Fox Corp boosts buyback by $3 billion as World Cup powers earnings

(Reuters) -Fox Corp expanded its share buyback plan by $3 billion on Wednesday and surpassed second-quarter revenue estimates as the FIFA World Cup and the U.S. midterm election boosted the Rupert Murdoch-controlled company’s advertising business.

Its shares rose 5% after the company’s first results report since Murdoch last month scrapped a plan to reunite Fox and News Corp on grounds that the merger was not in the best interest of shareholders.

Fox’s ad revenue rose nearly 4% to $2.5 billion, beating expectations of $2.39 billion, in what was a tough quarter for ad-reliant companies as businesses worried about high inflation and rising interest rates cut back on marketing.

Chief Executive Officer Lachlan Murdoch said the results were aided by “a compelling fall sports schedule, combined with an active midterm political news cycle.”

“We’ll be looking at M&A and other opportunities to use to deploy our capital against,” he said on the post-earnings call.

Analysts say Fox could face pressure in the coming months as the advertising boost from the World Cup fades and the political news cycle slows down.

The U.S. advertisement market is expected to grow 5.9% this year, lower than the 9% growth seen in 2022, according to industry body Interactive Advertising Bureau. Advertising on broadcast and cable TV is expected to decline 6.3%.

Lachlan said in November that he expects growth in digital ads on the back of online streaming service Tubi to partially offset the softness.

Tubi’s ad revenue jumped 25% in the second quarter, while Fox’s core television business posted revenue growth of over 6%.

Overall, revenue rose 3.8% to $4.61 billion in the three months to December, exceeding expectations of $4.58 billion, according to Refinitiv data.

Adjusted earnings per share came in at 48 cents, in line with estimates.

The latest buyback expands Fox’s repurchase program to $7 billion.

(Reporting by Yuvraj Malik in Bengaluru; Editing by Sriraj Kalluvila and Devika Syamnath)