Fox Corporation (FOXA) Earnings Call Transcript & Summary

Okay. Great. Again, thanks, everyone, for coming. We begin our next session. I'm very pleased to have with me here today, Steve Tomsic, the CFO of Fox. Steve, thanks for being here.

Thanks for having us back, John.

So we've got about 30 minutes for Q&A, and I've got the iPad here, so if anybody has any questions, I can -- you can download the app and submit them, and I'll work them into the conversation. So Steve, always at this time of the year, we try to get a sense for what companies are thinking about for '24. So if you look out in the new year, can you talk about the company's priorities.

Yes. So listen, I think FOX -- it sounds repetitive, and I think I said similar things at the conference last year. But FOX has been pretty resolute around a strategy that we think distinguishes our company from many of our peers. And so as part of -- we separated the company a little over 5 years ago, which now seems like age in history, but the strategy remains hyper relevant today. So we are in the live sports, live news kind of business. And we think the reason why we're in that business is: a, because we think we can lead in those 2 categories and have demonstrated that over a long period of time now; b, it monetizes super well because the advertisers covered it and so did the distributors; and c, it's the most compelling programming that's available in the market. So you'll see us -- in '24, the priorities will remain largely the same, which is continuing to deliver on that promise from a programming perspective to our customers, whether they be the end audience that watches the programming or the intermediate audience, which is the advertisers and distributors. '24 begins to become a really big year for us particularly on the news side. Sports is relatively similar to what we've seen this year. But '24 is a huge year from a news perspective. You've got the presidential elections and the primaries that lead into that. '24 from a sports perspective, we have a new property for us, which is the UEFA Championships, which will be in the summer. And then that builds through '24. And then into '25, we have our next Super Bowl. So you'll see us continuing to focus on those 2 categories. And as we focus on that, we'll obviously focus on the monetization of that. So we'll have our usual sort of progress with respect to affiliate renewals, and we expect to be able to achieve our objectives there with usual advertising trying to grow the advertising book across the whole portfolio. And then as we look -- so that's the core of the business and then we look out from that. We're very excited about the growth opportunities with our digital assets and in particular, to the nation whether -- and even the USFL, which is not digital per se, but part of the growth portfolio. So it's a lot to get done, but we feel like we're -- that the focus that's paid off for us over the last 5 years will continue to pay off.

So relative to peers, and as you mentioned, most of your linear program, including sports, is still exclusive to TV, not available on a sort of D2C platform. So will this continue to be the case? And are you guys confident that that's the best approach to take?

I think the notion or the term linear programming is now almost used in the majority, which we don't define ourselves by being a linear programmer. When you sit down to watch the Niners (sic) [ 49ers ] against the Eagles yesterday. You didn't think I'm sitting down to watch a lovely piece of linear programming, right? You're thinking about...

I did that.

You were thinking I'm here to watch a really, really important sports game. And that's the same with our news service, our general entertainment business. So we don't define ourselves by the delivery mechanism or the way it's scheduled. Linear -- sports and news are the opposite of entertainment in some respects, right? Because entertainment, there's no doubt that streaming had delivered a better user experience. It's on demand. You watch it when you want, you watch it, how you want. Sports is the opposite. The sports and news is the opposite. The actual content expects the viewer to be on demand, right, because it happens when it happens. People don't watch replays of the news. People don't want watch replays of -- generally speaking, they don't watch. So from a delivery mechanism, we still believe that the way we deliver our program, which is largely through traditional MVPDs and digital MVPDs, is the best way that we serve the end audience because it's the most integrated -- no one has all the sports, no one has all the news. And so the best way to deliver that integrated sports experience to the end consumer is through the bundles that we serve at the moment. The best way for us to monetize our content continues to be to take affiliate fees from distributors in return for some pretty incredible programming and pretty incredible programming investment and continue to take advertising revenue for advertisers who cover those kind of audiences. As distribution evolves, we're not going to stick our head in the sand and say, this is the only way we'll distribute our content. But we firmly believe that the bundle and being able to watch news and sports as part of the collective offering is going to be the predominant way people watching. Now whether that bundle remain MVPDs that are facilities based, virtual MVPDs, or some other version of that is to be seen, and we'll assess that. And if the right commercial opportunities present themselves to evolve the way we serve our clients, then absolutely, we're attentive to. But at the moment, we think we've got the optimized way of serving the consumer in the optimized way to monetize that.

And how is that approach and focusing on these existing distribution channels, how has that been paying dividends in terms of your sort of recent renewals on the affiliate side?

You can see on both sides. So you can see it both on the advertising side. I think we get best in market rate for our content from a CPM perspective. And you see with our affiliate renewals, like we had -- in '23, '24 -- fiscal '23, fiscal '24, we had about 35% in each year of our affiliate book coming up for renewal. Our fiscal – we’re start of December now, and in terms of that 35% that we had due this fiscal year, virtually all of that has been renewed. And you've seen that happen without us going up dark without acrimonious public debates about value of content versus value of distribution. So it speaks to the fact that we're delivering something of immense value to the distributor and the end audience. And you see that appear in terms of what I think will be sort of best-in-class affiliate rate growth, whether it be cable affiliate or retrans growth. And so we're seeing the fruits of that. And so it sort of perceived us to kind of respect the end consumer and respect the monetization that sits in between that.

So the sort of shock to the system was Charter's recent deal with Disney. And I think some programmers have been waiting this for a while that some of those longer tail networks or sort of less-watched networks were being dropped. And that seems to have kicked off that process. I mean, what implications do you think that this has for your business as it's currently positioned?

No, I think, we only know as much about the renewal as what's publicly available. But listen, I think the message that renewal tells us and I think tells the ecosystem is what we've been trying to say for the last 5 years, which is there's clearly been a prioritization by the distributors for sports. And it looks like the economics have been prioritized towards sports as opposed to -- or in preference to general entertainment content with so much of that content is linked to SVOD platforms. We think that ultimately, the bundle needs to shrink in order to serve the end consumer. And we think that losing some of those long-tail networks can only be helpful to create a bundle that sort of speaks to what the consumers are looking for. And it looks like Charter has been given the flexibility to be able to combine both what you term to be sort of classic linear programming as well as SVOD sort of services into one. So now it's really -- the ball goes back into Charter's court in terms of assembling an offer at the right price with the right blend of services, whether they be sort of the live services, which are typically delivered linearly like ours. And we're the best of that breed in combination with more contemporary SVOD services. And if we can -- if Charter can deliver that package and that is infectious across the industry, it will be fantastic for FOX because it's helpful for the subscriber universe. But the proof will be in the eating of the pudding, right? How does Charter deliver that in terms of a price point to retain their subscribers? But we think ultimately, it speaks to the strength of the programming that we've prioritized within that bundle and perhaps the strength of being able to deliver something. At the moment, the consumer is in -- when you look at what the consumer is being asked to deal with from a consumer choice, it's like take the classic bundle, but it's way over price because there's a bunch of stuff that they don't want, right? Or they go into the world of D2C, which is super fragmented, super unintegrated, super unfriendly. And so if we can build something that sits in the middle, which is truly integrated at a really sharp price point, I think it's going to be fantastic for FOX.

Yes, it seems like the Charter model is -- include all the SVOD services, but then drop on the long term or any duplicated networks.

Exactly, it's duplicative content. So I think we're very -- we're encouraged by that sign.

I mean that should eventually -- given the savings you get from bundling a lot of -- you think there's 3.3 SVOD services per household, bundling those in for your service. There's some real savings there even though the price might not come down. But I do think that there's some sort of positive trend -- this should lead to positive trends in terms of cord cutting in the U.S. But if it doesn't, if you see a continued transition out of the bundle towards streaming, I mean, how will the strategy at FOX sort of evolve to sort of stay in front of that?

John, if we do see that now we are -- I think people somehow have tagged as was being defined by the distribution sort of our means of distribution. We're distribution-agnostic, like as long -- our view is we have some of the most compelling content in the country, right, with our news and sports. How that content gets to the end consumer, whether it be through the 2 key versions now or whether that evolves, will follow that to the end consumer. It's incumbent on us to be able to continue to produce that content and have something super compelling. And then it's incumbent on us to get the right commercial terms for that. So don't think of us as just sitting on our hands saying, if it's not this model, then we're bust. Our distribution will evolve as the customer wants our distribution to evolve. But at the moment, we think we're best serving them with the suite of distribution that's available to them today.

Right. Disney has announced that they're going to launch ESPN Direct, '25, maybe it's a little sooner. I mean, is there room for sort of FOX to do the same? And if so, are there -- we're just -- people are starting to talk about bundling, both on the SVOD side and potential on the sports side. I mean, is that something that you would expect to evolve if the world headed in that direction?

We look at -- so we do the calculus on all the potential sort of distribution modes that could possibly emerge. I think with sports in this country, they're so fragmented. So for the true sports fan, ESPN is a great service, right? And I'm sure that when they launch ESPN flagship, it will be a fantastic product. But it's a sliver of the sports. And if you're a true sports fan, right? If you want to watch NFL in a given week, you've got Amazon Thursday, you got Us Sunday, you got CBS Sunday, you've got NBC Sunday Night and you've got ESPN Monday. So -- and NFL is the most important sports in the country. And so if you've got that level of fragmentation, no one sports service is going to satisfy you. And then when you look at across -- if you're a sports fan across multiple sports, you haven't got a hope. And so at the moment, the best way that, that sort of collective of sports comes together is in the virtual and digital MVPDs and normal MVPDs. If there is -- if you can conjure a way to bring all those sports services together, you're bringing together content from a lot of players that kind of looks like a digital MVPD, right? And it's probably going to be at a similar price point. So we're obviously following that we have the rights capability, both on the sports side and the news side to be able to deliver our services D2C. We have a pretty extensive technology build. We have Tubi from a streaming perspective, got Nation from a streaming perspective. So we've got all the holding blocks for us to go D2C if and when that becomes appropriate. But for now, we still think that the right strategy is where we're at.

Got it. And maybe shifting to the sports rights portfolio. I mean is that -- and you guys have shown a lot of discipline and willingness to change and pivot based on what rights are up for grabs and how expensive those rights are. Do you think you've got the right portfolio both on a sort of linear world and as we sort of look out into what could potentially be a more sort of digitally led future?

Yes. Listen, I think we've done a lot of optimizing on the portfolio over the last 5 years. So the biggest gesture we made was obviously an enormous renewal with the NFL, which gives us surety over the most important product for a long, long period of time.

Dropping Thursday...

Dropping Thursday. But we think that we're well served with the package we got with Sunday. We have MLB for a long period of time. We've got college football, which has been on a tear this year for us, for a long, long period of time, particularly with the Big Ten. We just renewed NASCAR for another 7 years. So we think the sort of the key planks of our app portfolio are in place. I think we're -- we've made -- we've also dropped certain things like we dropped WWE. You mentioned we dropped Thursday Night Football. We were ticked up, right? So we did the UEFA Championships, which is a pickup. We have USFL that's coming through. So we've made changes, and we've made changes both on what we think serves the end consumer. We've made changes that sort of suit our value and economics. So we think we've got a fantastic sort of foundational platform for a long, long period of time. I think we feel as though from a portfolio spend perspective, we've got that about right. And we'll continue to optimize as rights come and go. But right now, we're probably in as good a position as we've been in terms of just having the surety of supply of the key programming that defines FOX Sports.

So there's a couple of things out there. You mentioned you guys have passed on WWE. It's sort of, in our minds, things you created some a little bit of -- freed up a little bit of budget. You have NBA coming up. There's a few others. I mean, if you don't think as you look out into a digital -- potentially a more digitally-led world that you need to bulk up in terms of your portfolio at this point? Or it's about the right level of spend?

We think we're at about the right level of spend in the right spread of rights. Like we look at everything. I think Lachlan said NBA is probably less likely for us more close to an out right now. So no, I think -- we took away WWE because for us, it sort of was neither fish nor fowl. It wasn't brand defining for FOX. As a reasonable check to right, we're in deficit on a Friday Night with that programming. But it wasn't something -- and it was also -- different versions of WWE were available in different parts of the ecosystem. So it wasn't unique to us. And we think we can program Friday Nights in a really, really exciting kind of way once we get through WWE, and we'll have more to say on that in the coming months. But no, I think whether it be the distribution platforms we have now or whether that -- or whether distribution evolves to something different to what it is today, we think our sports portfolio will serve us super well.

Got it. Maybe turning to the ad market. We had the ad panel kick off things this morning, which was not -- I won't say there were that many surprises, but I wouldn't say it was terribly constructive on the overall sort of linear TV advertising, except for sports, frankly. But your peers have talked about soft ad trends persisting into calendar 4Q. Can you give us an update in terms of how you're viewing the overall linear TV ad market as well as what you're seeing on the sports side?

Yes. So I think our -- we're different to our peers, right? Like we play in -- it goes to the strategy, which is sports, news, super resilient, super compelling from a content perspective, and really, really hard to compete. If you don't have the NFL, you don't have the NFL. If you don't have FOX News, you don't have FOX News, right? So that's why we play in parts where we can win. And we see our portfolio mix is different to our peers. So when we look at it, it's probably fair to say that of all of linear general entertainment linear is the most challenged, and that is a very, very small part of our overall book. And so when we look at the overall portfolio, sports remains really solid for us. Like college football has been remarkable for us, and it followed having the Women's World Cup, which was also fantastic for us. NFL remains strong. NFL, I would say we probably -- we sold a lot of NFL in the upfront and probably got best-in-market CPMs in that. And we continue to preserve that price integrity may be a little bit better than upfront in terms of scatter pricing. I think with NFL, the matchups that FOX has had to date have been a bit more mixed. And so therefore, it's really about -- it's less about market dynamics and more about audience dynamics. We have a fantastic slate of NFL programming from here through the playoffs. And so we feel pretty excited about how that looks. MLB was okay from a cash perspective, not so great from a...

Match-up standpoint.

From a match-up standpoint and a game count standpoint. So we kind of got hosed on that. But that comes and goes, right? Next week -- next year, it might be a 7-game Dodgers Yankees. So that wasn't particularly good. On the news side, it's a bit more nuanced, right? So news we're still facing sort of DR pricing headwinds. And it's somewhat related to the sort of linear general entertainment, which has moved towards taking DR as part of their ad sales. And so news suffers from that because DR is an important component of the news advertising book. This quarter, we'll have preemptions from sort of the amazing coverage of what's going on in the Middle East at the moment. And then obviously, you've got some ratings headwinds in news. So that -- so all in the mix, sort of news as a -- sort of national news as a category remains pretty robust, but there are bunch of other headwinds that are sort of fighting in against that. Tubi has been strong from a viewership perspective that we've seen a ton of the inventory come through both from an AVOD perspective and digital writ large. And so we still continue to drive super engagement at Tubi, but I think you'll see that the revenue growth will be a little bit more moderate in this coming quarter. So I think when I look at the overall book, nothing's really changed over -- since for most of this fiscal year, actually. It's kind of like sports remains pretty solid. News is solid. We have our own sort of unique issues there. General entertainment, which is a small part of our book, and then Tubi continues to grow well from an engagement perspective. But we'll see how sort of that revenue moderation. The final piece is local. And we're obviously comping against an enormous midterm election that we had in Q2 last year, which obviously doesn't repeat itself. From a base to base perspective, I think we're about where we were last year. That's kind of being driven by the fact that order has been strong. Encouragingly, retail has been strong over the last probably month or so. And then -- but countervailing that is we continue to see a lot of movement in sports betting money away from our local stations and into more national placement. So that's the booking almost its totality, John.

Got it. That was comprehensive. In terms of the new side and the ratings, I mean, is this sort of just sort of normal course of business when you have sort of a big figure, leave the -- and do you expect -- I mean, the ratings of -- we're just looking at the other day. I mean, things have come back a little bit, but they're still well off from where they were. I mean, and then you mentioned the preemptions because of the war. I mean, should we think of this as something that just over time will sort of solve itself or sort of our near-term trends? Or is it something we're going to see in the numbers?

No, you'll see -- obviously, you'll see it -- you saw it in the numbers in Q1, and you'll see it in the numbers in Q2. For a whole balance, it's not just ratings. It's preemptions, it's DR pricing. So it's a bunch of reasons. So you saw that in Q1, you see it in Q2 as well. When we look at the underlying health of the network, like we made changes in the lineup in the July -- on July 17. And they've had pretty instant -- we've always been -- it's not hubris. So we are incredibly confident of the brand and the attachment of the audience to the brand. And so I think you see a what I'd call a temporary reduction in ratings. But as we sort of wind into primary season and then into election season next year, we feel pretty confident about the slate. And I think what people need to really understand with our FOX News service is, it's not just the 3 hours of prime time, like we are now pretty close to a full day, day part programming beast. And so you see things like the 5, which is consistently the highest rating news shows full stop in cable news. The channel is consistently sort of rates in the top 4 amongst the broadcast networks, right? So we feel pretty confident about the capacity of the brand and the network to withstand programming changes in prime time, absolutely. And you look at the brand and you look at the FOX News. We now call -- we've been calling a FOX News media since the spin, right. So it's not just even the linear network. It's the digital website. It's nation, it's weather, it's the audio service. And so when you look at that kind of collection and portfolio of news assets. It is by far and away the most well-placed news business in the country.

Makes sense. And any early read on the sort of political spending as we head into the sort of political sector. I mean, obviously, that's mostly on the local side, but what are you thinking that we'll see as things start to heat up?

No, listen, it's too early to say. I mean we're pretty optimistic about what next year, next calendar year could look like. Typically, what happens is you start to see some -- you don't see it in Q1 or Q2 -- our Q1 and our Q2, right? You'll start to see some build in Q3 and Q4, but that's in sort of the tens of millions of dollars. And then it really, really starts to prime July through November. And so the last presidential cycle, across the company, we were north of $350 million of political revenue. The vast majority of that went to our local stations. And so listen, based on sort of the political atmospherics, whether they be sort of national presidential or whether they be local races all points to it being another bumper political year for us.

You mentioned to moderating maybe we'll turn a little bit to some of the digital initiatives. You mentioned some moderation in growth on the Tubi side. Now you probably mentioned this in -- they make sure, but is it more consumption-based or just the ad market? Or -- and sort of what are the drivers for that? Because obviously, our theme is there's sort of more and more options for ad-supported viewership online, aside from Tubi and YouTube. And there's going to be a ad-supported or ads against Amazon content. Is that having an impact on the overall economics method?

I think short term, probably, yes. So it's -- from an engagement perspective, we're continuing to see phenomenal growth in engagement. So our Q1 engagement was up 65% and our revenue growth was up 30%. I think what you're seeing with the emergence of more ad-supported video is you probably -- you think pressure on the ad market that Tubi is not immune from, and that expresses itself both in terms of fill rate and CPM. I would say though -- and I think that's a short-term phenomenon because I think we've said for quite a bit of time now. It's really, really hard to drive engagement. It's hard to change that on a dime, right? And while we've got really, really healthy growth in engagement, we don't want to do anything to interrupt that. We want to continue to fuel that and monetize we'll catch that over time. I think with the proliferation of ad-supported services is potentially in the medium term, beneficial for Tubi because we think, unlike sports and news where we think we get top CPMs in both of those categories, we're by no means getting top CPMs at Tubi. And so to the extent that these ad-supported services validate that kind of inventory and they're able to drive CPM, drive fill rate, we think in the medium to long term, that's super healthy for Tubi. And the real hard bit is driving engagement. So Tubi is clearly -- if you look at the Nielsen Gauge, Tubi is clearly the most significant AVOD platform out there. Where -- like when I look at the curves between our prime time sort of linear led advertising versus Tubi, Tubi is already sort of crossed that curve. And so it's a really important asset for us. And Lachlan said that acquisition time. We expect Tubi to be the digital broadcast network and it's displaying all the signs have been.

What's driving that growth? Yes, I remember the 65% number. I mean, do you expect -- I mean it probably moderates just with the law of large numbers. But I mean, what content is raising or why do you guys think you guys are having somewhere -- you're right, the gauge numbers validate that versus all the other sort…

No it's not just there. I've been certainly marking our work. Nice. The beauty of it is, it's not 1 thing. It's -- the secret sauce is the obvious, right, which is you've got this enormous expansive target, the north of 60,000 tide is on the platform. And unlike others, our sort of -- from a programming perspective, we're not wedded to any 1 studio. We're agnostic to where we source the programming from. And if anything, programming suppliers are more and more willing to license Tubi for monetization reasons that they have as they're inducted on their SVOD strategies. And then from a distribution perspective, we're available everywhere. And so we're not beholden to trying to support hardware device strategy. We're available on all the big platforms. And so it's ubiquity of content, ubiquity of distribution, and there are just absolutely no barriers to consumption, right? It's free. If anything, what we need to -- what we're starting to do is to be able to collect some information from the consumer as they -- to get them to sign up to the service as opposed to being completely various. And that will help us with addressability, which will go to CPMs and all the rest of it. But we think it's a simple recipe, but we're kind of uniquely able to execute on that recipe.

Got it. I was going to go the -- all the digital investments in general have been a bit of a drag on the EBITDA. How should we think of that going forward? I mean, I think if I remember the guidance correctly, it was sort of 2 years at about the same level this year. I mean at a certain point, is that -- and I think Tubi is part of it. I mean I don't believe Tubi at this point is profitable. I mean when do you start to sort of monetize that or sort of really see EBITDA growth out of those initiatives?

Yes. That's a drag on EBITDA, but I'd like to think it's a huge lift in terms of value, right? Like Tubi is the biggest component of that investment spend. And it would be crazy for us to dial that back given the success we're having in that platform. So you should expect, I think, this year across the whole sort of growth portfolio. And in that portfolio, things like Tubi Nation whether USFL -- sort of a whole constellation of assets there. Tubi is the most important. You should expect some of those others will begin to get closer to breakeven. Tubi, I think, we'll keep it at a similar level to what we saw last year. But then you're right, John, over the sort of medium term, we would expect Tubi to pay for itself. And there's a clear pathway there. We've had Tubi at EBITDA neutral in quarters gone by, but we choose to invest in growth. And I think given what we're seeing from a consumption perspective and a top line perspective, we're going to continue to invest in growth because we reassessed the size of the opportunity. But obviously, over time, we want this to sort of wash its face breakeven and then really show proper EBITDA contribution as opposed to being a deficit in the EBITDA line. But when we look at valuation, right, Tubi cost us -- from an EBITDA perspective last year, Tubi was minus $240 million, right? I would argue that, that asset is worth -- like press reports added a couple of billion dollars. Meanwhile, people are capitalizing the losses into infinity -- there's an enormous value swing if people sort of get their head around that.

And the investments in growth, is that more content, subscriber acquisition? Or what are the investments there?

So all of the above, John. So a lot of it predominantly content. And with respect to Tubi specifically, it's about how do you bring in -- we've got an enormous amount of revenue share title, which is where the predominance of consumption happened. But then we add to that with license spend where we take on risk as opposed to being on consignment. And then you've seen us with a relatively modest investment of originals, but in a bunch of the -- so that's the predominant part of the investment. And then you see us invest into user acquisition. And it's the same with Nation, to be cost kind of content spend as well as user acquisition.

So longer term -- I mean, it seems like a lot of streaming companies have a target out there for longer-term profitability. And I think the fact is people just don't know. But I mean, is this a business that can -- you can see your way to sort of 10% or sort of 20%-plus type, Netflix type margins? Or how should we think of longer-term profitability there?

I think I won't give a number, but there's no reason why I can't achieve -- we're not investing in it just for the sake of driving top line revenue growth. We absolutely expect it to drive really, really strong IRRs. And the only way you use to drive strong IRRs being able to drive EBITDA margin and free cash flow generation over the medium term. So we expect Tubi and all of those assets to be able to deliver on that promise over the coming year.

Okay. And I think we have time for 1 more question. The theme of sort of M&A in the media space has sort of reemerged in I would say in the last it's gaining some momentum, but certainly in the last month. Actually, FOX almost -- or it looks like it contemplated a transaction with your sister company, News Corp. How should we think of how FOX is currently positioned in the landscape? Do you need more scale? Do you need maybe more digital assets or sort of how should we think of how FOX would play as you potentially see more consolidation?

Yes. The way we approach M&A is not from a defensive perspective, which is to say we narrowed down the company, and we've got a really, really focused company. And so we don't need scale for scale’s sake, right? In fact, the whole Disney -- the evolution of the Disney transactions was to deliver scale where scale was required, which with Disney and its SVOD strategy and deliver focus where we could be leaders in news and sports. And so we don't see M&A necessarily from a defensive perspective. You look historically and you look at our capital deployment and where we've gone with that, we've done $4.9 billion in buybacks since the spin. And we've done, in round numbers, about $1.5 billion in M&A. We want to grow the company. And so if you had said to me, John, the conference 5 years ago, whether that would be the split. I would have had it maybe the opposite. But we're super disciplined. I think it reflects how disciplined we are. We look at everything. 5 years ago, people were saying, you should be buying the RSN, and we had the common sense not to do that. But listen, we're on the lookout for how we can grow our core verticals, which is sports and news. And 1 of our core assets is the audience that is loyal and devoted to those brands and how we monetize those audiences in adjacent space. And so sports betting is an obvious example of that. So our M&A filter is pretty broad, but our bar is incredibly high. And so we'll only do something that we think is truly accretive from an earnings perspective as well as a value perspective.

Great. Makes a lot of sense. Steve, thanks for being here.

Thanks for having us. Appreciate it.

Thanks, Steve.