Fox Corporation (FOXA) Earnings Call Transcript & Summary

Good morning, everybody, and welcome back. Welcome to the third day of the UBS Global TMT Conference. I'm John Hodulik, the media and telecom analyst here in the U.S. Very pleased to introduce our next guest, is the CFO of FOX, Steve Tomsic. Steve, thanks for being here this morning.

John, thanks for having us back.

Absolutely. So we got about 40 to 45 minutes for questions. I've got the app up and running, so if anybody has a question, just please log in and shoot it over to me, and I'll leave it into the discussion.

So Steve, as I always do, late in the year, can you give us a sense of the focus of the company and the priorities as we look out to 2022?

Yes. Listen, I think in many of the topics -- so this sets up, I think, some -- a lot of topics that you want to talk about over the course of the next 40 minutes or so. So when you look at sort of the establishment of FOX and how we've developed since we spun, it really rotates around sort of the migration of audiences to 3 core themes, 1 being sports, 1 being used and the other being streaming. And so we think we've got leadership positions in all 3 of those pieces. And so with respect to sports, obviously, we did the NFL deal, which shows up as probably the single best sports property in the country for -- through to the 2030s. And we also did the UEFA deal that we announced a few weeks ago. As we think forward about sports, obviously, with the portfolio of rights pretty stable for us for a reasonably long period of time going forward, it really is about the adjacencies around sport. And so we think long and hard about how we can maximize our position in sports betting. And then if we flip across to news, obviously, I think we've not only reasserted leadership in the cable news space, but in fact, I think we've gone next level on that. And so it's important for us to continue on that. But also develop that news franchise. We no longer call it the FOX News channel internally anymore. It's FOX News Media. And so that encompasses things like dotcom, it encompasses things like Nation, with the various other sort of smaller businesses or nascent businesses at the moment, whether it be the books business or the radio business, but we continue to grow all of those. And then the third piece of that -- of the puzzle is Tubi, right, which we've owned for a little under 2 years. And has had explosive growth. And so we called out on our earnings call that we're going to continue to invest in that business because it would be crazy not to with the explosive growth that we've seen. And so as we shape into calendar year 2022 and if you indulge me into February of 2023, it becomes a really banter year for Fox where we will sort of -- will be the focus for a long period of the year. We've got -- if I look at calendar year '22, we'll go past the retransmission targets that we set ourselves on Investor Day, which was $2.65 billion. We start the next phase of affiliate renewals, where we expect to get step changes in rate card pricing for our core assets there. So that's an important moment for us. It's obviously the midterm elections come around again, and we expect that to be a pretty hard fought battleground. We expect that our local stations will really benefit from that. We have a World Cup towards the end of that calendar year, which then flows into a Super Bowl in February. And we lose Thursday Night Football, which obviously releases a ton of capacity to the P&L. And so, obviously, Tubi will continue to grow over that period. And so we think that it really, really sets up well for us over the course of the next 12 to 18 months given the sort of the concentration in those core assets that we have and the leadership position that we have.

Really does it looks like '22, especially as we get further into the year, it's setting up really well. Let's -- why don't we talk about some of the sort of the growth initiatives and then we'll focus more on the core business. So first, with -- on the D2C side, give us a sense of how do you guys think about expanding distribution of sort of each of the digital assets?

Yes. I think -- from a distribution perspective, I think it's more about expansion of those businesses as opposed to expansion of the distribution sort of in that narrower sense of the word. If I look at sort of the headline assets that we have in the digital space, and it's becoming quite a broad portfolio for us. Tubi probably leads it, and that's less about sort of expanding distribution because it already has distribution ubiquity today. But it's more about building the asset from a product perspective and a content perspective. If you look at FoxNews.com, it's less about the distribution. Again, it's more about how do we build more content, how do we build more and more verticals into that site. And it's a really important site for us and a really important revenue driver for us. Nation is a little bit about both. It's about continuing to broaden the sort of the physical distribution of that asset, but it's increasingly about developing the content that's going to appeal to a broader church. And I'm sure you want to get into that over the course of the call. And then we've got weather, which is a bit of everything. Weather is literally weeks old, and we're really encouraged with how that started. But that's both about building the service, which is launched and looks really great at the moment, but it's about continuing to build that service and building distribution for that. But that is a different asset for us because it truly is a fast channel and a D2C service that -- it's kind of divorced from the legacy system. And then you've got the slew of other digital assets we have, including Credible where, again, it's less about that distribution footprint, more about building more and more products into that sort of financial marketplace and developing that into a sort of a full-service fintech business for us. And so -- and we think we're on -- we've got strategies for each and every one of those assets, and we think we're on a pretty clear path with all of those and got really, really strong momentum in each one of those.

Great. Well, that's -- why don't we dig into each one of those briefly. Obviously, a ton of momentum in Tubi with the doubling of the revenue stream there. Can you talk about the increased content spend that you guys have previously talked about? And give us a sense for how much of the spend is incremental to the business versus a shift from linear?

Yes. So in terms of the -- taking the second question first, I think a lot of people asked the question about is the Tubi ad revenue truly incremental to our business? Or are we just re-shifting the debt shares? That's absolutely not the case. For us, it's truly incremental. Tubi runs its own rate internally in the business. And so Tubi is sold very specifically as its own asset. And it's also a different demo from the broader portfolio. And so every dollar we collect from Tubi is truly incremental to the broader advertising portfolio that we have. One thing I would say is one of the benefits and one of the fastest, I guess, synergies that we got out of doing the Tubi deal, was being able to plug into our ad sales force. And that has been a significant driver of that monetization in the first sort of 5 or 6 quarters that we've had the asset. But from a content perspective, listen, right now, it already maps about 37,000 titles on the service. So it really is that nice market, sort of free ad-supported network of the future. And so it already fills that role in sort of the ecosystem. Where we want to take the content is -- obviously the size of the library really counts from a user experience perspective. But we increasingly want to invest in sort of either licensed content because most of those 37,000 titles are revenue share titles. And so you're going to see us doing more content licensing deals where we think that we can price that content more efficiently than a revenue share deal. And you're going to see us continue to do more to the originals, but they're not going to be the sort of the Tubi -- they're not going to be the SVOD kind of very expensive titles that are essentially sort of marketing for those SVOD services. These are -- it's a free platform and the economics have to sort of work in that free platform environment. But we've seen it work already with the titles that we've had whether that be the sort of the good value titles like Twisted House Sitter where we're already cash on cash positive with those. And so -- and we've also had the recent animation, which is called The Freak Brothers, which is with John Goodman and Woody Harrelson, that's performed super well. It's the most watched series that we've got on the platform at the moment. And not only is it watched on the platform, but it allows sort of our linear assets to talk about something on Tubi because at the moment, most of it's been 1 way, which is the Fox linear assets finding a home on Tubi. And this is the first example where the sports guys can have fun with The Freak Brothers kind of content. And so you'll see us continue to do more and more of that. And that's where a reasonable amount of the investment is going when we talked about the $200 million to $300 million of net EBITDA investment in the business for fiscal '22. But we're going to do it in measured way. We're not building Game of Thrones at multimillion dollars an episode. It's more about this much more considered investments that fill the gaps around sort of the big library that we have there.

Got you. What about sports? Does sports make sense for the platform?

Yes, it does. So I'd delineate like we have -- with respect to our sports portfolio, we essentially have all the rights that the others have to be able to exploit our NFL rights or other sports rights on a linear basis or on a digital D2C basis. For us, we choose not to do that because we think the monetization model works best as we have it now versus sort of putting it all on a streaming platform day 1. So we think sports has a valid role to play in Tubi. So you've seen us put FOX Sports on Tubi, but it's not the live game. It's a lot of the shoulder programming or a lot of highlights rights that goes onto to Tubi. You've got an NFL channel on Tubi, an MLB channel on Tubi. So we absolutely think it has a home and it absolutely plays into growing the single most important metric for Tubi, which is total viewtime. And sports has an absolute role to close in that. But I think it will be some time before you see the live Sunday afternoon game on Tubi as opposed to sort of the shoulder program. Because we just think that the monetization model works best the way we have it already.

Got it. So we had Bob Bakish from Viacom on yesterday, and he talked a lot about the fast market in Pluto. And there appears to be a net monetization gap between Tubi and Pluto. And can you give us a sense of why this may be the case? And do you expect it to close over time?

Yes. So it's hard for us to be apologetic for our monetization of Tubi. We've owned it for, I think, what, 6 quarters. We bought it, and it was doing run rate revenue of $145 million, we bought it for, call it, $500 million, right? If you look at the full year of ownership that we closed out 30 June '21, we took that revenue to a touch under $400 million. A lot of that has come from better TVT, total viewtime, so bigger audiences watching more. The other part that came though was us being able to take our ad sales force and drive fill rate. But we're going to be very careful. I think we'll be careful and cautious with respect to sort of ad load for Tubi. Because for us, at the moment, it's still very much in growth phase. We want people to develop the habit of going to Tubi and spending long amounts of time with Tubi. So for us, monetization is super important. And as I said, the growth that we've seen at Tubi has even exceeded our own expectations for the asset. But like this is a long, long game for us, and we're not going to [ play it for ] Pluto about who wrote more revenue last quarter or last year. It's about how do we build an enduring and sustainable asset with Tubi. And so we're careful with how much monetization we take, but we have had incredible sort of growth with the asset. And in fact, the momentum that we're seeing there is extraordinary like November, the month we've just closed has been record rates of TVT. We're north of 300 million hours in the month, and we've done another record revenue month. And so we feel totally comfortable with where our monetization is for Tubi. We're going to be measured about it to make sure that we don't disturb the user experience too early.

Great color. Just last one on Tubi...

Yes. And one other point, John, it's really important to make it to like it goes to the fact that -- I'm sure we'll talk about capital allocation as we always do. But like when we look at Tubi, and at the moment, if you look at '21, it was a slight drag on EBITDA to be a bigger drag on fiscal '20 to EBITDA. The people that sort of do the lazy version of valuation, which is to just slap a multiple on our business, is actually attributing negative value for Tubi. If you would value this on any kind of revenue multiple, you would see that we have delivered enormous value from this asset over a pretty short period of time.

Makes sense. And then just lastly on Tubi. Any international sort of aspirations for the service?

Yes. So we're internationally right now in Canada, Mexico, Australia and New Zealand. We will continue to build that, but the absolute focus and the near-term opportunity and priority is the United States. And so the focus, we absolutely will build out the sort of the international portfolio. But for right now, there's -- we don't want to stray too far away from the focus of being able to sort of seize the opportunity here domestically.

Got it. So turning to FOX Nation, fiscal 1Q was the best quarter from an engagement and sub retention standpoint. Any sense of how big that business can get for you guys?

Yes. Listen, I think for us, it serves multiple purposes. I think it'd be fair to say we're transitioning from -- it started off as a shoulder service for the Super fan. So people who watch FOX News daily, who just wanted something more to consume. And over the last -- and you will have seen the way that we've programmed Nation, we're starting to broaden that out because I think the first 6 to 12 months of the service was relatively thin. So -- but again, a lot of the broadening out has been with assets that are familiar to the FOX News fan. So was taking PrimeTime Anytime time by being able to watch PrimeTime the next morning with Tucker doing originals for the service, by Dan Bongino. So we've done a lot to sort of provide more and more content to drive engagement, drive retention, drive user subscriber acquisition. But now we're starting to sort of broaden sort of what is on the service. And so you've seen we've done a reboot to the COP series, which will appeal to a broader church than just the sort of the narrow FOX News, and we'll continue to build on that. The other thing it gives us is that optionality on B2C. And so we've got all the attributes in place from a FOX News perspective, from a technology perspective, a billing and subscriber perspective to be able to create that optionality. Now we're not going to pull the trigger on that anytime soon. But it does give us that sort of base to work from. But in and of itself, Nation, we'll continue to build that because we've seen really nice momentum, particularly over the last 6 to 12 months.

And then maybe turning to FOX Weather. How -- you said it's off to a good start. How is it trended versus expectations? And again, give us -- if you could give us a little bit of a sort of the thought process behind the launch.

Yes. So FOX, like it's funny because like we have such a strong leadership position with FOX News, and we have such a special relationship with the FOX News audience and that loyalty that I think we underestimated the capability and the capacity of the brand to go to places where most new services are already at. So we didn't even have a sports tab on the FoxNews.com website until a little while ago. And as soon as we put it on, it really resonated well with the audience, and well and behold Weather which is part and parcel of News, we really left it sort of untapped and untouched until we develop FOX Weather. And so really, Weather was a pretty straightforward thing for us because we've got a lot of sort of weather assets in the company because we got -- it's' all around the local news sites. It was relatively incremental to do from a distribution perspective because of the new site that we have in Tempe in Phoenix, which allows us to do these fast channels really cost effectively. And so it's really about assembling those assets and creating a channel and a broader weather service for the app that we could -- and the other most important asset, obviously, is the cross promotion capacity. So you would have seen FOX News promoting. You would have seen FOX Weather promo on our sports assets, particularly with the World Series, which was just going into the launch of FOX Weather. And so we're immensely pleased. The product looks fantastic. The fast channel looks great. We put it on our business channel from 6 until 8 over this past weekend. And as Lachlan mentioned on the earnings call, we quickly shop to sort of very high up on the Apple App list, and we had more than 1 million downloads in that first week. So really, really early days, but everything is super encouraging. And it's yet another proof point for us of just anything that we do sort of authentically and sincerely with the FOX News brand and play that to the FOX News audience, will always find a home for us. And so it's just another proof point of that.

Now putting it all together, you've talked about the $200 million to $300 million of incremental EBITDA losses for the digital investments in fiscal '22. And it includes the new content on Tubi and the FOX Nation expansion, FOX Weather launch. Is that -- Is this a peak year of losses? Or how should we expect that sort of to trend as we look beyond fiscal '20?

Yes. So it's a net EBITDA investment. So we would expect that these investments begin to pay off in terms of generating revenue to ameliorate the size of that deficit. But when we look at like we did just south of $3.1 billion of EBITDA last year, given the changing in the industry and given the opportunity set that we uniquely have with the stand of assets that we have, it feels like $200 million to $300 million of relatively modest investment to try and exploit what could be really, really strong growth potential for us. And so yes, we'll begin to ameliorate that investment as the revenue begins to kick in from those investments. But it's pretty measured in the grand scheme of our portfolio.

Got it. Okay. Now let's turn to sports betting. Obviously, a lot of players targeting this space. Can you talk about how you see the market, how big the market could be, how important it could be for you? And maybe just how many players do you expect to succeed that are pursuing this pretty massive opportunity here in the U.S.?

Yes. Listen, there's lots of speculation around how big the market will become. And that's sort of like a 2-part question, which is, well, how many states legalize and how quickly do they legalize and then how much appetite is there for the consumer to gamble on sports. And I think with the markets that have legalized, the second is not in doubt, which is there's a huge amount of interest in being able to do this and it helps with engagement. I'm not going to speculate on what the number is because there's wide fluctuations, but it's in -- the TAM is in the double-digit billions of dollars. We've got a partnership with one of sort of the strongest global operators of sports betting and betting assets generally with Flutter. And so we've been as a company, I think when we look at the media companies in the United States and I think somewhat this comes from our heritage of having operated assets in Australia and the United Kingdom where sports betting and betting generally is probably more developed than it is here. We saw this opportunity really early. And we were very forward in taking positions in it, and we think it could be really big for us. It not only is big in the sense of it being a big business in and of itself, but it has absolute adjacencies for us from our core business perspective because it helps drive engagement and viewership of our sports linear assets. And the other piece to it is it's becoming an important category as an advertising category for us. And so it's crazy for us not to play in it because it's such a close adjacency for us, and we've seen how this -- these markets develop in international jurisdictions. And we're seeing no reason why the United States can't achieve its relativity compared to those other markets. How that market shapes up between players? Like you can see, over time, you sort of have a handful of players, maybe up to 10 that can find a home. But there'll probably be tiers of players in the sort of final washup of the market. But the final washup of the market is years out. Like this is going to -- this is like a decades-long play to get to sort of some sense of where the market stabilizes.

Got you. On the last earning call, you guys suggested that the company plans to get licensed to take bets. How long will this take? And why does it make sense to run your own sports book versus to partner with others?

Yes. So the last -- I think it goes back to -- so if you look at our position with the sports betting assets we have. So we have a 50% option over FOX Bet, and we have an 18.6% option over FanDuel. And when -- those options are valuable to us, obviously, from a financial perspective. But our play here isn't some sort of quick flip of the intrinsic value of those financial options. We're in this as a long-term player. I'm cautious about you sort of saying, why would FOX want to be an operator? FOX doesn't want to be an operator in and of ourselves. We don't have that expertise in-house. So it will always be in partnership, and we think that with Flutter, we've got a great partner to partner with. But the licensing is all about taking that next step of like wanting to be sort of writing arm and arm with our partner in these assets and being able to develop them in partnership and being fully committed to that rather than sort of these financial options, which I think The Street has a hard time valuing. And so I think if we're in there directly, it's probably easier for the Street to get their head around the true value of the asset. How long it takes us is a bit of -- how long is a piece of string because it's a state-by-state licensing regime, so we need to go through that. But I think really there's an inevitability to it if we want to be true partners in these assets, and we do. And so it's really not a question of whether we will. It's a question of when do we do it. And that's the rationale behind it.

And then lastly, just on sports betting, it's a good segue to the sort of traditional business and advertising. Just -- you mentioned just before the opportunity in sports betting, any sort of figures you can give us that give us a sense of how big that could be for you guys, especially given all the sports rights that you own? And where it's legal, you must be really seeing those revenues start flowing. And any color there.

No, absolutely. Listen, it's becoming an important category. At the moment, the state-by-state sort of fragmented nature of it makes it less of an advertising category with respect to the national linear assets that we have. But it's more important from a local perspective. And I would -- like right now, it's like a -- it's a 9-digit category for us. And so it's become really, really important. A lot of that will flow to our local business. But I would also hasten to add that we've also seen in other markets that this has gotten out of hand and there's actually too much advertising from sports betting that is in the sports broadcast. There's actually potentially too much editorial. Like in Australia, we had experiences where bookmakers were part of the editorial on screen for a football match. And so we definitely have the mindset of self-regulation, we'll put internal caps on ourselves in terms of how much saturation and we intend to lead the industry in doing that. Because the last thing you want -- the first place you want to be is self-regulation because if you're left to regulation, then you'll end up in a much worse place. But there's no doubt that this is going to be an important advertising category. And this fiscal year, we'll write north of $100 million on it predominantly locally, but some national money there.

Got it. Actually, before we go to advertising, and around the topic of sports. What's the vision behind the USFL? Could you give us a sense for the new league you guys are launching? Just your vision of the future and how that can create value for you.

Yes. So USFL is really exciting for us. We think that there is absolute consumer demand for Spring League. It's not meant to be a competitor to the NFL, obviously. And so the USFL comes with sort of the legacy brands and team logos and all the rest of it. So it's going to be a familiarity with it to start with. But importantly, it serves 2 purposes of -- 2 or 3 purposes for us. One is it builds another sort of sporting property for us in the spring. And remember, we have a pretty significant fall schedule where you'd have heard ad nauseam in there talking about the fact that FOX owns the fall. So they have this sort of spring asset which is really important from a linear programming perspective. The other piece to it is that we own it. And so the benefits of -- we don't rent the asset like we rent virtually all the other sporting businesses that we have the rights for, we will own this asset. And so in success, it becomes potentially a very, very lucrative asset for us to own. And yet, it's another asset that becomes quite interesting for us from a sports betting perspective. And so it ticks a number of boxes for us. We think we can do it in a pretty cost-effective way and that then the money that's going to go into getting that league launched is part of that $200 million to $300 million. So it's not going to be incremental to that. And so listen, we think -- we're really excited about the opportunity there. And so we can't wait for the spring to come and see how we go.

Yes. And you're right about the multiples. I mean, F1 and what's implied for UFC inside Endeavour is a pretty lofty multiple, so...

Absolutely.

So -- all right. Turning more to the traditional business, maybe starting with cable. Despite the tough ratings comps, you've been able to grow cable advertising in recent quarters. Can you talk about what's driving the strength and do you expect that to continue?

Yes. So listen, we've -- so cable advertising for us splits into 2 broad categories, 1 is sport and 1 is new. Sport has been relatively consistent over the last couple of years and sort of the swings and roundabouts between year-on-year changes in sport is largely -- there's some CPM increase, but it's also driven by scheduled changes in terms of what's on FS1 and 2 versus what's on the network and when those games get played. And we've had amazing growth though in cable news advertising. And that if I look at -- I think you're alluding to sort of where we were calendar Q4 last year versus calendar Q4 of the prior year, where we did sort of across cable advertising, we did north of 30% growth in cable advertising, which is phenomenal. But it was -- Q4 last year, remember, was the heart of the election cycle, and we wrote some political revenue. But I would expect that this Q4, if you took out the political revenue that we wrote last year, which was about $30 million for FOX News. We're going to be ahead of that number Q4 this year versus Q4 last year in calendar terms. And that's being driven by a really strong linear position with FOX News, but also a really strong digital advertising, particularly at FoxNews.com. And so seeing great sort of programmatic results on FoxNews.com. And then on the linear channel, even though the ratings were comparing to pretty tough comp from a ratings perspective, the monetization has been great. Our direct response rates have never been higher and sort of the universe of advertising across the portfolio continues to broaden. So FOX News, I think it feels increasingly like FOX News is becoming the fifth network. And you see it with the ratings dominance with cable news, but increasingly, like we're competing with broadcasters, right? You've got Gutfeld! that we introduced in the late night slot that consistently knocks over virtually all the other late night shows with the exception, I think, of Colbert. And so we've got a really important franchise there. And so that advertising revenue continues to be upside for us. So -- and we'll continue to build out that business.

Right. And you mentioned the political situation. And we've got -- as you said earlier, we've got the midterms coming up in '22. And obviously, I'd say that this past November, we're probably conserved fairly well. So the base is engaged, more states are in play. I think the money being raised is going to be just off the charts. I mean how do you look at the opportunity as we head into the fall next year in terms of, I guess, both on the news side and the local side of political advertising?

Yes. Like if you look -- like the battle lines have already been drawn in Georgia. Everything points to '22 being blockbuster for midterms. I think it will again -- it feels like it's going to look a lot like calendar year '20 for us, which is you're going to have -- like the whole new cycle is pretty up there at the moment, right? You've got geopolitical issues. You still got COVID in there, and you've got sort of national politics as well. So it looks like that kind of viewership is going to continue on all the way into November of next year. And from a revenue perspective, listen, everything points to be another huge year. And it's always hard to work out how big a year it's going to be, but some data points for you. If you look back to the most recent midterm, so 3.5 years ago, we did $180 million of political revenue. And at that point in time, that was the biggest election year we'd ever had, whether it be presidential or midterm. We then went into the most recent presidential and we doubled that. And so I think they are the sort of data points that we're looking at as being the sort of the monetization potential. And listen, who knows how big it could be. I don't think it matters sort of -- we've talked about this ad nauseam going into the most recent election, whether it's Democrat or Republican. And our viewership is super engaged in the political debate. And so whoever wins or loses, I don't think it matters. I just think it's going to be a very, very big year for us. And so yet another reason why FOX News is going to be front and center in terms of the media consumption next year.

Yes, makes sense. And it seems this is subsided. It's really the question that we've been getting is subsided, but how do you think about sort of potential competition coming into the space? I mean, I think after the last administration left, there's a lot of noise about it, but it seems to have gone. Is that what you're seeing on your side? Or how do you think of sort of competition on the...

So the competition -- so there's the traditional competition because we always compare ourselves and every one compares with SMBC and CNN. And I mean, listen, maybe the jury has decided on that now given sort of where our share now amongst those 3 is now consistently well into the 50s and seeing it go into the 60s. It used to be that people would go to other stations for sort of international and national breaking news. The most recent example of that was Afghanistan. And there, we saw FOX News get even more viewership, which has not been traditionally the case. So increasingly, when something breaks either nationally or internationally, people turn to FOX News, even in partials. And so that's really important for us. I think the talk around people establishing another conservative sort of news network in competition of FOX is. We should never -- we don't have a hubris bone in our body. And so we're conscious that, that may or may not emerge. There's nothing to suggest it's emerging right now. But it's a big mountain to climb, right? It took us $1 billion to get FOX News to break even. And FOX News is no longer just FOX News 3 hours of PrimeTime opinion. It's a full new server. It's a full digital server. And so listen, we think we've got a very, very powerful mode. And not only is it the full service, you got an incredible loyal audience and fan base there. And so to break that next is a really big hill to climb. So we feel -- like we feel really, really strongly about the position of FOX News sort of competitively, full stop.

So aside from political, what are you seeing in terms of local TV advertising? There's a lot of worries about supply constraints. And I think in the past, you've cited some softness in the [ supply ]. But just sort of how are those trends? And can you give us a sense of what you expect to see as we look into '22?

Yes. So I think there's been a lot of speculation about the vulnerability in the ad market at the moment with supply chain issues. And so if I just take it up a level, not just local, but if I look at the -- if I look at where our portfolio is at, I think it goes back to the first thing I discussed, which is just the strength that we have around our core assets, particularly around sport and news. And so that vulnerability, we're just not seeing it from a macro perspective across the portfolio. We've got Sports, we've probably never had a better NFL advertising season that we're having right now. The same with college football. News has been super strong. I mentioned the sort of the DR pricing that we're getting, the broadening of the advertisers there. And so we're seeing premiums to upfront of between 20% and 30% across those verticals. I talked to you about Tubi about the momentum there and November being a record month for us from an advertising perspective. So we're not seeing it on to Tubi. The one place that we are seeing is pretty -- it's pretty narrow, which is the auto be that local, and that's not because the consumer is not there. It's because the cars aren't in the car dealerships. And so that sort of the local buy for the dealership has dropped off for us from a local advertising perspective. But the slate from that has been picked up by the strength that we're seeing in sports wagering. And so listen, from a advertising sort of revenue book perspective, we feel super strong at the moment. And I think it goes to having a pretty narrow portfolio of assets. But a concentration in leadership in those portfolio of assets, the advertisers just want to keep coming back to. And so listen, we aren't too cosidered about it, but that portfolio is in really, really strong shape at the moment.

Got it. So obviously, sports has been a big part of your -- the strength you've seen both from a viewership standpoint, and the advertising standpoint. And you mentioned this earlier that you recently won the UEFA the EURO, basically the EURO and the nation's league. Makes a lot of sense to me. I'm a big football fan. But can you give us a sense for the thought process behind this and why that makes sense given your sports portfolio?

Yes. So it kind of -- it's a similar story. It's similar sort of the USFL, right? Like there's a lot of European club football you can buy, but it runs into the same season that we're already ridiculously strong in, right? So it runs through the fall and into the winter. And so -- there's that piece to it. We want to extend sort of the period of time in any given year that we're truly relevant from a sports perspective. And so with the UEFA sort of national team championships, they happen over the summer period. And so it really works well with our schedule. And so we'll have Men's World Cup, Women's world Cup and then we'll have the EUROs in sort of successive years on top of the Latin American football that we have. So it makes a lot of sense. And then from a U.S. consumer perspective, it feels like it's an easier sell to talk to the U.S. consumer about England, Germany playing Brazil versus Argentina versus trying to convince them of a Leicester City, Crystal Palace game, right? So we feel like that's going to -- it's an easier thing for us to do. So it works well on so many dimensions that is a bit of a no-brainer for us. And so now we can turn -- sort of we own the full with respect to NFL and college football and MLB post-season. And now we have the summer of soccer, which is sort of the big high-profile international competitions that we think are going to work really well for us.

So it sounds like you guys didn't really look that hard at the EPL rates.

We look at everything, but we're kind of oversubscribed in the sports from a sequence perspective. So it was an easy decision for us.

Okay. All right. Maybe switching over to affiliate. And then as you said we'll go to capital allocation. Just what's the outlook for renewals, when that hits? You said that sort of sticks back late in '22. And actually subscriber trends, too. So both the price and quantity have sort of held up. Just thoughts about the renewal cycle and your guys negotiating leverage and just what you're seeing in terms of subscriber trends.

Yes. So I'll take the latter first, John, which is I think on subscriber trends, if you rewind back a year, 18 months ago, they're kind of -- the erosion rate was north of 6%, and that seems to now be floating in a range of 4%, 4.5% to 5%, so that range. So that has improved, but like it's a moving feast. And so we're hopeful that it continues to improve. But when we look at our affiliate revenue, I think the real big driver for us there is pricing power. And I think we feel more involvement with that because like we've made a conscious decision with respect to the way we exploit our big linear assets, and those are really broadcast entertainment and retrans -- sorry, broadcast and retrans, I should say, which is sports and entertainment. And then FOX News. And both of those were kept behind what I called the traditional paywall. And some of our peers have chosen to have a bet each way by sort of having the traditional distribution as well as competing with our traditional distribution with over-the-top. And listen, it's incumbent on ours as we go into the renewal cycle, the next big renewal cycle, to get the sort of the rate increases that justify the decision to keep those exploited in the current way we exploit those assets. And so -- and I think we've made it pretty clear on the call that fiscal '22 is going to be -- is relatively light on the renewal cycle. We've only got 5% of the book that comes due. And so you'll see sort of the rate of change sort of ease off over the course of fiscal '22. But then we fully expect to drive price growth in fiscal '23 and fiscal '24. And in each one of those, we've got sort of mid-30% of the book that comes due for renewing. And we do that, and quite deliberately, obviously, we do that with sort of the certainty of long-term NFL deal, which is sort of -- is the backbone for retrans, and we do that coming out of this sort of a never been stronger FOX News network. And so all goes well for that for us being able to take price in that sort of next big phase of renewals.

Perfect. And then lastly, capital allocation. You have over $5 billion on the balance sheet. How should we think of sort of uses of that? Is it right to think of it is basically a question of M&A opportunities versus share repurchases? And again, as we look out into the next calendar year, how should we think of the pacing of potential buybacks?

Yes. So I think we've been pretty -- there's no doubt, like the amount of cash we have on the balance sheet is somewhat a legacy of raising capital at the start of COVID, sort of just in case. And fortunately, the just in case didn't happen. And so we are overs from the amount of cash that we have on the balance sheet. But if you look at the history of how we've deployed capital so far in terms of FOX. We started off with a $2 billion buyback authorization with -- going into the most recent quarter that we printed. We had already used up $1.9 billion and so we've taken the authorization up to a total authorization now $4 million. If you look at where the stock price is and the implied EBITDA or adjusted EBITDA multiple on that, we think buying the stock is unbelievably good value at the moment. And so if you look at where we've deployed $1.9 billion in cumulative buyback through the quarter that we just done, released, we did $800 million of cumulative dividend payments as a company since the start of the company. And if you look at where we've spent money M&A-wise, we've done $1.6 billion gross that we've sold some assets along the way, so it's $1.1 billion net. And so we're going to be balanced about how we deploy capital. And so the other piece to all of this is we've got a debt maturity next month at $750 million, which will pay out the cash on the balance sheet. But we're going to be balanced about -- we're going to take -- there are opportunities -- we'll look at M&A opportunities as they present themselves. But we also think that buying back stock is pretty good value. So you should expect us to sort of be responsive to both sides of that.

Perfect. That's all we have time for. Steve, that was great talking to you, super helpful, and we look forward to seeing you next year.

Thanks, John. Hopefully, next year in person.

Yes, that would be great. Thanks, everyone. Thanks for joining. Take care.