10-K: Fox Corp. Reports Revenue Growth, Eyes Roku Acquisition

Fox Corporation announced a 5% increase in total revenues for fiscal year 2026, driven by strong advertising and distribution growth, while also detailing its proposed acquisition of Roku.

Summary

• Fox Corporation reported a 5% increase in total revenues for fiscal year 2026, reaching $17.126 billion, up from $16.300 billion in fiscal 2025.
• Net income attributable to Fox Corporation stockholders decreased by 26% to $1.685 billion in fiscal 2026, compared to $2.263 billion in fiscal 2025.
• The company announced a definitive agreement to acquire Roku for a combination of cash and Class A Common Stock, valued at $96.00 in cash and 0.9693 shares of FOX Class A Common Stock per Roku share.
• The Television segment saw a significant 52% increase in Segment EBITDA, reaching $1.438 billion, driven by strong advertising revenue from major sports broadcasts.
• The Cable Network Programming segment experienced a modest 2% increase in Segment EBITDA to $3.099 billion.
• The company returned approximately $2.3 billion to stockholders through dividends and stock repurchases in fiscal 2026, including a $1.5 billion accelerated share repurchase program.
• As of June 30, 2026, Fox Corporation had $4.2 billion in cash and cash equivalents.

Sentiment

Score: 7

Explanation: StockSavvy.ai views this filing as moderately positive, primarily due to the significant revenue growth and strong performance in the Television segment, despite a notable decrease in net income. The proposed acquisition of Roku is a major strategic move that could significantly enhance future growth.

Positives

• Total revenues increased by 5% to $17.126 billion in fiscal 2026.
• Advertising revenue grew by 7% to $7.339 billion, boosted by major sports events like the FIFA Men's World Cup and additional NFL/MLB postseason games.
• Distribution revenue increased by 4% to $8.058 billion, driven by higher average rates per subscriber.
• The Television segment's Segment EBITDA surged by 52% to $1.438 billion.
• The company maintained strong liquidity with $4.2 billion in cash and cash equivalents.
• Significant capital was returned to stockholders through dividends and share repurchases totaling $2.3 billion.

Negatives

• Net income attributable to Fox Corporation stockholders decreased by 26% to $1.685 billion.
• Operating expenses increased by 3% to $10.853 billion, partly due to costs associated with the launch of FOX One.
• Selling, general and administrative expenses rose by 9% to $2.367 billion, driven by higher employee costs and FOX One launch expenses.
• The company faces significant termination fees ($866 million or $1.2 billion) if the Roku acquisition does not close under certain conditions.
• The company recorded non-cash impairment charges for FCC licenses totaling $64 million in fiscal 2026.

Risks

• The Roku transaction may not be completed or may be delayed due to failure to satisfy closing conditions, including regulatory approvals.
• Entry into the Roku Merger Agreement could negatively impact the market price of common stock and lead to significant transaction costs.
• Changes in consumer behavior and evolving technologies may adversely affect the company's business models, revenue streams, and advertising revenues.
• Declines in advertising expenditures due to economic weakness or shifts to digital offerings could impact revenues.
• Failure to renew affiliation and carriage agreements on favorable terms could materially affect business operations and revenues.
• Damage to the company's brands or reputation could have a material adverse effect on its business.
• The company is subject to cybersecurity threats and potential disruptions to its systems.
• The company faces risks related to content piracy and the protection of its intellectual property rights.

Future Outlook

The company's future outlook is significantly influenced by the proposed acquisition of Roku, which is expected to enhance its streaming capabilities and reach. The company aims to maintain leading positions in news, sports, and entertainment, increase revenue growth through high-quality content, and expand digital distribution offerings.

Management Comments

• The company's revenues increased 5% for fiscal 2026, as compared to fiscal 2025, due to higher distribution, advertising and content and other revenues.
• The increase in advertising revenue was primarily due to sports programming led by the broadcasts of the FIFA Mens World Cup and additional National Football League (NFL) and Major League Baseball (MLB) postseason games and higher pricing partially offset by the absence of the February 2025 broadcast of Super Bowl LIX.
• Operating expenses increased $335 million or 3% for fiscal 2026, as compared to fiscal 2025, primarily due to costs associated with the launch of FOX One and higher digital content costs.

Industry Context

StockSavvy.ai notes that Fox Corporation's performance reflects broader industry trends of revenue growth in sports broadcasting and digital platforms like AVOD services (Tubi), while also highlighting the challenges of rising content costs and evolving consumer viewing habits. The proposed acquisition of Roku positions Fox to compete more effectively in the rapidly consolidating streaming and connected TV landscape.

Comparison to Industry Standards

• Fox News has maintained its position as the top-rated national cable news channel in Monday-Friday primetime for over 24 consecutive years.
• Fox Sports is a leader in marquee live sports broadcasts, including the NFL and MLB, securing rights under long-term contracts.
• Tubi, an AVOD service, showed 20% growth in total view time in fiscal 2026 and is among the most-watched free ad-supported streaming services, averaging 2.2% of all television viewing.
• Fox Entertainment consistently delivers the youngest and most diverse audience among broadcast networks in primetime.
• The company's owned and operated television stations maintain strong positions in major markets, often ranking as the #1 or #2 rated news provider in key time slots.

Legal Proceedings

• Smartmatic USA Corp. lawsuit alleging defamation or disparagement, seeking $2.7 billion in damages; summary judgment motions argued, trial not yet set.
• Derivative lawsuits filed by stockholders alleging breaches of fiduciary duty by directors and officers related to news coverage of election fraud allegations.
• Lawsuits and arbitration claims arising from alleged misuse of personal information by Tubi, with a settlement reached in Gregory v. Tubi.
• The company is subject to ongoing regulatory and investigative inquiries related to sexual harassment and discrimination claims at FOX News.

Related Party Transactions

• Transactions with related parties for buying/selling programming and purchasing/selling advertising were not material in fiscal 2026, 2025, and 2024.
• Amounts due to related parties were $82 million as of June 30, 2026.

Stakeholder Impact

• Shareholders may benefit from the proposed Roku acquisition, which aims to drive future growth, but also face risks if the transaction is delayed or does not close.
• Employees may be impacted by the integration of Roku and potential restructuring efforts.
• Advertisers may benefit from Fox's strong reach in sports and news, but face a dynamic digital advertising market.
• Distributors (MVPDs) may see continued negotiation leverage due to declining subscriber bases.

Next Steps

• Complete the acquisition of Roku, subject to stockholder approvals and regulatory clearances.
• Continue to invest in and expand digital distribution offerings and direct consumer engagement.
• Optimize the sports portfolio and maintain leadership positions in news, sports, and entertainment.
• Manage operating expenses and integrate new initiatives like FOX One.
• Continue to return capital to stockholders through dividends and share repurchases.

Key Dates

Recommendation

The company shows solid operational performance with revenue growth, particularly in its core segments. However, the significant decrease in net income, coupled with the substantial financial commitments and regulatory hurdles associated with the proposed Roku acquisition, introduces considerable uncertainty. While the strategic rationale for the Roku deal is strong, the execution risks and potential for integration challenges warrant a cautious 'hold' stance until more clarity emerges on the transaction's completion and its impact on future financial performance.

Keywords

Fox Corporation, Roku acquisition, financial results, revenue, Segment EBITDA, advertising, distribution, media industry