Fox (FOXA) Q2 2026: Tubi Revenue Jumps 19% as Streaming Profitability Extends Portfolio Reach
Tubi’s 19% revenue surge and repeat EBITDA profitability mark a streaming inflection for Fox, while robust advertising across news, sports, and digital signals portfolio resilience. Management’s bullish tone on live content and digital engagement sets up a pivotal election-year play, but cost discipline and evolving distribution dynamics remain key watchpoints for investors.
Summary
- Streaming Profitability Milestone: Tubi delivered record revenue and sustained EBITDA profitability, expanding Fox’s digital leverage.
- Advertising Demand Resilience: Live news and sports drove historic ad revenue, with cable scatter pricing up sharply and new advertisers fueling growth.
- Distribution and Bundle Strategy: Subscriber declines moderated, while Fox One and skinny bundle positioning protect economics amid industry shifts.
Business Overview
Fox Corporation is a media company focused on news, sports, streaming, and entertainment. Its revenue comes primarily from advertising (selling ad inventory across its networks and platforms), distribution (affiliate fees from pay TV providers and direct-to-consumer products), and content licensing. Major segments include cable networks (Fox News, Fox Sports), television (broadcast network and owned stations), and digital streaming via Tubi and the new Fox One platform.
Performance Analysis
Fox reported broad-based revenue growth, with total revenues reaching $5.18 billion, up 2% year-over-year, as strong advertising and distribution offset a challenging political comparison and mixed entertainment results. Distribution revenue growth of 4% was driven by affiliate pricing gains and a notable improvement in subscriber declines, particularly when factoring in Fox One’s early success.
Advertising revenue increased 1%, despite cycling last year’s heavy political spend, as live sports and news delivered record results across Major League Baseball, NFL, and college football. Tubi was the standout, posting 27% growth in total view time and a 19% jump in revenue, while achieving EBITDA profitability for the second consecutive quarter—a significant marker for Fox’s digital ambitions. Expense growth, primarily from sports rights and digital investment, pressured EBITDA, which fell to $692 million from $781 million a year ago.
- Cable Segment Outperformance: Cable revenue and EBITDA grew 5%, with cable ad revenue up 7% on robust news and sports pricing.
- Television Mixed Dynamics: TV segment revenue was flat as Tubi and sports offset the absence of political advertising; TV EBITDA declined on higher sports costs.
- Free Cash Flow Seasonality: A typical first-half deficit of $791 million reflected sports rights payments and ad receivables, expected to reverse in the back half.
Capital returns remained aggressive, with $1.8 billion in buybacks year-to-date and a $0.28 per share dividend declared, supported by a $2 billion cash balance and measured leverage.
Executive Commentary
"Our favorable results were broad-based, including notable strength in advertising revenue, where despite high political advertising a year ago, we still adroitly grew total company advertising revenue. I made the comment last quarter that we were experiencing the most robust advertising market we have seen for some time. That remained true during the second quarter, and it continues to be true today, where we are seeing unabated healthy trends and positive metrics across our portfolio."
Lachlan Murdoch, Executive Chair and Chief Executive Officer
"Advertising revenues grew 1%, despite facing a difficult comparison to last year's record political cycle, driven by strong linear pricing across our portfolio, continued robust revenue growth at Tubi, and a seven-game World Series of sports. Quarterly adjusted EBITDA was $692 million as compared to the $781 million reported in the prior year quarter as the increase in revenues was offset by higher expenses."
Steve Tomczyk, Chief Financial Officer
Strategic Positioning
1. Live Content as Core Differentiator
Fox’s strategic emphasis on live sports and news is paying dividends, with these segments representing the vast majority of national ad sales and driving record engagement. Management highlighted that 94% of national ad revenue comes from sports, news, and streaming, underscoring a deliberate pivot away from legacy entertainment volatility.
2. Streaming Scale and Profitability
Tubi’s revenue and usage surge, coupled with repeat EBITDA profitability, signals that Fox’s digital-first approach is gaining traction. Tubi’s audience skews younger and more diverse, with 70% classified as cord cutters or cord nevers, positioning Fox to capture incremental ad dollars as linear declines.
3. Distribution Model Evolution
Fox One’s launch and skinny bundle adoption are moderating subscriber declines, with management noting a 6.3% decline excluding Fox One—an improvement from prior quarters. Fox’s bundle-selling approach to distributors offers downside protection as the pay TV landscape fragments, while direct-to-consumer growth diversifies risk.
4. Capital Allocation Discipline
Share buybacks and dividends remain central, with $1.8 billion repurchased this year and cumulative returns of $10.4 billion since Fox Corp’s creation. Management’s approach leverages a strong balance sheet to support both growth investments and shareholder yield.
5. Monetization and Ad Innovation
Fox is capitalizing on robust scatter pricing (up 46-47% YoY in news) and new advertiser categories, including financial services and pharma. The company is also positioning for upside from political ad cycles and emerging digital categories, such as sports betting and AI-driven services, which are expected to drive incremental revenue.
Key Considerations
Fox’s quarter highlights the interplay between live content, digital expansion, and disciplined capital allocation. The company’s ability to offset linear headwinds with streaming growth and strong pricing power in core segments is central to its investment case.
Key Considerations:
- Streaming-Driven Margin Expansion: Tubi’s sustained profitability offers a blueprint for scaling digital economics across the portfolio.
- Advertising Market Breadth: New advertisers and category diversity are buffering cyclicality, with live content providing pricing leverage.
- Distribution Resilience: Skinny bundle adoption and Fox One’s growth are slowing sub declines and protecting affiliate fee economics.
- Sports Rights Cost Management: Rising NFL and other sports rights costs are a looming headwind, with management eyeing portfolio rebalancing as an offset.
- Political Cycle Tailwind: The upcoming election year is expected to deliver incremental national and local ad revenue, particularly for news and streaming assets.
Risks
Sports rights inflation remains the most material risk, as upcoming NFL contract escalators could compress margins if not offset by pricing or portfolio adjustments. Distribution shifts, including the pace of pay TV declines and the uncertain impact of skinny bundles, present ongoing volatility for affiliate fees. Entertainment segment volatility and the need for continued digital investment may pressure near-term profitability, while competitive intensity in streaming and advertising could slow growth momentum if macro or industry trends deteriorate.
Forward Outlook
For Q3 2026, Fox guided to:
- Continued advertising strength in sports and news, with political spend ramping into the back half.
- Sustained Tubi revenue and engagement growth, with profitability expected to persist.
For full-year 2026, management maintained a focus on:
- Low to mid-single-digit millions of Fox One subscribers over the next three to four years.
- Disciplined cost management amid rising sports programming expenses.
Management emphasized confidence in strategic direction, a robust ad market, and the potential for upside from political and digital tailwinds.
- Live content and digital engagement prioritized for growth.
- Capital returns supported by strong cash flow reversal in the second half.
Takeaways
Fox’s Q2 2026 results reinforce the company’s live-first, digital-forward strategy, with streaming profitability and advertising breadth offsetting legacy headwinds.
- Streaming Inflection: Tubi’s 19% revenue growth and repeat EBITDA profitability validate Fox’s digital strategy and offer a scalable template for future margin expansion.
- Advertising Power: Live sports and news are delivering historic ad revenue, with new categories and robust scatter pricing insulating against macro softness.
- Distribution Adaptation: Fox’s bundle approach and Fox One’s traction are mitigating affiliate risk, but sports rights inflation and entertainment volatility warrant close monitoring in future quarters.
Conclusion
Fox enters the second half of fiscal 2026 with momentum in streaming and live content, a resilient ad market, and disciplined capital returns. Execution around sports cost management and digital scale will determine the sustainability of recent gains, especially as the political cycle intensifies.
Industry Read-Through
Fox’s results highlight a broader industry pivot toward live content and streaming profitability, with advertising demand for sports and news outpacing legacy entertainment. The success of Tubi and Fox One signals that ad-supported, digital-first platforms can achieve both scale and margin, challenging peers to accelerate digital monetization. Distribution model adaptation, including skinny bundles and direct-to-consumer, will be central for all network owners as pay TV declines moderate. Sports rights inflation remains a sector-wide risk, underscoring the need for portfolio discipline and pricing power across the industry.