Fox Corporation (FOXA) Earnings Call Transcript & Summary

All right. Again, thanks for joining us this morning. I'm John Hodulik, the media and telecom analyst here at UBS. And very pleased to announce with us today is Steve Tomsic, the CFO of FOX.

Hey, John. Thanks for having us.

Absolutely. So we've got about 40 minutes, and I've got a list of questions I'm going to run through. We also have the iPad here. And if you scan the [indiscernible] card in front of you, you can log in and toss some questions in, and I can work them into the conversation.

So Steve, yes, a lot going on in the media space today. We just heard from Jeff Shell and prior to that, we had the ad panel. Maybe you could set the stage with us by just giving us a sense for priorities for the company as we look out into 2023.

Yes. So immediate priorities for us, we're going through -- we're sort of midway through a super cycle of events for us. And remember, our business being focused on news and sports is driven by big cyclical events that drive big audiences. And so we're right in the middle of one of those big ones, which is the World Cup, which is going fantastically for us.

You mean for us as FOX or...

For us FOX, unfortunately, albeit and the Americans got enough of that on Saturday. So we're really pleased with how that's going. We just got through a huge political season for us, which is big for both our FOX News business from an editorial perspective but also massive for us from our local TV stations' perspective. And then it culminates -- in terms of this sort of big cycle that culminates early next year with the Super Bowl that we have because we carry the Super Bowl this year. So if you look beyond that, when we -- I think the last time we did this conference was 2 or 3 years ago before COVID. And I think the questions around that was, are you going to renew NFL, where you're at with your whole sort of runway of sports rights. If you fast forward back or to today, like our sports business is an incredibly strong shape, right? Because we've got NFL locked up for a long period of time. College football is locked up, MLB is locked up. So our core sports rights are pretty much done around the edges, where we've got negotiations, and we'll see how the portfolio pans out. But from sports perspective, that sort of fundamental foundation of rights is locked. From a news perspective, we're continuing to expand that franchise, whether it be in day parts across sort of the linear channel. So you have seen over the last 12 months, Jesse Watters has gone from strength to strength in access prime. You've Gutfeld! that's become the #1 late-night host. So the news franchise continues to expand from a linear perspective as well as sort of in adjacencies such as Nation, with audio. So those 2 assets continue to go from strength to strength. And so as we think about '23 from a monetization perspective, it's incumbent upon us to drive that in terms of driving affiliate fee, rate increases because we've got a big renewal cycle over the course of this calendar year and next fiscal year, which is really important for us to execute on. And we think that we've got a really powerful and concentrated stable of assets to make that happen. We also need to make it happen in next year's upfront because a lot of our advertising is now pretty much done for this fiscal year. And then we have an eye for sort of our portfolio of growth investments and the most prominent one there is Tubi and so we need to continue to execute against that Tubi growth plan and other sort of growth assets, including Nation and USFL. So I would -- we've got a pretty extensive agenda in terms of calendar '23 but extensive but very focused and distilled on sort of real quality.

Got you. So let's dig into some of those monetization opportunities. First of all, the TV advertising market, your peers and Jeff reiterated it, before you've talked about sort of soft ad trends in 4Q. And you actually said that, the last month, as things have really fallen off. So maybe if you can give us sort of a sort of a general overview in terms of how you view the TV advertising market?

Yes. So I think it feels like the ad market is really heterogeneous at the moment. So I think the one thing that's thematic probably across all advertising players is visibility is lower and the money is coming in later. But then I look at our book, and the bid for sports continues to be there, like we're running great cash for World Cup in the middle right now. We're super well sold on Super Bowl. And we're pretty much -- like when I look at our advertising book, a lot of it is first half versus second half. And so we feel really good about where sports is at. News linear continues to be quite strong for us. I think the pockets where we see areas of weakness is, to a certain extent, digital news and programmatic there and to a certain extent, DR. Local, we've just come out of a record mid -- sorry, a record political cycle, full stop, if you exclude the runoff that took place in Georgia 2 years ago, but the base market there, the sort of puts and takes in the base market, which makes it a little bit variable there. But then I look at our other big advertising asset, it's Tubi. And in Tubi we've seen extraordinary growth in viewership, which is translating into a really, really strong growth in terms of advertising revenue. And so I think in -- in Q1, we posted ad revenue growth at Tubi at plus 29%. And right now, that's advancing from that position. So we accelerated to get that [indiscernible] -- so as I said, I think the advertising -- I think -- our other area, which is probably -- which is increasingly becoming the smallest component of our advertising book, which is sort of network entertainment advertising, it's weaker there, but I think the weakness there is less about market and more about ratings and audience. But again, as I said, like last quarter, it was the first time that Tubi meaningfully was ahead of our entertainment network in terms of ad sales. And so from our perspective, that's -- where we've recognized that, that's a small and reducing component of the portfolio, and we continue to build out the pieces where we've got real strength. So when we look at the advertising market, we think there's a real flight to quality, a real flight to sort of audiences you can rely on in terms of either size or just engagement. We can -- oddly enough, the market feels variable, but the pricing remains quite strong. So we're seeing nice premium to upfront pricing. And so it really is mixed across I think the industry, and I think we feel like we've got the best table of assets to extract the greatest value in this market.

So you think -- I guess summarizing that answer, which was great. But -- it's a mix of engagement and sort of, I guess, the inventory, the quality of the inventory. Because I think what we heard from Jeff today is it's going to be a sort of a theme going forward here as we get into reporting season. But it just doesn't -- I guess it's a combination of the focus on sports and news and the strong engagement that you have that just sort of allow FOX to sort of end up above those...

Not completely. I think there's a real -- I think -- to the extent that the money is coming late, it's like advertisers are becoming much more careful about where they place their dollars and they're becoming much more choosy about where those dollars go?

Got you. And let's talk a little bit about the sports real quick. First of all, how is the World Cup been trending for you guys, both in terms of the advertising side and the engagement side and just how we're at way through the NFL season, how has NFL been for you guys this year?

I think, listen, I think they're both emblematic of the strategy that we've chosen to go down since the split of news -- since the split with 21st Century FOX. Both of those -- like NFL continues to just set itself apart from most other sort of broadcast assets in terms of driving sort of viewership levels and from our perspective, from a monetization perspective, being able to really drive that in terms of P&L. And the World Cup has been the same. And I think the World Cup, we've gone down a very deliberate path with respect to -- in this country, we call it soccer. It's been a very deliberate path around choosing sort of international events soccer, which we think captures the imagination of the American consumer a lot easier. So like all of a sudden, we've all become experts on Kylian Mbappé and how good a player he is, whereas that's harder for people to translate from club football in Europe. And so we've gone down this -- and I think when you look at World Cup, it's been fantastic for us from putting that sport on the map here in the U.S. The viewership levels both on the network as well as in FS1 and really sort of lining up the circulation across those 2 networks and the monetization has exceeded our expectations. And so unfortunately, the U.S. got knocked down on Saturday to the Aussies, but if you look at it in a few days, we'll have England, France and one of the titanic international games of soccer, ever. So like it really has -- like it's the beautiful game, but I think it's really unlocked the romanticism in this country around that sport. And if you think about it, we've got the euros in a couple of years' time, and then we have -- the big one -- the mother of all World Cup which will be the one that's here in the U.S. in 4 years' time. And so I think the strategy we've chosen around football and sports generally is really paying off.

Yes, makes a lot of sense. So again, stepping back a little bit. Can we talk a little bit about -- just remind us about how you guys did in the upfront? Maybe if you talk about how much inventory you sold in the upfront and the flexibility in terms of that you guys have extended it to advertisers as we look into '23?

Yes. So I think when people ask the question around flexibility, they're worried that the dollars are going to be called back. I think you have to understand the nature of our business, which is we're probably a 60-40 first half, second half business in -- so first half of our fiscal year, so a lot of our ad book has already spoken for from the perspective of just that mix because we're just so heavy in terms of full in any particular sports. And so we feel pretty good about where that is. When you look at upfront, we took the view in April, May of this year to sort of upweight how much money we were taking in the upfront. And that was particularly around our entertainment business. I think we were at about 85% of the book in entertainment right there. And then it's important for sports, but the upfront is less. There's no upfront for local, right? That's all spot sport and then all spot, I should say. When you look at news, the upfront is less important. A lot of it is either spot or DR and the other one that we were able to monetize is probably better than what we anticipated was Tubi where we wrote a reasonable amount of dollars in the upfront. But I think the Tubi strength we're seeing now is not a virtue of how many dollars were written on the upfront it's just the usership has grown so much.

Got it. Maybe transitioning to affiliate. Obviously, pay TV losses are accelerating. Jeff commented on it in our last session. You've got a number of -- you're sort of hitting the new renewal cycle this year and next year. Do you believe that you can keep that you've got enough sort of pricing power that you can keep that line item in the P&L growing through the core cutting that we're currently seeing?

Yes, listen, we take a -- when you look at short term, long term, there's no -- we've got just over 1/3 of our affiliate book came due for renewal this year, another 1/3 next year. I think it's well publicized, we have DIRECTV come due a couple of days ago and that got done. When I look at the pricing we have achieved so far with the distributors that we've renegotiated and renewed with, they're all at or better than our expectations. I can't control where volumes go. But I definitely -- like when we look at the overall sort of affiliate revenue trajectory, we definitely see growth in that going forward. We think that we're probably the most friendly partner to our distributors, given how sort of closely aligned we are with them. And so let's see where volumes end up. I think when you look at the trajectory for us over the next year or 2, you'll continue to see growth. That growth will probably be skewed towards the TV segment rather than the cable segment, but we definitely see medium and long-term growth in that, assuming that the volumes sort of don't deteriorate further from here.

They don't roll over. Yes. And can you give us a sense -- you said that the -- the pricing has met your expectations. Can you give us a sense of how the pricing trends are versus what you've seen sort of in the last renewal cycle? Are they similar or pretty changed?

It's hard to draw a comparison, John, because the last really big renewal cycle was when we're 21CF. And so there we had a lot of math to feed in terms of sort of the portfolio of channels that we were representing. Now it's very concentrated. And as I said, I think you'll see the pricing, I think just given the maturity schedule and the way our deals work, you'll see the pricing growth skewed towards retrans or the TV side of the business. You'll see cable come along on a delayed basis. And I think you'll see from our perspective, it's almost fungible the amount of money we get across sports, whether that be from retrans or FOX Sports 1 and 2, and so we kind of negotiate that as sort of one big hole. But you should expect to see news pricing kicking over the coming years as well. Like news has become such an important network across the whole ecosystem, we increasingly -- we compare ourselves a little less to sort of the other news brands...

Right, I mean, given the ratings.

Yes, absolutely. And we increasingly compare news to sort of we have a full broadcast and that's because we just go head-to-head with them and often are the third or fourth in terms of audience share on any given evening news, as supposed to the other full broadcast.

And is that resonating with distributors? I mean -- and is there a way to give us a sense of how much upside there is over time, just as those ratings continue and the concept really should change.

No, the concept -- I don't see the news channel getting to sort of retrans rates sort of anytime soon, but there's definitely -- I see news having upside monetization opportunities, both in terms of rates, where we think we've still got a lower headroom given the importance -- the relativity of its importance continues to grow. So as other networks are either flat or down, news continues to grow. And then I see it from a CPM perspective, we're under monetized on news given the audience it delivers. And so we see both of those levers being appropriate for us to pull on.

Makes sense. Any impact on the sort of renewal conversations as a result of not having a Thursday Night Football does that affect the conversation at all?

Not really. Listen, we've got such a strong NFL package for such a long period of time, and that's supported with a really, really strong set up of other sports rights that Thursday Night Football was really helpful for us from the perspective of putting FOX Corp on the map. But when we looked at it, I think we have more than enough in terms of sort of that portfolio of rights to carry the retrans aspirations that we have.

Got you. And then just sort of your view on sort of overall sports rights. I mean -- I guess -- yes, is there anything in the portfolio right now that -- where you think there's some cost savings opportunities? And we've seen prices just continually get bid up really across the board. I mean -- or do you conversely see yourselves investing more in sports rights there to sort of drive that inventory?

I think when I look at the investment spend we have on sports across the network and the cable net, I think we feel well spent. We look at everything, right, like anything that comes to market, that's what guys want to buy everything. We look at everything, we're super disciplined about how we approach it. So Thursday Night, we were super disciplined about that exact calculus like what is -- what's the net contribution in terms of rights costs versus the advertising revenue that we could generate from it? Does it deliver us outsize benefit from a retrans perspective, that sort of helps that equation, and it didn't. So we let it go to a different [ client ]. But I think every [indiscernible] feels about rights. We always evaluate rights as they come up and do we -- is something making the grade or is something better to replace, so we took UEFA competition in -- earlier in the year, which was good for us. But I think you should see it as the [indiscernible] about right, and we'll trade the portfolio as to what we think is going to deliver the most for our sort of the end consumer as well as sort of our -- most of the media consumers, which is advertisers and distributors.

And do you see the sort of tech platforms as a new competitor in terms of driving sports rights? And is it a sort of a long-term threat to the sort of the business model?

They're certainly more active. I can say both Amazon and Apple playing a much more active role in that sports right ecosystem. But I think that most sports rights owners, and if you look at the most recent sets of renewals and NFL being the most significant of all of them, there's still a significant premium placed by the rights holders on -- or the rights owners, I should say, and just sheer reach. And so I think -- like we feel really good about the value proposition that we offer the rights owners and the reach we deliver them and the monetization that we deliver for them. And so we feel particularly good about the position that we have. But there's no doubt that the tech players are playing an increasing role there now, how competitive that gets over time remains to be seen. And what sort of package is created to allow the tech players to come in. And so that the rights owners have some sort of digital sort of distribution on top of what they get for us in the more traditional view of the world.

Right. And lastly, on sports and the USFL. So did the performance of the USFL sort of meet you guys' expectations? Is it sort of on the track that you guys had expected? And are there any other opportunities for that kind of thing? I mean you guys own the league effectively, right? So I mean -- so now you're sort of playing in that fear of rising sports cost inflation.

I think USFL was a particularly unique opportunity. I'm not sure -- I'm not sure how many more opportunities there are to replicate that. But with first season of that we absolutely hit our objectives in the sense that the audience levels were there, which kind of proved that there was a place in the market for that product in spring. I think pro football is so important in this country and NFL in some respects, is such a concentrated product, sort of relatively few number of weeks per season before you get into playoffs. And so I think there's an absolute appetite from dealers to have spring football, and we prove that out with the ratings that are delivered both on our network as well as NBC carrying it. And so we have both networks, which I think was really good for promoting the game. And so as we shape up for this season, I think you'll see us. But one of the learnings was the ratings in Birmingham where we have all the teams, we're sort of off the chart. And so anything incumbent on us to find an economic model that pays so that we can take the teams closer to that...

Sort of new branch out to a few...

Exactly. And so I think you'll see that in the coming season and seasons. And so -- no, absolutely -- like we think that we can develop a really, really important sports franchise here. We don't have aspirations for it to sort of be competitive within MLB or NFL. But we think that it can carve out a really, really strong niche for us at a quiet time of the year for us, remember. So we're -- as I said, we're very forward-oriented from a lineup perspective, and this gives us something really, really attractive in the spring to sort of complement the NASCAR and MLB.

Got it. Now let's turn to digital. You talked about Tubi seeing sort of better growth in beating the 29% growth you guys saw in the last quarter. That is clearly not the message we're getting from [indiscernible]. So if we could dig down into that, I mean, what are the drivers of that? Because it's entertainment programming, right? For the most part, I was looking at the platform the other day. I mean what are the big drivers there? And what are you hearing from advertisers and ad buyers?

The primary driver is the content that we have gathered for that service. So we're now at -- I think it's 48,000 titles. We're quickly developing a nice selection of linear, sort of fast channels on top of the VOD service. We promote the heck out of it on sort of the core FOX assets. We've got ubiquitous distribution. And so all of those things combined, we've got go -- going back to your sort of first question, John, we've got the World Cup on a highlights basis there, which in the grand scheme of things is neither here nor there, but it's a great promo for us, and you see that Tubi is heavily promoted on the World Cup for us. And so when you bring all those things together, you get this really, really significant increase in what we call total view time, TVT. And so that's -- that continues to grow in the 40-plus percent for us. And so that pretty much directly converts into revenue growth. [indiscernible] advertisers see this is a pretty valid product to be in. We have -- we're pretty strict with respect to ad load on it. And so I think really, it's being generated by the end consumer demand for the service and how much they're using. So if there's more people using it and there's the existing people using it more often. And so that sort of flywheel effect continues to benefit truly from a monetization perspective. So it's an asset that we're going to continue to invest in when we see this kind of top line growth rate.

That's for sure. So how much of the ad spend on Tubi, would you say is incremental to the company versus a shift from linear? Number one. And then can you just talk about how that ad inventory is sold. Is it largely part of the upfront? Or is it more programmatic or...

Yes. So in terms of is it truly incremental from our ad portfolio perspective, it's truly incremental in the sense that when we -- when somebody buys something else in the portfolio, we don't sort of throw in Tubi and allocate, that number [ deteriorate ]. So there's no sort of -- they don't get a free kick from a revenue allocation from our ad sales team. But to an extent, as you see, viewership decline in sort of traditional linear consumption of entertainment content. Some of that dealership is going to platforms like Tubi and Tubi is the beneficiary of that audience and therefore, the revenue that derives from it. So from that perspective, there is sort of like a switch going on. When I look at it from the perspective of how we monetize that is less than 1/3 of it is sold in the upfront, and then the rest of it happens both from a direct ad sales perspective as well as from a programmatic perspective. And so I think there's a nice healthy balance across those 3 where we monetize that platform.

Got you. So there appears to be a bit of a monetization gap between Tubi and Pluto. I mean have you guys seen that? Or why is that the case? And can that be closed?

I'm not always convinced we're comparing apples with apples in terms of how we see revenue for Tubi and how the paramount proxy revenue for Tubi. I think there is an element of Tubi is -- has been and is starting to shift away -- not shift away from, but adding to -- Tubi has been on a VOD service. And so the ad load on VOD is typically less than sort of linear streaming. And so from that perspective, there's more opportunity to monetize. But to the extent that there is a gap, and it's a gap that is apples for apples, and we see that as headroom for us to just easily grow into because when we look at the consumption of the service. It can absolutely support more monetization.

Right. And when you're talking about more investing against it. I mean what are we talking about in terms of new content? Is it sort of more of the same? Or are you going to add more sports? Or how should we think of that product evolving over time?

I think -- so absolutely, one of the core tenets of Tubi is just having absolute breadth. It's almost like -- it almost is the YouTube of professional content. So with 48,000 titles, if you want to see type in Colombo because you want to see one of the classics, you will find that in Tubi. So it's having that kind of sheer size of library that people can go there and reliably find something they're going to be interested in. And a lot of that comes in the form of rev share, and so it's not as if Tubi is taking this huge sort of content investment risk because it's paid for on a variable basis. We continue to grow our originals and these are not kind of Mandalorian kind of cost originals. They're very, very value-driven originals that continue to drive viewership and have really, really short cash payback cycles. And so we're going to continue to take that sort of base of audience and drive them into those original programming. And then from a sports' perspective, I think sports is largely going to be around the shoulder programming or the highlights. The Tubi model doesn't support sort of big, high-profile live rights being monetized against. But I think that those sort of rights continue to belong where they are right now for us. But you'll continue to see us develop that side of the business, you'll see continued sort of stronger linkage between Tubi and the mother ship from a content perspective. So you've seen that with things like TMZ being much more prominent on Tubi now. So it's sort of like -- it's like building that in a really cost and value conscious way for us.

Got you. And any international ambitions for the platform?

We are -- we do have international presence today. So we're in Mexico, a bunch of other Latin American countries. We're in Australia and New Zealand, but they're rounding those in the context of sort of really the focus of Tubi and the management there is really on prosecuting the North American business.

Got you. And then FOX Nation, how do you -- how should we think about how that business should scale and maybe how big of a business could that get to over time?

So FOX Nation, we've deliberately set on a path for it to be a companion service for the core FOX brand, the FOX sort of FOX News Media brand. And so we're not going to embark on this enormous sort of SVOD spend to try and get FOX Nation to the kind of scale of some of our peers. But we absolutely see it as a place where we can aggregate an incredibly loyal and engaged FOX News consumer and monetize them with an SVOD product. And we see that. We'll continue to sort of, in a really measured way, develop the content there. So we kind of continue to see the FOX News, linear, some of their brands like Tucker Carlson, is on FOX Nation. You would have seen recently that we had Kevin Costner's Yellowstone: One-Fifty on the service, which has done really great for us in terms of subscriber acquisition. But we'll do that on a measured basis and grow it over time. We're not trying to build this service into something enormous. I think for the time being, our aspiration is really on developing that into a companion service for the core -- the core audience for FOX News. And as we prove that out, the aspirations may change and it gives us -- to the extent that we want to take more D2C, it gives us a great foothold there. But right now, we sort of see it as a measured sort of piece to the FOX News core service.

Makes sense. So put it all together and digital investment has been a drag on EBITDA for the last couple of years. I mean when can we start to see that EBITDA drag sort of -- start to slow and it starts to contribute to EBITDA growth?

So in terms of -- a couple of points I'd make there. So I think this year, you'll see the incrementality of that drag dissipate. So that sort of level of investment will mean this year, pretty similar to last year. I think within that EBITDA drag, so to speak, and Tubi is the most prominent one. And so -- and with -- where you would have seen in our Q1, we're trying to be more transparent around the numbers we give on Tubi. And so the last year, the EBITDA drag from Tubi alone was sort of low to mid $200 million. And so that's -- when you look at that -- and you think about valuation for the company, you put a multiple on that and you're capitalizing those, albeit the multiple is terrible, [indiscernible] 4x, 5x. So you're getting sort of implicitly, people are tagging with a negative valuation for Tubi when the things got absolute clear, our assets of value for us. And so you'll continue to -- we'll continue to give you, the Street, more insight into that asset because we want to switch it from being a drag on the valuation, so the valuation is positive for us because we think that the aspirations for that business are very large, and we think that the headroom is there for us. And so Tubi, I think you'll continue to see us invest in that platform until we see that -- until sort of our appetite is satisfied in terms of the top line growth, but we don't see that capping out anytime soon. I think things like Nation with -- to a certain extent, USFL, they will become less of a drag on P&L over the sort of short to medium term.

Okay. So we're probably hitting sort of peak drag now.

I think we are peak drag to the extent unless there's sort of another glaring opportunity we find, but I think when we look at that drag Tubi is the sort of way we have clear line of sight.

Got you. Let's talk a little bit about sports betting and maybe the Flutter arbitration. Could you give us your sort of view on how that worked out and in sort of the benefits to FOX from the conclusion of that?

Yes. So sports -- I think you're going to take a step back with sports betting and look at where FOX is versus other participants in the market. And so we haven't put -- with the exception of sort of $400 million we put into Flutter and Topco, which is now worth I think $600 million. We haven't put any hard money into the local sports betting market. But we've put in -- we've put our shoulder into sort of our relationship with Flutter and we put our shoulder into promotion of FOX Bet and the commercial agreements that go with that. And so when you come out of arbitration. And arbitration -- most important thing from arbitration is clarity. And so we now know where we are with respect to the FanDuel option, strike prices, when you look at it from a total enterprise value perspective, it's $20 billion. When I look at when notes came out after the FanDuel Capital Markets Day a week or 2 ago, I think where people had FanDuel valuations pegged, it was like $17 billion sort of mean or median. And so we've got a slightly out of the money FanDuel option with another 8.5 years to go to excise until the end of 2030 to exercise. And so you put that through any kind of option valuation math and you look at the volatility in the sector and you get an enormous value for that optionality for us. And so from that -- would we have liked the lower strike price? Absolutely, we would have, but that strike price could have gone a lot higher, we thought it could have gone a lot lower, but we feel really, really -- FanDuel is, by far and away, the #1 player in the market. We feel great about the fact that we could earn 18.5% at our option anytime over the rest of the decade. So from our perspective, without putting any real local capital down, we've probably got the best sports betting position out of any other media company in the country. And so I think we've done super well both from being able to get ourselves to this position from the commercial negotiations we've done, the arbitration outcome. And so we're in a fantastic position. Now it's a volatile industry, there will be winners and losers, we think we're on the winner. But we've got -- we now -- time is on our side in terms of being able to have a look at how that industry plays out and how and when we want to play in it.

So are there any sort of -- now that you've got some clarity there. Are there any areas where you could sort of move forward with the strategy outside of FanDuel? And obviously, there's FOX Bet, but sort of other investments you can make or other licensing that you could do or anything else you could do to advance the strategy?

No, in the medium term, I think we have really got ourselves to a neat position in terms of being able to -- going back to what I just said, but the volatility -- we're big believers in the industry, but we think there's going to be a lot of volatility and there's going to be a lot of shakeout in terms of players. And so we have the luxury of time to see how that plays out. We'll continue to be good partners with respect to FOX Bet and put sort of our promotional capacity behind that, and we'll obviously have a close watchful eye on FanDuel and how that sort of option could pay off over time. But with the luxury of time, we don't have to deploy capital against it anytime soon. So we'll use that time to make the right decision when it's right for us.

Now because I have asked a news corporate combination. I imagine there's [indiscernible].

Not if you want me to get next to you, John.

Exactly. But is there anything you could say just generally about sort of the timing? Or when should we hear anything or any way to frame it differently than what we've been hearing?

Not that because I think when the announcement came out in the mid October, it was probably closer to the start of the process than the end of the process. And so I think it is now in the hands of the FOX Corp Special Committee and News Corp at that time Special Committee. And so they'll be really considered and they'll be very deliberate against that. And they'll make the right decision. I think whatever happens, I think both the special committee as well as the track record of sort of the [indiscernible] in terms of creating value for shareholders, that will be at the forefront of everybody's mind. And I think there's a really, really long heritage of our old News Corp, then morphing into 21st Century Fox now with FOX Corp. and News Corp of always doing what is the value-maximizing approach for the company and for all its shareholders. And I think that those principles will hold true with when the deliberations take place.

Makes sense. So the last thing for me. Speaking of shareholder value, you've got $5 billion of cash on the balance sheet. How should we think -- you've got the Flutter arbitration behind you? Obviously, we're waiting on the shape -- how the things with News Corp shake out? Just how should we think of uses of that cash over the sort of near to medium term?

Yes. So listen, we recognize that -- like we recognize the fact that we've probably got -- we're a little bit [ lower ] in terms of cash on balance sheet. We're going to be balanced -- it's hard to do anything with in terms of -- with the News Corp traction -- transaction around all of this. But you should expect to see us continue to be balanced, right? And when I look at what we've done over sort of the short life span of FOX Corporation in terms of where the priorities of that cash deployment has gone, we've put in $1.9 billion gross, $1.4 billion net in terms of M&A and you compare that to what we've done from a share buyback perspective, which is now north of $2.9 billion. And so -- plus on top of that, north of $1 billion in dividends. So far, the track record has been the -- has actually been to return capital to shareholders. We remain watchful for whatever opportunities are out there, particularly with pressure in the market and pressure on asset prices. And we feel that in generally turbulent economic climate, we think that have been pretty fortress-like balance sheet is a key asset for us, but we're going to be balanced but we're going to be the when we so full with it.

That's great. Well, Steve, thanks for being here. Thank you all for joining.

John, thanks for having us.