss the conversation -- well, I don't know there are conversation they are having or nor can I discuss them, so sorry about that Jessica.

[Gabrielle Brown, Chief Investor Relations Officer at FOX]

Operator next question please.

[Operator]

We'll go to the line of Robert Fishman with MoffettNathanson.

[Robert Fishman, Analyst at MoffettNathanson]

Hi, good morning everyone. Maybe just more broadly, can you discuss the importance of scale in the media industry or are there advantages to having a smaller portfolio where you can focus on the core of sports and news assets that you just started to talk about, especially when thinking about the cable network negotiations that you already alluded to?

[Lachlan Murdoch, Executive Chair, Chief Executive Officer at FOX]

Good morning Robert. How are you? Look, I think scale you have to be focused and scale is important and what we've seen amongst our media peers over the last few years are our peers getting bigger through mergers and acquisitions, and so I think scale lends flexibility in many ways. So we continue to grow our business, we continue to be -- look at M&A and be very disciplined in how we look at it, but we also do look at the importance of scale. Particularly over the next couple of years when opportunities I think in the marketplace will emerge, they are having the scale, be flexible and how we deal with them will be important.

[Gabrielle Brown, Chief Investor Relations Officer at FOX]

Operator next question please.

[Operator]

And that will come from the line of Ben Swinburne of Morgan Stanley.

[Ben Swinburne, Analyst at Morgan Stanley]

Thank you. Good morning. You guys may be the only ones to talk about revenue growth -- advertising revenue growth accelerating into the December quarter during earnings as particularly with your comments around TUBI. We've seen a lot of weakness in digital advertising broadly. Can you talk a little bit about the drivers there? I know you mentioned TBT, but are there other aspects to what TUBI is offering advertisers that explains the strong growth this quarter and what you're seeing into Q4?

And just to come back to capitol allocation if I can sneak one more in. I guess I'm a little surprised buyback isn't accelerating, just your stocks got like a 15% plus free cash yield and you're sitting on cash $5 billion earning. I don't know 2% or 3% it seems, given the position of the company's cash flow profile like a pretty attractive opportunity to sort of increase the pace. So I don't know Steve, if you have anything you want to add in terms of just what you guys are waiting for looking at to resolve itself to maybe get more aggressive or maybe the environment just means you want to be more conservative. I'd love to hear your thoughts there. Thank you guys.

[Lachlan Murdoch, Executive Chair, Chief Executive Officer at FOX]

All right. Good morning Ben. I'll start obviously with the TUBI and Steve, you can talk about the buyback and capital allocation. So to start with TUBI, if you look at TUBI as a business and what the team there have built is really a best-in-class AVOD service and they've had several years head start in this business. They are entirely focused on AVOD, but that's both from a having established really a superior ad-tech stack and ad-tech team, and also now combined with FOX, an advertising sales team with a proven track record. You couple that with the largest library available in the United States with 48,000 titles, which by the way is 5 times the Netflix library.

The cross platform opportunities that we are executing on across Sports and News and entertainment, it really sort of provides a tremendous platform that's absolutely taking off. TBT was up 53%. That really drives a tremendous amount of the sort of monetization as it flows through. We hold our CPM. Rates are pretty steady at TUBI so it's really -- it's not pricing that is pricing has increased, but it's not pricing that's accelerating. It's really the TBT time that's offering our clients and advertisers more opportunities on the platform. So we are tremendously excited about the future of TUBI as we sit here today.

[Steve Tomsic, Chief Financial Officer at FOX]

Hey Ben, its Steve. Just on the capital allocation. I think this environment obviously lends itself to being more conservative on balance sheet management, but it's our nature to be measured in the way we manage the balance sheet. If you look at what we've done since the establishment of FOX and why capital has been directed, which sent $4 billion back to the shareholders, whether it be in the form of the $2.9 billion buybacks plus over $1 billion in dividends versus M&A which sits at -- net M&A sits at below $1.5 billion. So I think the bias so far has been to return capital to shareholders where we haven't had other alternative uses for it, but right at the moment we feel like being measured is a touch more conservative is the right place to be.

[Gabrielle Brown, Chief Investor Relations Officer at FOX]

Next question please.

[Operator]

We'll go to the line of Phil Cusick of JPMorgan.

[Phil Cusick, Analyst at JPMorgan Chase & Co.]

Hi, thank you. First, a follow up on the TUBI data points. Those are helpful. Thank you. Can you discuss the potential of that business to evolve maybe from what it looks like today and I know you're in -- specifically in investment mode, but what does it take to get that EBITDA number to a positive over time? And then second, any sort of update on the Flutter negotiation or timing there? Thank you.

[Lachlan Murdoch, Executive Chair, Chief Executive Officer at FOX]

So on TUBI. TUBI is being profitable in past quarters and we've made the proactive and I think prudent decision to use not this opportunity to invest in TUBI, its modest investment compared to -- very modest investment compared to what our peers are investing in their SVOD platforms, but we think it's a sage investment because the opportunity to really lead in the AVOD market is absolutely there for the taking. We are leading the AVOD market, but they sort of cement that lead and to win in the AVOD market is absolutely our goal. So we'll continue to invest into the short to medium term in TUBI. I think particularly in an environment where there are potential sort of economic stress in households, having a free service is a great position to be in, and I think TUBI will benefit from any -- frankly from any economic chills that the people might feel. So it's the right time to invest this, it's the right time to extend our lead.

[Steve Tomsic, Chief Financial Officer at FOX]

Flutter?

[Lachlan Murdoch, Executive Chair, Chief Executive Officer at FOX]

Oh and Flutter, we expect a decision in the Flutter arbitration imminently and once we have their -- that handed down, we'll assess our position, but we expect imminent decision and we expect to be pleased by it so.

[Gabrielle Brown, Chief Investor Relations Officer at FOX]

Next question please operator.

[Operator]

That will come from the line of Steven Cahall of Wells Fargo.

[Steven Cahall, Analyst at Wells Fargo & Company]

Thank you. I know you're not commenting on the merger itself, but I think you mentioned that a majority of independent shareholders need to approve it. So I was wondering if you could at least comment as to whether shareholders are going to be provided with some incremental information between now, and I guess what will be a required shareholder vote. And the reason I ask is I think that FOX in my opinion is a great business. So I think shareholders are wondering why they want to mix a great business with just a different business. So if you could at least comment not specifically on the deal, but what that investor education is going to look like. I think that would help everybody envision what's going on. Thank you.

[Lachlan Murdoch, Executive Chair, Chief Executive Officer at FOX]

Thank you very much. As I mentioned, I can't really comment on it because we don't know if there is a deal or if there will be a deal, what that deal would look like so it's hard to comment on anything or impossible to comment anything that doesn't exist today. So we like you -- have to be patient, sorry and wait to see what the special committees are -- how the -- what the outcome of their discussions and process is.

[Gabrielle Brown, Chief Investor Relations Officer at FOX]

Operator we have time for one more question.

[Operator]

And that will come from the line of John Hodulik of UBS.

[John Hodulik, Analyst at UBS Group]

Great. Thanks guys. Maybe first a couple of follow-ups on the TUBI data. First and Lach you may have covered this, but like what content is driving that 50% increase in TVT there? And then is the $50 million investment that we saw in the quarter -- is that a good run rate going forward? And is that -- I would imagine that's not a -- that doesn't constitute a change in the guidance for sort of flattish digital dilution in the quarter. And then lastly, just back to the ad market. Anything you could say about sort of ad-trends, especially in the local TV market, ex-political as we head into the December quarter because again there's been a number of sources of weakness there and I'm just wondering what you're seeing in that part of the market? Thanks.

[Lachlan Murdoch, Executive Chair, Chief Executive Officer at FOX]

So let me start on TUBI and Steve can talk about the run rate, and then I'll come back to the local ad market ex-political and with political as well. So look, the TVT growth across TUBI has really been across all genres. It's been pretty widespread. TUBI as we've discussed on previous calls, TUBI's core proposition is video on demand so it's their movies and their television series on demand.

They have worked hard over the last year or so launching I think it's now over 200 FAST Channels, which are a combination of both News, but also general Entertainment and Sports FAST Channels. Those FAST Channels are doing very well and are growing rapidly, but are overall a smaller percentage of their TVT, but it's pleasing that this is -- the growth has been really across the entire platform.

Steve do you want to talk about the run rate?

[Steve Tomsic, Chief Financial Officer at FOX]

Just John, run rate for TUBI is at $50 million absolute EBITDA deficit in the quarter. Last year we sort of across TUBI -- across the whole year was in the low 200s in terms of EBITDA deficit for the company. I would anticipate that the $50 million we saw last year and I expect this to be the same case this year, where the second half of the year had relatively more investment than first half, and so you should expect to see a relatively consistent pattern with that. Listen we -- it doesn't change sort of our guidance in terms of the dilution around digital investments across the company, whether that includes TUBI, Nation, whether block-chain, the rest of the portfolio that remains intact as it is. But TUBI listen as we see that business develop, we'll continue to invest in as we see that top line continue to grow, which is exceeding our expectations.

[Lachlan Murdoch, Executive Chair, Chief Executive Officer at FOX]

And then on the advertising market, it's interesting as you sort of look at the -- what's the word, the sort of ins and outs of the market, like in some categories where local might have some softness or more fluidity in the market, you're seeing it being picked up in national advertising in the same category. So sectors that were strong in local now are strong in national. So there's some sort of swings and roundabouts there. But overall, the trend is really a flight to quality, particularly around our News and Sports brands and platforms. So nationally, I think I called out pharmaceutical is very strong, restaurants, particularly quick service restaurants and even more particularly pizza category is doing very well.

I know my household is -- the advertising is working and media are really streaming, particularly as SVOD services are more and more competitive, they are spending a lot of money marketing themselves on our platforms. On the soft side and we're seeing softness in wagering. Again, that's more of a local softness in wagering, but we're picking up a lot of that in national wagering sort of betting spend and government health services. So this time last year, there was still a lot of COVID-19 health advertising messaging from governments and obviously that's very significantly less this year around.

Locally, automotive remains very strong. Again, this is the first time in a couple of years that we've seen a local automotive advertising as strong as it is now. The other category locally that's very strong is general services, which is good to see and any softness some elsewhere is more than made up by this record political year. I think you have to remember that in our markets and we have a tremendous local station footprint and there are Senate races in 13 out of our 18 markets and particularly the hard fall ones are Arizona, Georgia, Pennsylvania, and we're certainly seeing a tremendous amount of political spending flow through those markets. But also you know this year, gubernatorial races, we have -- I think 17 gubernatorial races in our 18 markets so it's an incredibly busy time and we'll certainly see it flow through in our political revenues.

[Gabrielle Brown, Chief Investor Relations Officer at FOX]

At this point we are out of time, but if you have any further questions please give me or Dan Carey a call. Thank you once again for joining today's call everyone.

[Lachlan Murdoch, Executive Chair, Chief Executive Officer at FOX]

Thanks everyone.

[Operator]

[Operator Closing Remarks]