Fox Corporation (FOXA) Earnings Call Transcript & Summary

Welcome, everyone. I'm John Hodulik, telecom and communications infrastructure analyst at UBS. Thank you all for joining us. And I'm pleased to introduce our next speaker, Steve Tomsic, CFO of FOX. Steve, thanks for being here.

Thanks, John. Thanks for having us back.

So we've got about 40 minutes. And as you all know, please send me any questions that you may have, and I will try to weave them into this discussion, either through the application. You can e-mail me or text me, and I'll try to make sure they get asked.

So Steve, maybe we can start off by just giving us a quick overview of the company's priorities and a sketch of the positioning of the company as we look out to 2021.

Okay. Thanks, John. So I think from a positioning perspective, and I'm sure we're going to talk about -- we'll go in and deep dive into many of these topics over the course of the next 40 minutes. But from a positioning perspective, I think calendar year '21 has been -- notwithstanding COVID and even as Lachlan said, in spite of COVID, has been somewhat of a better year for us. So if you think about sort of owning the attention of the living room over the course of calendar year, like we started the year, it feels like an eon go, but we started the year with some broadcast to the Super Bowl, which was an enormous success for us. That then led into -- unfortunately, it led into to COVID, but then our local TV stations became so important in terms of informing and communicating to the local communities they serve, and so they become hyper relevant through that phase of sort of what the country and the world has gone through. And then that dovetailed into an election season for the ages, right, where Fox News' prominence has never been greater. And so we sort of -- we're coming to the end of that. We still have a runoff rate in Georgia, and we have inauguration. But if you look at calendar year 21, it's been pretty amazing from an on-screen perspective, notwithstanding all the other -- all the issues that have gone on in the world. We entered the year with a fortress-like balance sheet, so it gives us enormous flexibility. Affiliate, if I look sort of through the businesses and through the sort of the revenue lines, affiliate, we sort of ticked off so many renewals over the course of the last 2 years that we're in great shape from an affiliate perspective going into the next couple of years, which were relatively quiet. Advertising, I'm sure you're going to want to ask about but has been a pretty robust market, much better than we expected when we sort of -- in April, May. And then you go through the businesses. News, obviously, has had an enormous run over the last 6 months, and it's about continuing to be the leading news service in the market. Our local TV stations have again been able to leverage sort of the political ad revenue, and that sets us down well for the second half of our fiscal year. Sports and entertainment are both focused, with different aspects to it, but are very focused on getting product on screen and going through all these sort of hoops of production difficulties with the pandemic. And Sports has got the added pesky issue of an NFL renewal that's in the offing. And then when you look at sort of those cluster of assets, what we want to do with those cluster of assets is shine a torch on some of the new businesses, use those assets to shine a torch and really cross promote some of the new businesses that we've acquired since the spin, and so things like 2B, FOX Bet and Credible are all adjacencies where we've seen the power of being able to take that cross-promotion strength across those big viewership assets and being able to really turbocharge the growth in those assets. So we set up for calendar year '21 really, really strongly. So I'm sure you don't want to ask questions more deeply in each one of those aspects. But in many respects, we couldn't be more pleased about where we stand right now.

Perfect. That's a great overview. Yes, maybe we start with the advertising market. It's certainly been one of the strength of the return of the advertising market. It's been 1 of the themes of the conference so far. FOX News, in particular, is coming off a very strong year, as you said, record ratings. Maybe talk about the success you had during the political season. And then as you look ahead, can you maintain the momentum that you've recently seen as we move into a sort of a post-election cycle?

Yes. So listen, FOX News specifically has had a great run like -- we just closed out November, obviously, which represents the 53rd consecutive month, and it's been the highest-rated cable channel. It's rating since Memorial Day has essentially beaten everybody at cable nets and broadcast nets included. So that ratings momentum has been extraordinary. It is feeding absolutely into advertising strength, and so we would expect to have a record advertising year at FOX News, even though it doesn't -- and that's largely driven by the fact that it is converting sort of that viewership into ad dollars because it doesn't accrue the same kind of political advertising benefit is what accrues to our local TV station, so it really is driving sort of general advertising revenue. And with respect to that, we've really opened up the client base there. So we've got a much broader sort of pallet of clients that are advertising on FOX News. There's no doubt that sort of as we look forward into the second half of our fiscal '21, it's almost impossible to maintain or sustain the intensity of the political news cycles. So we would expect all news channels to take somewhat of a breather in the next 6 months once we get through inauguration and sort of have a settled election result. But as we look at it, and as is proven in the case over prior election cycles, has that sort of intensity of viewership dies down. Yes, it takes down the overall rating. But our share usually sort of picks up. And so we would anticipate that, that still remains the case as we get through this current election cycle.

Got you. How does FOX News think about the potential for -- from a competitive standpoint for new entrants entering this space?

Yes. Listen, it's an amazingly strong platform. And I don't -- we don't have a hubris bone in our body, right? So we don't take lightly the potential for competition, whether it's the existing sort of classic MSNBC or CNNs or the sort of emerging ones like Newsmax and OAM.

Right.

But when we look at -- or anybody else that might emerge for that matter. But when we look at FOX News, and I think people take the simplistic view and many of them are not viewers of FOX News. The FOX News is simply the sort of 3 hours of prime time that takes place Monday through Friday. The service and the actual business is so much broader than that. And so it is a 24/7 news operation. It took us $1 billion to get to sort of -- $1 billion in cash burn to get FOX News to profitability. It's not a small undertaking to try and sort of compete at that level. People don't just tune in into sort of the editorial and the opinion in prime time when there's a major national or international news story. They tune to FOX News, and you need to have that kind of coverage and that investment in that kind of coverage for people to tune into you. The brand has got amazing loyalty, like over the last 5 years, you've seen a lot of changeover in both management and on-screen talent, some of it sort of quite high-profile changeover, and the ratings haven't missed a beat. In fact, they've grown all the way through. So we're not beholden to any sort of 1 or 2 personalities on the network. It's a much bigger brand than that. It's not just the linear business either. It is also all the digital [ instruments ] that go with that. So our website generates enormous amount of traffic. So November alone, we had close to 4.5 billion pages for the foxnews.com website. So I think when people think about competition, they sort of -- their knee-jerk reaction is to think, well, all we need is 2 or 3 talking heads to go head-to-head with ours. The business is much bigger than that. And so we never take competition lightly. And as Lachlan mentioned, I think, on our last earnings call, we kind of welcome it because it sharpens us up and gives us a real focus. But we think the sort of -- in order to qualify to be competitors to us, you really have to put your best foot forward. And so we think we've got a business that has stood the test of time. And every time there's been skepticism about what the future looks like, we've pierced through and hit another high. So we feel super confident about FOX News being able to compete in any environment going forward.

Great. Maybe on the local TV side. You highlighted noticeable improvement ex-political on your most recent -- the fiscal 2Q call. Any impact yet on the local side from the rising rates of COVID that we're seeing sort of the second wave of the pandemic?

No. Listen, we watch it really closely because it really is our -- all -- pretty much all of local is spot business, and so it is the canary in the coal mine for us. October is almost impossible to draw a real line around sort of what we call base market advertising because it was just absolutely overwhelmed by the amount of political advertising that was written through October. November is a more normal month. You still had the early few days of November with political in it. And we've also had Atlanta continuing through with even more political advertising. But November, from a base market perspective, was actually up versus last year by a couple of percentage points, which is really encouraging. And we're on the lookout for December. It's still early days in December, so I don't -- it's too early for us to call that. But from where we were, well, April, we were pacing minus 15%. So we've been pacing pretty much square to the prior year is an amazing turnaround for us. So we feel, I think, a little bit more than cautiously optimistic that our local TV stations are going to ride this through pretty well. And I'd imagine that we'll close the first half of our fiscal year pretty close to a record in terms of advertising revenue because the strength of the political bid has just been enormous.

Yes. And maybe on that political -- I mean sounds like it was just massive. October, even the majority of the month -- a lot of November didn't just end after the election. I mean is there any way to sort of size it versus what you've seen in the past in some of the past cycles?

No. So if I look at it from a calendar year perspective, so if you say the political government went off in January of this year and finishes sometime through November, we'll have written, across the whole business included, local -- largely local, but also somewhat national, we'll have written close to $400 million worth of political. And that is significantly ahead of -- our most recent record on that was the most recent midterms. And that comfortably eclipses those numbers.

Right. Maybe sticking with advertising. The upfront was obviously noticeably different this year. How did FOX perform in both in terms of volumes and pricing versus last year? And maybe talking about some of the contracts. Was there additional flexibility given all the unknowns in the market right now?

Yes. So the upfront was unit based this year, and it sort of took place over an extended period as sort of visibility grew around different on-screen assets being available or not available. So we took -- and Marianne Gambelli, who runs our ad sales business, took a tactical view to hold back on how much we actually sold upfront. So we took a few percentage points of volume. We took that down a little bit in the expectation that scatter would be there for us and be there with pretty strong pricing, which is proving to be absolutely true. So across the board, we were sort of low to mid-single-digit pricing increases. There were sort of a little bit -- around the edges, there was increased sort of levels of flexibility offered. But now that we moved into a very, very tight scatter market, it sort of is playing to our favor.

Right. And then probably just before we started, we were talking about the content production side. Where are you in terms of getting the content production back up and running? And are you back to sort of a pre-COVID pace? And then how should we think of those shows coming back online?

Yes. So listen, we were pleasantly surprised that we were able to get The Masked Singer up and running this side of the new year, so we got another season of that in. And we're hopeful that we get another season in the new year. Sport, you can leave to one side, because I think everybody is pretty aware of what's happening in the NFL and college football. And that's a week-to-week proposition that we sort of adjust to. Entertainment, production-wise, the sort of the reality and competition shows have fared a lot better. And we were able to get a lot of that away. Animation, the same. So our Sunday night animation lineup has come through pretty well unscathed. Our big scripted shows are in production now. And assuming that sort of the California shutdown laws allow that production to continue going, we still fully expect to get those shows on air at the start of the new year as mid-season launches. So at the moment, I think we're -- the slate that we have -- that we expected to have will actually eventuate, assuming that we can continue those scripted shows being produced. They're probably halfway through production in the season. So we feel pretty good that we'll be able to get a meaningful number of episodes through starting sort of that first or second week of January.

Got it. So no new production sort of shutdowns given the tighter sort of rules out in L.A. and California?

Not at the moment. And listen, like -- I'm on the lot now, and a lot of our shows are produced on the sound stages we have here on the lot. And the COVID protocols that they have are really, really stringent. And so I think they're very careful. But it doesn't mean that production doesn't happen at the same pace as it used to happen. But no, we remain hopeful that we can get those shows away through -- into the new year.

Got it. Maybe switching briefly over to the -- onto the affiliate side. As you said, you're coming off sort of a number of heavy years of renewal activity. Anything you can tell us about those recent deals, whether from a -- directionally from a pricing standpoint or qualitatively just on any sort of new asks from distributors or additional flexibility you guys have from a D2C standpoint?

So I think the 2 things that are worth really mentioning here is, from a pricing perspective, we achieved all of our internal objectives in terms of pushing rate. Most importantly around that, we made some statements at our Investor Day around where we expect retransmission revenue to grow. And so we are absolutely -- all those renewals put us on a pathway to hit and exceed those targets. So we feel really happy about rate. The other thing that we feel really happy about is just the -- you've seen a lot of sort of tempestuous renewals taking place in the market over the last 12 months, with the exception of one where we are off dish for a period of time. We got our renewals done really real -- in a -- with the usual sort of negotiation but without the Acrimony. So we feel -- well, I think that talks to or speaks to just the strength of the brands that we bring and the resonance and relevance that they have that they must-have for our distributors. And so our positioning with our distributors is strong. As you said, we got through a big volume of renewals over the course of the last 2 years, which means that the next -- this calendar year and next calendar year are relatively light for us. And so that rate will continue to play for us and really what is going to drive our affiliate revenue, overall growth is going to be where industry subscribers guide for the next 1.5 years or so. So -- but we were able to achieve all of our sort of objectives, making sure that we're carried on most available tiers. So we feel really good about the sort of the progress we've made there.

Great. I know you've touched on subscriber growth. I mean the number suggests that the cord-cutting trends have actually gotten a bit better over the last couple of quarters. Third quarter, in particular, there was virtually no cord-cutting that sort of hit the pause button. Just what's your view on the overall sort of direction and sort of the course and speed of the multichannel TV market? And maybe what are you seeing in terms of -- from the traditional side, cable, telco satellite, versus the virtual guys? I mean obviously, the virtual guys have been taking up some slack and actually -- at least this quarter, doing quite well.

Yes. No, I think to take your final point, yes, we are absolutely seeing the virtual guys really pick up the pace. I think they're probably the 2 leaders there are YouTube TV and Hulu, the sort of the best of the bunch at the moment. But they're the biggest and the most scaled. And that's even with them taking price from a retail perspective over the last probably -- well, they've been taken for a while now but particularly over the last couple of months where they've gotten price points to about $65 a month. There's no doubt that traditionals have been lagging there, but our sort of -- our macro view is that we will continue at a rate of decline, and then our expectation is, at some point that, that probably plateaus. And you have -- and you end up with what is a core subscriber base that wants essentially live news and sports, which is most fundamental to that bundle. Our hope is that the bundle, whether it be linear, digital MVPD or some sort of new version of over-the-top bundles, begins to take shape in a much more sort of core form of bundle at a more affordable and approachable price point because we think -- it doesn't matter which bundle that is expressed in the market. The asset that we bring to the table are going to make -- are going to be pretty mandatory to any one of those bundles. And so we're hopeful that we do get to that point where we get to our core bundle. And we think that given how much of our assets, so 1/4 of that bundle, at the time, we think that we can disproportionately take price for our assets given that others are sort of trying to have their feet in both counts, whether it be the traditional bundle or going direct-to-consumer themselves. And so we think our growth, at least in the initial term, will come from being able to continue to take price disproportionately against sort of the other people that are in the bundle. And that should more than offset sort of the subscriber sort of headwinds that we're facing.

That makes sense. So in your vision of how the bundle evolves, are you thinking sort of fewer entertainment-focused networks, especially as all that viewership and frankly, content spend shifts to the Internet in these D2C platforms? And maybe, especially given your positioning now, maybe less RSNs, which seem to be, at least from an expanded basic standpoint, sort of less core to what people are bought but what distributors are offering and what people are buying?

Yes. I think both of those points are right, John. And I think when we look at -- should we take our service direct-to-consumer versus staying sort of -- wouldn't say wedded to the bundle, because we've got a bunch of businesses that sit outside of the bundle that are delivering really nice results, and I'm sure we'll get into that. But I think when you look at -- if you have a foot in both camps, then it absolutely compromises your capacity to get price in sort of the linear bundle because a linear distributor can stay down and say, well, I'll just point my subscribers to your app at a pretty sharp price. And so we don't have that or channel conflict. And so we think that as that sort of happens to some of our sort of general entertainment channel colleagues, we think that value increasingly shifts to the people that are -- the essence of the bundle, which is live sports and live news.

That makes sense. You brought up Sports as just sort of the core sort of glue holding the bundle together. Maybe we can pivot there. Starting with the NFL, how is that asset been performing for you? And how are you positioned going into the NFL renewal, obviously, gets a lot of -- I think going into the pandemic, we thought that you would get the renewals done by now. Anything you could tell us on timing or your positioning in those negotiations?

Yes. So listen, I think NFL this year, it feels like a bit of an anomalous year from a sports perspective, given just how dislocated the overall sports calendar has been. And it's also ran straight into the competition from a viewership perspective from just everything that's happening in the world, whether it be the election or COVID. And so we think -- and also sport feeds off having a live audience. And so we think this year, in terms of audience levels, sort of we're down a touch from an NFL perspective. We think there's a lot of factors that show that this will be just a one-off. And NFL super important to us. From a positioning going into the renewal, there's not a lot that I can say. You can ask me 1,000 questions on this stuff, sort of add them all back. But listen, we feel -- we're in a constructive dialogue with the NFL right now. We feel really well-positioned with respect to being able to get a good renewal away with them. It's hard to put a time frame on it, because there's just so much happening in the world that, in any given week, distractions can go to sort of fixing up sort of a COVID mud, week or whatever it might be. So I don't want to give it -- in some respects, the time line is certainly beyond my control. And so I don't want to speak for the NFL in terms of when they want to conclude negotiations. But we feel like we're a really strong partner of the NFL. Probably no one has an NFL as it's -- to its core in terms of the business in terms of on screen as we do with respect to NFL. We've built an NFL -- we've built a local station footprint that completely supports the NFC teams that we have on our -- in our NFL package. So I think there's enough to line up to say, we're in a great position to renew it. But obviously, it comes down to a negotiation. And there'll be a value judgment around all of that, that needs to be made. And so that will all play out in the coming weeks and months. So -- but needless to say, I think we're as well positioned as anybody to renew the rights on reasonable terms.

All right. Just 1 more on the NFL and then I'll leave you alone. Can you talk to the importance of maintaining 2 NFL packages through the renewal cycle versus -- there's the -- there's also a lot of thought that maybe that you could just drop to 1 just given the expected price inflation versus what you expect to see?

Yes. Constantly. Listen, I think we're in, what, our third year of Thursday Night Football. So -- and we're sort of well into our sort of second decade or I think we're into our 25th year of Sunday. So obviously, when you look at -- if there is a choice between the 2 packages, then the heritage that we have with -- as I mentioned, the fact that the Sunday NFC package lines up so sort of complementary with our local stations, that, that is the one that sort of is absolutely core to our hearts. I think Thursday Night becomes a judgment around value. And so if we can make that continue to work, then obviously, we'll be in the mix to have a look at that. But absolutely, the heritage of the company was built around Sunday Afternoon Football. And I think that is definitely the priority for us.

Got you. Maybe quickly on WWE, again, suffering some ratings headwinds. And clearly, that's impacted by the lack of fans, right? I mean the fans are clearly integral to that property, more so than any other sport by far, right? So what are your thoughts there? I mean, obviously, the timing wasn't great in terms of what we've seen recently with the pandemic. But what are your views on those rights in the future and as the pandemic recedes?

Yes. So we -- what we -- we started WWE October of last year. And you're right. I think the fans are integral to the experience because it's as much theater as it is sports. And so without the fans, it does take away from some of the atmospherics around the on-screen presentation. What I would say is the -- sort of in deference to the WWE, they've been able to put product on week in, week out with the pandemic sort of scaling a lot of pieces of production rates. So they've been sort of a reliable Friday night installment for us on the network. The viewership is a touch down versus where we were sort of last year. But I think viewership of Sport just generally has been down. And so we'll see once the world normalizes, whether that comes back. And then I would say from an advertising perspective, we've actually exceeded our own internal expectations for being able to write ad revenue even though the audience levels have been down. And so hats off to the WWE for being able to put product on air for us. So we -- listen, we're just over a year into a 5-year deal with them, and we still absolutely committed to building that into a bigger service and just generally a bigger service for us.

Okay. Maybe pivoting to Sports gambling. Obviously, there's some news last week with Flooder and Sandal. Maybe start by giving us an update on FOX Bet and just how you believe that property is positioned? And maybe talk a little bit about sort of the growth and evolution of the sports-betting market here in the U.S. and is it unfolding the way you expect it?

Yes. So I think from a macro perspective, I think -- listen, there's no doubt the equity markets are convinced about the size that this market grows. So you look at where Draftkings is valued out at the moment, it's off the charts. But this is not a 2, 3-, 5-year sort of play. This is a 10-year plus, which sort of goes to sort of the nature of our partnership with Flutter. So we're -- listen, we're encouraged and we're really encouraged by the extent to which we're seeing -- us being able to put stimulus in the market to promote things like FOX Bet Super 6 with our on screen assets and seeing that have an immediate impact on take up. So FOX Bet itself, the actual Sportsbook is kind of like 1 degree of separation removed from us because we don't -- we have an auction unit. We don't have actual money in that business right now. If I look at sort of FOX Bet Super 6, we expected there to be much more natural demand for that. But then we -- as we went into NFL season, we make -- we made an absolute concerted effort across all of our businesses from a FOX Bet Super 6. And so we've seen user takeup or registrations for that product increase from about mid- to high 1 million. And now we've got 3.5 million registered users of that free-to-play product, which makes -- from the intelligence we have in the market, that sort of order of magnitude is ahead or orders of magnitude ahead of where any competition is on those sort of free-to-play weekly games. And that, for us, is in some respects an asset in itself because it helps engagement with our on-screen sort of presentation of sports. If you've picked 5 of the 6 results and you're waiting on that sixth result, you're going to watch the game because you probably -- you might win $1 million. But it also is the top of the funnel that will feed FOX Bet Sportsbook. And at the moment, the only thing that -- or the main thing that is the barriers for that to become a real one-to-one equation is the fact that FOX Bet Super 6 is a truly national platform, whereas the Sportsbook is in 3 states at the moment. So we're in Pennsylvania, New Jersey and Colorado with Michigan to come. And so we think being able to harvest that funnel from a free-to-play game perspective and push that into Sportsbook is going to get the Sportsbook an unnatural advantage in terms of being able to drive player growth. And our -- and the most analogous example of that is what we saw in Sky with their Super 6 product with Premier League and being able to drive that free-to-play product into Sportsbook demand. And so we're super encouraged by the fact that we've been able to take the power of all of our assets. And I mean this in terms of all of our assets because we've had the free-to-play game against the classic slide Thursday Night Football, Sunday Afternoon Football, MLB. But we then expanded that, and we had FOX News promoting Super 6 with sort of the presidential debates, the election results and things like that, which were more tongue-in-cheek, but still drove amazing sort of user growth over the course of the last 3 months. And so it's exceeded all of our expectations in terms of driving the top of the funnel. FOX Bet will be an investment that I'm sure will pay off over many, many years to come. If even half of the market excitement is accurate about how big this market could be, FOX Bet could do super well. And then we have this option of a FanDuel. And then we've also, I think, what has become really nicely performing investment for us is we've now -- we participated in the most recent flowing capital wins. And so we have now put in a touch under $400 million into that sort of rate cut, which is now worth about $850 million. And so that's real money. And so everything we have done from a FOX -- from a sports-betting perspective has really driven value for us. And I think most of that value sits below our EBITDA line in terms of sort of hidden asset values that we've been growing out of the last little while.

Right. Just last on sports-betting. I mean just given your guys' experience and what you've seen in other markets around the world, Australia and the U.K., I mean, how many winners will there -- in terms of the sports-betting market, do you think there'll be like a dozen of these sports-betting companies out there? Or is 2, 3, 4, the right number? Or I mean how do you expect it to evolve as it becomes legalized throughout the country?

My -- so our sense is that other markets have been much more distributed, right? And that's with -- what's happened in other markets as you had sort of high-street betting shops be overtaken by digital-first players and particularly mobile-first players, right? And so they've had a much more distributed number of players that have been able to eke out a pretty nice existence. Here, I think the jury is still out, I think out of the blocks, sort of the 2 businesses that came out of the Fantasy Sports heritage, sort of have come out of the blocks really quickly, and particularly in new Jersey, we see Draftkings FanDuel really, at the moment, dominating the market. If you look at Pennsylvania, that's a little bit more distributed. And it's somewhat dependent on how quickly you are out of the blocks. And so I think the jury is still out on whether this is a 2-player market or a half-dozen player market. And so -- but there's a lot of -- I think there's a lot of pent-up demand for the product. And so I think there'll be more than enough value to go around.

Got you. Let's talk about D2C. If you could lay out for us FOX's D2C strategy and maybe the thought process behind it, the Tubi acquisition and give us an update on the sort of advertising demand you're seeing there on that product.

Yes. Sure. So D2C, in some respects, is a bit of a misnomer, right? D2C from -- when you look at all these D2C announcements, one of the most immediate things that comes with them is a distribution arrangement with Roku and Amazon and Verizon and Apple. And so sort of true D2C -- I'm not sure it actually exists because what you're actually doing is substituting 1 into media...

Form of distribution. Yes, exactly.

Yes. So when we look at sort of the flush of new sort of some of our peers and sort of -- I'll distinguish with what makes them our peers and what doesn't make them our peers. But when we look at all the new launches of D2C, they're really, really corralled around entertainment programming and time-shifted programming, where streaming, as a business model, is probably less attractive from a returns perspective and a margin perspective. But from a consumption model, Netflix has shown the way that the restrictions of a linear schedule is not what the consumer wants. They want to be able to consume these shows whenever and wherever they want. They want to be able to finish them. And I don't want to watch an hour once a week and come back, come back, come back, right? So the consumption model forces you to provide a streaming answer because that's what the consumer wants. Our product, so the essence of what FOX is as live sports and news, which doesn't lend itself to streaming. In fact, the windowing of sport is actually consumer-friendly because it allows consumers to watch more games over the course of a game weekend, right? So streaming from a -- answering a consumer problem doesn't really exist. In fact, I'd argue that the sort of the reception capacity of a streaming sports service is less than a traditional kind of traditional distribution, right? So that -- we're not trying to solve a consumer problem by going streaming. When we -- that's not to say, though, that we've got our head in the sand and we have a lot of that, that's around where the digital -- where digital businesses are going. It's not to say that we haven't made progress with our digital businesses. And so when we look at our sort of overall revenue and how much of that is coming from digital-sort-of-driven revenue, whether it be digital advertising revenue, digital subscription revenue, it's now coming to a real meaningful number. So our digital revenue across the business for fiscal '21 is going to be a number approaching $1.2 billion. And so that's -- so we are making absolute progress there. You mentioned Tubi, which has been -- I think a precedent acquisition for us. We bought that -- we've started negotiations before the pandemic and concluded sort of in the middle of the pandemic. We've seen the sort of -- everyone has their measures around monthly active users and people have different ways of measuring that. But the asset test, I think, of engagement around that service's actual total viewing time. And so when we look at Tubi, the most recent stat on that for November, we're about 230 million hours a month of viewing time across a number of -- across a broad spectrum of programming. We continue to drive that TV viewing time by putting -- by increasingly acquiring new titles but also putting some FOX programming into the service. So you've seen parts of our local news service being put on as well as other new services being put on Tubi. You've seen some of our flagship entertainment shows being put on Tubi on a delayed basis like The Masked Singer and Master Chef. And so we completely expect to expand the number of hours of programming on the platform. And we completely expect to drive total viewing time. When we look at revenue run rate for Tubi, we are running a number that will be double sort of where -- our fiscal '21 will be double where fiscal '20 was. And so -- and we would expect that, that growth rate to continue for several years to come, to the point where you can see that the lines will cross out sort of what our broadcast entertainment network ad revenue will soon be eclipsed by Tubi advertising revenue. And this is not sort of like a 10-year sort of macro view of where the world is going. We expect that to happen in the next sort of 2 or 3 years. And so we feel completely vindicated by the use of capital to buy Tubi because there's no doubt that its value increases by the day. And it's also currently has it been assisted and supported by the content assets we bring to that business, but the monetization assets by being able to plug that into our ad sales force has been super powerful. I think even Tubi -- like Farhad, who is the founder of Tubi, has been a fantastic entrance to our business. And I think even he has been, in some respects, overwhelmed by just the power of plugging into that monetization engine.

Do you expect to meaningfully increase the content spend to drive these fantastic growth rates that you refer to over the next couple of years or maybe even shift some or whether it's your existing entertainment book or sports rights to Tubi to try to drive that growth and maintain that kind of engagement you're talking about?

We will. We'll -- we -- like to the extent that sort of 6 months worth of ownership proves out the investment basis. It absolutely justifies incremental investment. And that will be through all of the areas you mentioned. I'd stop short of saying we're going to put live sport on Tubi, but some of the shoulder programming absolutely can find a home on Tubi. We'll increasingly sort of use sort of time shifted entertainment programming on Tubi, and we'll absolutely be sort of in the sort of acquisitions market for content. But don't -- please don't sort of construe that as meaning we're going into the sort of S5 kind of budget TV series. We're not -- this model doesn't deal with sort of gain that's from like budgets where you have to have massive marketing titles each month that sort of cost you a small fortune. This is much more about having something available to somebody at every point in time. And so it's about breadth of content.

Right. Okay. Actually, last question. We're running out of time here. We're in pretty quickly. One of the things you started with was the sort of fortress-like balance sheet that FOX has now coming out of the pandemic. You have over $5 billion in cash on the books. Talk about how you decide how to use that cash? I mean, obviously, we've seen number of smaller acquisitions that have created value along the way since you've been an independent company. Buybacks, obviously, are another option. How do you weigh -- are those the 2 options you look at? And then how do you weigh those 2 as we look out into '21?

Yes. So listen, we've been consistent with this since Investor Day, John. We don't have a prescriptive formula on how we are going to apply surplus cash. So the $5 billion is -- it's definitely obvious in terms of how much cash we want to have on the balance sheet. But remember, that came about by us doing sort of an abundance of caution debt raise in May, which touched what we haven't had to sort of -- it has been abundance of caution. It's been absolutely superfluous to our need. And so some of that is actually pre-funding a $750 million maturity we have in a little over a year. The remainder is definitely surplus to sort of where we need to operate from. And there, you will see us continue to buy back stock. So we -- at our last earnings results, we would touch over $900 million in terms of cumulative buyback against that $2 billion authorization. As we sit here today, we're just short of $1 billion of that. And so we have every -- absolutely every intention of completing a $2 billion buyback. And then when it comes to looking at other opportunities, we'll look at it through the cycle and see whether we invest organically inside of our own business or if there are opportunities to invest inorganically. If the return profile is there, if the fit is there and if we can bring real value to the asset to light it up by using the platform that we have, then we're absolutely all in on that. But it has to fit those hundred criteria of really sort of us being able to lock that asset up with the assets that we have right now as a platform.

Great. Well, that's awesome. I think that's all we have time for, Steve. Thanks for being here.

Thanks, John. I really appreciate it. Take care.

Okay. You, too.