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Fox (FOXA) Renews its Distribution Agreement With DirecTV

Fox Corporation FOXA announced that it renewed its multi-year distribution agreement with AT&T’s T DirecTV after days of struggling with reaching a fair agreement.

The agreement includes the renewal of FS1, FS2, Big Ten Network, Fox Deportes and Fox Soccer Plus, as well as retransmission consent for local Fox Television Stations across DirecTV, DirecTV Stream and U-verse.

These TV stations are located in 18 major cities, including New York, Los Angeles and Chicago.

DirecTV is one of the largest pay-TV operators in the United States, present in more than 13 million U.S. households. This renewal thus brings a sigh of relief for Fox as it can continue to reach such a wide audience without any hindrance.

Multiple Distribution Deals Aid Growth at Fox

Further on the distribution side, Fox has also entered a multi-year deal with VIZIO VZIO, which makes the Fox Sports app available on VIZIO smart TVs, along with the Fox Weather channel being added to VIZIO WatchFree+ besides existing Fox ad-supported LiveNOW and Fox Soul.

In August, Fox announced the completion of a multi-year renewal of its distribution agreement with Verizon for its Fios TV platform.

The agreement included the continued distribution of the entire portfolio of FOX brands, including FOX News Media, FOX Sports, FOX Network and local FOX O&O TV stations in markets including New York, Washington D.C. and Philadelphia. FOX Weather has also been added to the Fios TV lineup and Tubi is included in both Fios TV set-top boxes, as well as on many other platforms.

Fox Corporation Price and Consensus

Fox Corporation Price and Consensus
Fox Corporation Price and Consensus

Fox Corporation price-consensus-chart | Fox Corporation Quote

These agreements are evidence of the confidence that the distributors show in Fox, which is definitely on the heels of its high traction-gaining content library.

The NFL on FOX has had a great start as it averaged nearly 23 million viewers, up 9% year over year in first-quarter fiscal 2023, aiding the company’s subscriber growth. The 2022 College Football season also got off to an outstanding start with 10.6 million viewers for Alabama, TX.

Fox Nation, which is a subsidiary of Fox News Channel, has been aiding the company’s top-line growth as well. Its subscriptions and total hours watched grew 45% and 70% year over year, respectively, in first-quarter fiscal 2023, making it FOX Nation’s highest quarter ever for hours watched. The conversion rate of trialists to paid subscribers has been high and retention rates were above the industry averages.

This delivered 5% growth in top-line revenues of the company led by an 8% increase in advertising year-over-year in the first quarter of fiscal 2023.

Rising Concerns Over Fox’s Merger With News Corp

Fox’s decision of merging with News Corporation NWSA is a strong headwind as it is sternly being opposed by investors in the fears that combining the two companies would fail to realize the full value of the company.

Concerns such as the redundant print-advertising model of News Corp, its reliance on countries outside the United States for the majority of its revenues during the ongoing foreign exchange fluctuation or the U.S. dollar gaining strength are major factors that are yet to be addressed by the company.

This Zacks Rank #3 (Hold) company faces the biggest threat from the ongoing cord-cutting which is in response to the advent of streaming services. Per Outlook, 5 million people have cut cable TV cords in 2022, which is 55.1% of the residents in the United States.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Shares of Fox have declined 11.7% year to date, outperforming the Zacks Consumer Discretionary sector, which fell 31.3%.

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AT&T Inc. (T) : Free Stock Analysis Report

News Corporation (NWSA) : Free Stock Analysis Report

Fox Corporation (FOXA) : Free Stock Analysis Report

VIZIO Holding Corp. (VZIO) : Free Stock Analysis Report

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