ITEM 1A. RISK FACTORS
Prospective investors should consider carefully the risk factors set forth below before making an investment in the Company’s securities.
Risks Related to the Roku Transaction
The Roku Transaction may not be completed or may be delayed if the closing conditions in the Merger Agreement are not satisfied, and the Merger Agreement may be terminated in accordance with its terms.
On June 14, 2026, FOX and Roku entered into the Merger Agreement pursuant to which Roku will become a wholly owned subsidiary of FOX. The completion of the Merger is subject to several closing conditions, including requisite FOX and Roku stockholder approvals, clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, the receipt of consents or approvals under certain other antitrust laws and certain investment screening laws and other customary conditions. The regulatory approval process (including if regulatory or governmental authorities seek to impose any terms, conditions, obligations or restrictions as a condition to approval) may lead to lengthy negotiations, jeopardize or delay completion of the Merger or negatively impact its anticipated benefits. The failure to satisfy all required conditions could prevent the Merger from being completed or delay its completion for a significant period of time. Such a delay could result in a failure to realize some or all of the anticipated benefits of the Merger on the expected timeline, or at all. There can be no assurance that the conditions in the Merger Agreement will be satisfied or waived or that the Merger will be consummated.
The Merger Agreement also contains customary termination rights and provides that each party is required to pay the other a termination fee of approximately $866 million if the Merger Agreement is terminated in certain circumstances, including due to a change in the recommendation of its board of directors or if the Merger is not consummated by the termination date specified in the agreement. In addition, the Company will be required to pay Roku a termination fee of approximately $1.2 billion if the Merger Agreement is terminated under certain circumstances related to the failure to obtain certain regulatory approvals or upon the entry of a permanent restraint under certain antitrust laws or investment screening laws. FOX has also agreed to reimburse Roku for up to $70 million for reasonable third-party costs and expenses incurred by Roku in connection with the Merger if the Company is unable to obtain the requisite FOX stockholder approval in connection with the transaction.
If the Transaction is significantly delayed or is not completed, it could have an adverse effect on FOX’s business, financial condition or results of operations.
Entry into the Merger Agreement could have a variety of negative impacts on FOX and the market prices of the Common Stock.
The Company is subject to a number of risks in connection with its entry into the Merger Agreement, including:
•negative reactions from the financial markets, including negative impacts on the market prices of the Common Stock;
•negative reactions from FOX’s customers, suppliers, distributors, employees, or other business partners;
•significant costs relating to the Merger, including financial advisory, legal, financing, accounting and other transaction costs and additional expenses related to combining the operations of the two companies;
•restrictions on the conduct of FOX’s business prior to completion of the Merger set forth in the Merger Agreement, including pursuing alternatives to the Merger, which could discourage a potential third party from making an alternative transaction proposal or prevent the Company from making other acquisitions or taking other actions that would have been beneficial to FOX; and
•the commitment of substantial time and resources by FOX management, which otherwise could have been directed toward the Company’s operations and pursuit of other beneficial opportunities.
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If the Merger is not consummated, in addition to failing to realize it benefits, FOX may experience adverse impacts to its ongoing business, financial condition, results of operations or on the market prices of the Common Stock. For example, the Company could be subject to litigation related to a failure to complete the Merger or an enforcement proceeding seeking to require FOX to perform its obligations under the Merger Agreement. The cost of defending against such litigation and proceedings may be significant. Similarly, if there are delays in the completion of the Merger, they could, among other things, result in additional transaction costs, loss of revenue or other negative effects associated with uncertainty about completion of the Merger.
Business uncertainties and contractual restrictions on FOX while the Merger is pending could adversely affect FOX’s business and operations.
Uncertainty regarding the completion of the Merger may cause some customers, suppliers, distributors, vendors, strategic partners and other parties to delay or defer making business decisions concerning the Company or entering into agreements with FOX, and may cause them to seek to terminate or renegotiate their existing arrangements with the Company. If this occurs, it could have an adverse impact on the Company’s business, financial condition, results of operations and cash flows or on the market prices of the Common Stock, regardless of whether the Merger is completed. The Merger Agreement also restricts the Company from making certain other acquisitions or issuing additional equity in excess of certain limitations without Roku’s prior consent, which may prevent FOX from pursuing attractive business opportunities or strategic transactions that arise prior to the completion of the Merger.
The market price of the Common Stock may decline as a result of the Merger.
The market price of the Common Stock may decline as a result of the Merger, and holders of the Common Stock, including Roku stockholders who become holders of Class A Common Stock as a result of the Merger, could lose the value of their investment in the Common Stock if, among other things, the Company is unable to achieve the expected growth in earnings, the anticipated benefits from the Merger are not realized, the transaction costs are greater than expected or any transaction-related financing is on unfavorable terms. The market price of the Common Stock also may decline if FOX does not achieve the perceived benefits of the Merger as rapidly or to the extent anticipated by financial or industry analysts or if the effect of the Merger on the Company’s business, financial condition or results of operations is not consistent with analyst expectations. The issuance of shares of Class A Common Stock in the Merger could independently have the effect of depressing the market price for the Common Stock. In addition, Roku stockholders may choose or (in the case of some stockholders such as funds with limitations on permitted stockholdings) be required to sell the Class A Common Stock they receive as a result of the Merger. Any such sales of Class A Common Stock could depress the market price for the Common Stock.
The Company or its Board of Directors may be the target of Merger-related lawsuits that result in substantial costs or delay or prevent the completion of the Merger.
Securities class action and derivative lawsuits are often brought against public companies that have entered into merger agreements. Even if the lawsuits are without merit, defending against or otherwise resolving these claims can result in substantial costs and divert management time and resources and an adverse judgment could result in monetary damages, which could have a negative financial impact on FOX. In addition, if a plaintiff successfully obtains an injunction prohibiting the consummation of the Merger, it could prevent the Merger from being completed on the expected timetable, or at all.
The Company may be unable to successfully integrate the businesses of FOX and Roku and realize the anticipated benefits of the Merger.
The Merger involves the integration of Roku and FOX’s businesses -- a complex, costly and time-consuming process. Many of the difficulties inherent in the process are outside FOX’s control and could result in delays, increased costs, decreases in expected revenues and diversion of management time and attention. In addition, post-closing, FOX will have significantly more systems, assets, investments, businesses, customers and employees than it did prior to the Merger, and FOX will operate new lines of business. The combined company’s success will depend in part on the Company’s ability to successfully combine the businesses and realize the anticipated benefits of the Merger.
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FOX’s post-Merger indebtedness may have a significant negative impact on its business, financial condition or results of operations.
FOX is incurring a significant amount of debt in connection with the Merger, which could have significant consequences, including: increasing the Company’s vulnerability to adverse changes in economic or industry conditions; reducing its ability to effectively compete and respond to business or industry changes; creating competitive disadvantages compared to companies with lower debt levels; increasing FOX’s borrowing costs and requiring it to dedicate a greater amount of cash to debt payments at the expense of operating needs, capital expenditures, strategic initiatives or general corporate purposes; limiting the Company’s ability to return capital to stockholders; and impeding its ability to borrow additional funds in the future. Additionally, rating agencies may take negative actions against FOX’s credit ratings because of the Merger, which would increase its borrowing costs. Following completion of the Merger, if the Company is required to arrange additional financing or refinancing for working capital, capital expenditures, acquisitions, or other general corporate purposes, its ability to do so will depend on many factors, including market conditions and other factors beyond its control. There can be no assurance that FOX will be able to arrange additional financing or refinancing on acceptable terms or at all.
Risks Related to Macroeconomic Conditions, Our Business and Our Industry
Changes in consumer behavior and evolving technologies and distribution platforms and offerings continue to challenge existing business models and may adversely affect the Company's business, financial condition or results of operations.
The ways in which consumers view content and technology and business models in our industry continue to rapidly evolve. New distribution platforms and offerings, increased competition from new entrants and emerging technologies have added to the complexity of maintaining predictable revenue streams. Technological advancements have driven changes in consumer behavior as consumers now have more control over when, where and how they consume content and have increased advertisers' options for reaching their target audiences. Consumer preferences have evolved toward direct-to-consumer offerings such as SVOD, AVOD and FAST services, as well as connected TV devices and operating systems and gaming and other consoles. An increasing number of FAST services and SVOD services that have introduced advertising-supported tiers has intensified competition for digital advertising and may continue to do so in the future. In addition, the increasing use of time-shifting and advertising-skipping technologies that enable viewers to fast-forward or circumvent advertisements impacts the attractiveness of the Company's programming to advertisers and may adversely affect its advertising revenues. Other new technological developments, such as the development and use of generative AI, including large language model applications, are rapidly evolving and increasingly being incorporated into business operations and content generation, and AI may be used in ways that could reduce demand for our content, products and services. The advantages and risks associated with the use of generative AI are largely uncertain.
Changes in consumer behavior and technology have also had an adverse impact on MVPDs that deliver the Company's broadcast and cable networks to consumers. Consumers’ increasing viewership through direct-to-consumer offerings has contributed to industry-wide declines in subscribers to MVPD services over the last several years. These declines are expected to continue and possibly accelerate in the future. If consumers increasingly favor alternative offerings over MVPD subscriptions, the Company may continue to experience a decline in viewership and demand for the programming on its networks. The Company’s distribution and advertising revenues have been negatively impacted by these trends, and these negative effects could continue and accelerate in the future. Changing distribution models may also negatively impact the Company's ability to negotiate affiliation agreements on favorable terms, which could have an adverse effect on its business, financial condition or results of operations. Our distribution and advertising revenues also may be adversely affected by consumers' use of antennas (and their integration with set-top boxes or other consumer devices) to access broadcast signals to avoid subscriptions.
To remain competitive in this evolving environment, the Company must effectively anticipate and adapt to new market changes. The Company continues to focus on investing in and expanding its digital distribution offerings and direct engagement with consumers, including through Tubi, the FOX One direct-to-consumer subscription streaming service, FOX Nation, FOX Weather and other offerings. However, if the Company fails to effectively safeguard and monetize the value of its content while responding to and developing new technologies and business models to take advantage of, technological developments and consumer
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preferences, it could have a significant adverse effect on the Company's business, financial condition or results of operations.
The Company derives substantial revenues from the sale of advertising, and declines in advertising expenditures have caused, and could continue to cause, the Company’s revenues and operating results to decline significantly in any given period or in specific markets.
FOX’s advertising revenues have been, and may continue to be, adversely affected by factors such as changes in consumer behavior, advertising market conditions and deficiencies in audience measurement, and they vary substantially due to cyclical sports events and elections.
The evolution of consumer preferences toward direct-to-consumer streaming offerings and other digital products and the increasing number of entertainment choices has intensified audience fragmentation and reduced viewership through traditional linear distribution models. This has caused ratings and viewership declines for television networks, including some of our networks. These changes have also given rise to new ways of purchasing advertising, as well as a general shift in advertising expenditures toward streaming and other digital offerings, some of which may not be as beneficial to us as traditional advertising methods. In addition, increased digital advertising available in the marketplace due to the proliferation of advertising-supported direct-to-consumer offerings has intensified, and may continue to intensify, competition for viewers and advertising. The use of AI tools in advertising technology also is becoming more prevalent and if our competitors are able to adopt the use of these tools more effectively than we are, it could negatively impact our advertising revenues. Periods of economic weakness also could accelerate industry-wide shifts in advertising expenditures from linear to digital advertising. There can be no assurance that we can successfully navigate the evolving digital advertising market or that the digital advertising revenues we generate will offset the declines in advertising revenues generated by our traditional linear networks.
The strength of the advertising market can fluctuate in response to the economic prospects of specific advertisers or industries, advertisers' spending priorities and the economy in general or the economy of an individual geographic market as described further below. Our ability to generate advertising revenue also depends on demand for our content, the viewers in our targeted demographics, advertising rates, targeting capabilities, results observed by advertisers, the perceived effectiveness of our advertising offerings and alternative advertising options. In addition, factors such as terrorist acts, wars, political uncertainties and hostilities, natural and other disasters and widespread health emergencies can also negatively impact advertising revenues.
Major sports events, such as the NFL’s Super Bowl and the FIFA World Cup and the state, congressional and presidential election cycles also may cause the Company's advertising revenues to vary substantially from year to year. Political advertising expenditures are impacted by the ability and willingness of candidates and political action campaigns to raise and spend funds on advertising and the competitive nature of the elections affecting viewers in markets featuring our programming.
Advertising sales also largely depend on audience measurement and could be negatively affected if measurement methodologies do not accurately reflect actual viewership levels. Although Nielsen’s statistical sampling method is the primary measurement methodology used for our linear television advertising sales, we measure and monetize our digital platforms based on a combination of internal and third-party data, including demographic composite estimates. The industry is transitioning to a multiplatform measurement environment in an effort to more completely measure viewership and advertising across linear and digital platforms, but has not yet established a consistent, broadly accepted measure of multiplatform audiences. Although we expect multiplatform measurement innovation and standards to benefit us as the advertising market continues to evolve and are actively working to improve our internal measurement capabilities, we are still largely dependent on third parties to provide these solutions. In addition, measurement providers may change their methodologies, data sources and panel/“big data” mixes, which could result in a discontinuation of or volatility in reported ratings and audience metrics (including declines in reported ratings) that may not correspond to actual changes in audience behavior. Declines in advertising revenues may also be caused by regulatory intervention or other third-party action that impacts where and when advertising may be placed. If negative impacts on advertising revenues continue or accelerate, they could have a material adverse effect on the Company's business, financial condition or results of operations.
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Because the Company derives a significant portion of its revenues from a limited number of distributors, the failure to enter into or renew affiliation and carriage agreements on favorable terms, or at all, could have a material adverse effect on the Company’s business, financial condition or results of operations.
The Company depends on affiliation and carriage arrangements that enable it to reach a large percentage of households through MVPDs and third party-owned television stations. There can be no assurance that these agreements will be renewed in the future, or renewed on favorable terms, including terms related to pricing, programming tiers and bundles and the types of rights we grant distributors. The inability to enter into or renew MVPD arrangements on favorable terms, or at all, or the loss of carriage on MVPDs’ most widely distributed programming tiers or their targeted, genre-focused programming tiers (sometimes referred to as “skinny bundles”) could reduce the distribution of the Company’s owned and operated television stations and broadcast and cable networks, which could adversely affect the Company’s distribution revenues and its ability to sell national and local advertising time. The loss of favorable MVPD packaging, positioning, pricing or other marketing opportunities could also negatively impact the Company’s distribution revenues. Consolidation among MVPDs, their increased vertical integration into the cable or broadcast network business or their use of alternative technologies to offer their subscribers access to local broadcast network programming could increase their negotiating leverage. Competitive pressures faced by MVPDs, particularly in light of evolving consumer viewing patterns and distribution models, could adversely affect the terms of our contract renewals with MVPDs. In addition, our strategic initiatives could negatively impact our ability to renew our MVPD agreements on terms that are favorable to all our networks. If the Company and an MVPD reach an impasse in contract renewal negotiations, the Company's networks and owned and operated television stations could become unavailable to the MVPD’s subscribers (i.e., “go dark”), which, depending on the length of time and the size of the MVPD, could have a negative impact on the Company's distribution and advertising revenues.
The Company also depends on the maintenance of affiliation agreements and license agreements with third party-owned television stations to distribute the FOX Network and MyNetworkTV in markets where the Company does not own television stations. Consolidation among television station group owners could increase their negotiating leverage and reduce the number of available distribution partners. There can be no assurance that these affiliation and license agreements will be renewed in the future on terms favorable to the Company, or at all. The inability to enter into affiliation or licensing arrangements with third-party owned television stations on favorable terms could reduce distribution of the FOX Network and MyNetworkTV and the inability to enter into such affiliation or licensing arrangements for the FOX Network on favorable terms could adversely affect the Company's distribution revenues and its ability to sell national advertising time.
In addition, the Company has arrangements through which it makes its content available for viewing through third-party online video platforms. If these arrangements are not renewed on favorable or commercially reasonable terms or at all, it could adversely affect the Company's revenues and results of operations.
If the number of subscribers to MVPD services continues to decline or such declines accelerate, the Company’s distribution and advertising revenues could be negatively affected.
As described above, changes in technology and consumer behavior have contributed to industry-wide declines in the number of subscribers to MVPD services over the last several years, which have had a negative impact on the number of subscribers to the Company’s networks. These industry-wide subscriber declines are expected to continue and possibly accelerate in the future. The majority of the Company’s affiliation agreements with MVPDs are multi-year contracts that provide for payments to the Company that are based in part on the number of MVPD subscribers covered by the agreement. If declines in the number of MVPD subscribers are not fully offset by affiliate rate increases, the Company’s distribution revenues will be negatively affected. Because MVPD subscriber losses could also decrease the potential audience for the Company’s networks, which is a critical factor affecting both the pricing and volume of advertising, future MVPD subscriber declines could also adversely impact the Company’s advertising revenues.
The Company is exposed to risks associated with weak economic conditions and increased volatility and disruption in the financial markets.
Prevailing economic conditions and the state of the financial markets affect various aspects of our business. Factors that have affected and could in the future affect economic and financial conditions include actual or perceived uncertainty about economic stability (including taxes and tariffs) and social and political
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uncertainties and conflicts, changes in consumer confidence, recession, high inflation, declining economic growth, diminished availability of credit, higher interest rates, unemployment rates and changes in consumer spending habits. Weak economic conditions have had and may continue to have an adverse impact on the Company's business, financial condition and results of operations. For example, reduced advertising expenditures due to a weak economy can negatively impact our advertising revenues, and increasing inflation raises our labor and other costs required to operate our business. Increased volatility and weakness in the financial markets, the further tightening of credit markets or a decrease in our debt ratings assigned by ratings agencies could adversely affect our ability to cost-effectively refinance outstanding indebtedness or obtain new financing.
The Company also faces risks associated with the impact of weak economic conditions and disruption in the financial markets on third parties with which the Company does business, including advertisers, affiliates, suppliers, wholesale distributors, retailers, lenders, insurers, vendors, retailers, banks and others. For instance, the inability of the Company’s counterparties to obtain capital on acceptable terms could impair their ability to perform under their agreements with the Company and lead to negative effects on the Company, including business disruptions, decreased revenues and increases in bad debt expenses.
There can be no assurance that weakening of economic conditions or volatility or disruption in the financial markets will not occur. If they do, it could have a material adverse impact on the Company’s business, financial condition or results of operations.
The Company operates in a rapidly evolving and highly competitive industry.
The Company competes with other companies for high-quality content, talent, audiences, advertisers’ expenditures and distribution. The Company’s ability to compete effectively depends on a number of factors, including our ability to consistently offer popular content, successfully adapt to evolving technologies and distribution platforms and offerings, and maintain widespread distribution of our content. Increased competition in the acquisition of programming may affect the scope of rights we are able to acquire and the cost of such rights, and the future value of the rights we acquire or retain cannot be predicted with certainty.
The composition of our competitors has evolved in recent years with the entrance of new participants, including companies in adjacent sectors with significant financial, marketing and other resources, greater efficiencies of scale, fewer regulatory burdens and more competitive pricing. Additionally, new technological developments, including the development and use of generative AI technologies, including large language model applications, are rapidly evolving. If our competitors gain an advantage by using such technologies to create, market, target or distribute content more efficiently or effectively, our ability to compete effectively could be adversely impacted. Our competitors also include companies with interests in multiple media and entertainment businesses that are vertically integrated. The media and entertainment industry is undergoing a period of rapid and significant change, with several transformative transactions that may further complicate the competitive environment. Industry consolidation and alliances among industry participants have also increased, and may continue to do so, intensifying competitive pressures.
There can be no assurance that the Company will be able to compete successfully in the future against existing or potential competitors or that competition in the marketplace will not have a material adverse effect on its business, financial condition or results of operations.
Acceptance of the Company's content by the public is difficult to predict, which could lead to fluctuations in or adverse impacts on revenues.
Programming distribution is a speculative business since the revenues derived from the distribution of content depend primarily on its acceptance by the public, which is difficult to predict. Low public acceptance of the Company's content will adversely affect the Company’s results of operations. The commercial success of our programming also depends on the quality and acceptance of other competing programming, the growing number of alternative forms of entertainment and leisure activities, general economic conditions and their effects on consumer spending and other tangible and intangible factors, all of which can change and cannot be predicted with certainty. Moreover, we must often invest substantial amounts in programming and the acquisition of sports rights before we learn the extent to which the content will earn consumer acceptance and, as described below, competition for popular content, particularly sports and entertainment programming, is
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intense. A decline in the ratings or popularity of the Company’s news, sports or entertainment programming or the Company's failure to obtain or retain rights to popular content could adversely affect the Company’s advertising revenues in the near term and, over a longer period of time, its distribution revenues.
Our business depends on the popularity of special sports events and the continued popularity of the sports leagues and teams for which we have programming rights.
Our sports business depends on the popularity and success of the sports franchises, leagues and teams for which we have acquired broadcast and cable network programming rights. If a sports league declines in popularity or fails to generate fan enthusiasm, this may negatively impact our sports programming viewership and advertising and distribution revenues. Our operating results may be impacted in part by special events, such as the NFL’s Super Bowl, which is broadcast on the FOX Network on a rotating basis with other networks, and the FIFA World Cup, which occurs every four years, and other regular and post-season sports events that air on our networks. Our advertising and distribution revenues are subject to fluctuations based on the dates of sports events and their availability for viewing on our networks and the popularity of the competing teams. For example, any decrease in the number of post-season games played in a sports league for which we have acquired broadcast programming rights, or the participation of a smaller-market sports franchise in post-season competition could result in lower advertising revenues for the Company. There can be no assurance that any sports league will continue to generate fan enthusiasm or provide the expected number of regular and post-season games for advertisers and customers, and the failure to do so could result in a material adverse effect on our business, financial condition or results of operations. A shortfall in the expected popularity of the sports events for which the Company has acquired rights or in the volume of sports programming the Company expects to distribute could adversely affect the Company’s advertising revenues in the near term and, over a longer period of time, its distribution revenues.
The inability to renew programming rights, particularly sports programming rights, on sufficiently favorable terms, or at all, could cause the Company’s advertising and distribution revenues to decline significantly in any given period or in specific markets.
We enter into long-term contracts for both the acquisition and distribution of media programming and products, including contracts for the acquisition of programming rights for sports events and other content, and contracts for the distribution of our programming to content distributors. Programming rights agreements, retransmission consent agreements, carriage contracts and affiliation agreements have varying durations and renewal terms that are subject to negotiation with other parties, the outcome of which is unpredictable. The next significant sports programming rights package that is up for renewal is the FIFA World Cup package. The negotiation of programming rights agreements for popular licensed programming, and popular licensed sports programming in particular, is complicated by the intensity of competition for these rights.
An increasing number of companies bidding for sports programming in recent years has also driven increases in the cost of such programming. Moreover, the value of these agreements may be negatively affected by factors outside of our control, such as league agreements and decisions to alter the number, frequency and timing of regular and post-season games played during a season. We may be unable to renew existing, or enter into new, programming rights agreements on terms that are favorable to us and we may be outbid by third parties and therefore unable to obtain the rights at all. The loss of rights or renewal on less favorable terms could negatively impact the quality or quantity of our programming, in particular our sports programming, and could adversely affect our advertising and distribution revenues. These revenues could also be negatively impacted if we do not obtain exclusive rights to the programming we distribute. Our results of operations and cash flows over the term of a sports programming agreement depend on a number of factors, including the strength of the advertising market, our audience size, the timing and amount of our rights payments and our ability to secure distribution from and impose surcharges or obtain carriage on MVPDs for the content. If escalations in programming rights costs (together with our production and distribution costs) are not offset by increases in advertising and distribution revenues, our results of operations could be adversely affected.
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Damage to our brands, particularly the FOX brand, or our reputation could have a material adverse effect on our business, financial condition or results of operations.
Our brands, particularly the FOX brand, are among our most valuable assets. We believe our brand image, awareness and reputation strengthen our relationship with consumers and contribute significantly to the success of our business. Maintaining, enhancing and extending our brands may require us to make significant investments in marketing, programming or new products, services or events, and these investments may not be successful. We may introduce new programming that is not popular with our consumers and advertisers, which may negatively affect our brands. To the extent our content is not compelling to consumers, it may adversely impact our ability to maintain a positive reputation. The Company’s brands, credibility and reputation have been impacted from time to time, and could be damaged in the future, by incidents that erode consumer, advertiser or business partner trust or a perception that the Company’s offerings, including its journalism, programming and other content, are low quality, unreliable or fail to attract and retain audiences. For example, the manipulation of content by bad actors, including the creation of “deep fakes” (videos created with AI to realistically impersonate persons such as journalists or political candidates), could erode audience trust by making it difficult to determine what is real. FOX’s brands, credibility and reputation also could be adversely impacted if AI tools misattribute incorrect information to the Company or if the Company’s use of AI in its own products and services produces content, information, analyses or recommendations that are alleged to be deficient, inaccurate, biased, harmful, discriminatory, an intellectual property infringement, a violation of privacy rights or otherwise problematic. Additionally, litigation, governmental scrutiny and fines and significant negative claims or publicity regarding the Company or its operations, content, products, management, employees, practices, advertisers, business partners and culture, including individuals associated with content we create or license, may damage the Company's reputation and brands, even if meritless or untrue. To the extent our marketing, cybersecurity, customer service and public relations efforts are not effective or result in negative consumer reaction, our ability to maintain a positive reputation may likewise be adversely impacted. If we are not successful in maintaining or enhancing the image or awareness of our brands, or if our reputation is harmed for any reason, it could have a material adverse effect on our business, financial condition or results of operations.
Acquisitions, investments and other strategic initiatives present many risks, and we may not realize the financial and strategic goals we had contemplated, which could adversely affect our business, financial condition or results of operations.
We have acquired and invested in, and expect to continue acquiring and investing in, new businesses, products, services, technologies and other strategic initiatives to complement, enhance or expand our current businesses or otherwise offer us growth opportunities. Such acquisitions and investments may involve significant risks and uncertainties, including insufficient revenues from an investment to offset any new liabilities assumed and expenses associated with it; failure to perform as expected, meet financial projections, achieve strategic goals or further develop an acquired business, product, service or technology; unidentified issues not discovered in our due diligence that could cause us to not realize anticipated benefits or to incur unanticipated liabilities; difficulties in integrating the operations, personnel, technologies and systems of acquired businesses; the potential loss of key employees or customers of acquired businesses; the diversion of management attention from current operations; and legal and regulatory limitations. Additionally, strategic initiatives may cause potential disruption to our business and operations or unanticipated challenges to or loss of our relationships with new or existing advertisers, distributors, viewers and others with whom we do business; and delays in or the cancellation of announced transactions or initiatives may occur. Because acquisitions, investments and strategic initiatives are inherently risky and their anticipated benefits or value may not materialize, they may adversely affect our business, financial condition or results of operations.
The loss of key personnel, including talent, could disrupt the management or operations of the Company’s business and adversely affect its revenues.
The Company's business depends on the continued efforts and abilities of key personnel, including news, sports and entertainment personalities. The loss of such personnel could disrupt the management or operations of the Company’s business and adversely affect its revenues. The Company employs or independently contracts with several news, sports and entertainment personalities who are featured on programming the Company offers. These personalities sometimes have a significant impact on the ranking of a cable network or station and its ability to attract and retain an audience and sell advertising. There can be no assurance that they will remain with us or retain their current appeal, that the costs associated with retaining current talent and hiring
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new talent will be favorable or acceptable to us, or that new talent will be as successful as their predecessors. Any of the foregoing could adversely affect the Company's business, financial condition or results of operations.
Labor disputes may disrupt our operations and adversely affect the Company’s business, financial condition or results of operations.
In a variety of the Company’s businesses, the Company and its partners engage the services of writers, directors, actors, musicians and other creative talent, commentators, production crew members, trade and craft employees and others whose services are subject to collective bargaining agreements. Certain of these are industry-wide agreements negotiated by the Alliance of Motion Picture and Television Producers (the “AMPTP”) of which the Company is a non-voting member. The Company is bound by and enjoys the benefits of AMPTP-negotiated collective bargaining agreements, but is not directly involved in negotiating them. When negotiations to renew collective bargaining agreements are not successful or become unproductive, strikes, work stoppages or lockouts have occurred in the past, and such events could occur in the future. Such events have caused, and may in the future cause, delays in production, higher production costs and increased costs of labor, which could reduce profit margins and could, over the long term, have an adverse effect on the Company's business, financial condition or results of operations.
In addition, our networks have programming rights agreements of varying scope and duration with various sports leagues to broadcast and produce sports events, including certain college football and basketball, NFL and MLB games. Any labor disputes that occur in any such league (such as any dispute following the expiration of the MLB collective bargaining agreement in December 2026) may preclude us from airing or otherwise distributing scheduled games or events, resulting in decreased revenues, which could adversely affect our business, financial condition or results of operations.
The Company has recognized, and could continue to recognize, asset impairment charges for goodwill, intangible assets, programming and other assets and investments.
The Company performs an annual impairment assessment of its recorded goodwill and indefinite-lived intangible assets, including FCC licenses. The Company also continually evaluates whether current factors or indicators, such as the prevailing conditions in the capital markets, require the performance of an interim impairment assessment of those assets, as well as other long-lived assets. Any significant shortfall, now or in the future, in advertising revenue and/or the expected popularity of our programming could lead to a downward revision in the fair value of certain reporting units. The Company holds investments in marketable and non-marketable equity securities. These investments are recorded either at fair value and measured on a recurring basis based on quoted prices in active markets or on a non-recurring basis whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable. The occurrence of certain events or circumstances has resulted in, and could continue to result in, a downward revision in the fair value of a reporting unit, indefinite-lived intangible assets, programming rights, investments or long-lived assets that could result in a non-cash impairment charge. Any such charge could be material to the Company’s reported net earnings in a given reporting period. During fiscal 2025 and 2026, in connection with the Company’s annual impairment assessments, the Company recorded non-cash impairment charges for intangible assets of approximately $70 million and approximately $64 million, respectively, at the Television segment primarily related to FCC licenses. See Note 2, “Summary of Significant Accounting Policies,” to the accompanying consolidated financial statements included in this Form 10-K for further discussion.
Risks Relating to Cybersecurity, Piracy, Privacy and Data Protection
The degradation, failure or misuse of the Company’s network and information systems and other technology could cause a disruption of services or improper disclosure of personal data or other confidential information, resulting in increased costs, liabilities or loss of revenue.
Cloud services, content delivery and other networks, information systems and other technologies that we or our vendors or other partners use, including AI-enabled technologies and technology systems used in connection with the production and distribution of our content (the “Systems”), are critical to our business activities, and shutdowns or disruptions of, and cybersecurity attacks on, the Systems pose increasing risks. Disruptions to the Systems, such as computer hacking and phishing, theft, computer viruses, ransomware, worms or other destructive software, process breakdowns, denial of service attacks or other malicious activities, as well as power outages, natural or other disasters (including extreme weather), human error, terrorist and/or
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nation state-sponsored activities and insider threats (including actions by persons linked to hostile foreign governments and/or organized criminal groups), may affect the Systems and could result in disruption of our services, misappropriation, misuse, alteration, theft, loss, leakage, falsification and accidental or premature release or improper disclosure of confidential or other information, including intellectual property and personal data (of third parties, employees and users of our streaming services and other digital properties) contained on the Systems. The techniques used to access, disable or degrade service or sabotage systems change frequently and continue to become more sophisticated and targeted, and the increasing use of AI may intensify cybersecurity risks and the volume of attacks. In addition, ongoing tensions with China, North Korea, Russia and other nation states, conflicts in the Middle East and Europe, and other geopolitical events may lead to cyberattacks or other actions that could lead to a disruption of services, improper disclosure of personal data or other confidential information, or otherwise negatively impact the Systems (including supply chain disruption and attacks). The Company’s high-profile sports and entertainment programming and its extensive news coverage of elections, sociopolitical events and public controversies subject us to heightened cybersecurity risks. From time to time, the Company experiences cybersecurity threats and attacks. Although no cybersecurity incident has been material to the Company’s businesses to date, we expect to continue to be subject to cybersecurity threats and attacks and there can be no assurance that we will not experience a material incident. Any cybersecurity incidents could result in a disruption of our operations, customer or advertiser dissatisfaction, damage to our reputation or brands, regulatory investigations, claims, lawsuits or loss of customers or revenue, and the Company may also be subject to liability under relevant contractual obligations and laws and regulations protecting personal data and may be required to expend significant resources to defend, remedy and/or address any incidents. While we and our vendors and partners continue to develop, implement and maintain security measures seeking to identify and mitigate cybersecurity risks, including unauthorized access to or misuse of the Systems, such efforts are costly, require ongoing monitoring and updating and may not be successful in preventing these events from occurring. In addition, the Company’s recovery and business continuity plans may not be adequate to address any cybersecurity incidents that occur, and the Company may not have adequate insurance coverage to compensate it for any losses that may occur.
Technological developments may increase the threat of content piracy and signal theft and limit the Company’s ability to protect its intellectual property rights.
Content piracy and signal theft present a threat to the Company’s revenues from products and services, including television shows, cable and other programming. The Company seeks to limit the threat of content piracy as well as cable and direct broadcast satellite programming signal theft; however, policing unauthorized use of the Company’s products and services and related intellectual property is often difficult and the steps taken by the Company may not in every case prevent infringement. Although no content theft has been material to the Company’s businesses to date, we expect to continue to be subject to content threats and there can be no assurance that we will not experience a material incident. Developments in technology increase the threat of content piracy by making it easier to create, access, duplicate, widely distribute, display and store high-quality pirated material. These developments include recent advances in AI and large language model applications, digital copying, file compression technology, growing penetration of high-bandwidth Internet connections, increased availability and speed of mobile data networks and new devices and applications that enable unauthorized access to content. In addition, developments in software or devices that circumvent encryption technology and the falling prices of devices incorporating such technologies increase the threat of unauthorized use and distribution of direct broadcast satellite programming signals and distribution to MVPDs with set-top boxes, and the proliferation of user-generated content sites and live and stored video streaming sites that deliver unauthorized copies of copyrighted content may adversely impact the Company’s businesses. The proliferation of unauthorized reproduction, display, distribution and/or use of the Company’s content could have an adverse effect on the Company’s businesses and profitability because it reduces the revenue that the Company could potentially receive from the legitimate sale and distribution of its products and services. The legal landscape for new technologies remains uncertain, and legal developments in this area could negatively impact the Company’s ability to deploy new technologies or its ability to protect against uses of FOX’s proprietary content by unauthorized third parties, including generative AI developers. The Company’s use or adoption of such new technologies may also increase the Company’s exposure to intellectual property claims and further increase its enforcement costs.
The Company takes a variety of actions to combat piracy and signal theft, but the protection of the Company’s intellectual property rights depends on the scope and duration of the Company’s rights as defined by applicable laws in the U.S. and abroad and how those laws are construed. If those laws are interpreted in
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ways that limit the extent or duration of the Company’s rights or if existing laws are changed, the Company’s ability to generate revenue from intellectual property may decrease or the cost of obtaining and enforcing its rights may increase. A change in the laws of one jurisdiction may also have an impact on the Company’s overall ability to protect its intellectual property rights across other jurisdictions. The Company’s efforts to enforce its rights and protect its products, services and intellectual property may not be successful in preventing content piracy or signal theft. Further, while piracy and the proliferation of piracy-enabling technology tools continue to escalate, if any laws intended to combat piracy and protect intellectual property are repealed, weakened or not adequately enforced, or if the applicable legal systems fail to evolve and adapt to new technologies that facilitate piracy, we may be unable to effectively protect our rights, the value of our intellectual property may be negatively impacted, and our costs of enforcing our rights could increase.
Third parties may challenge the validity or scope of the Company’s intellectual property from time to time, and such challenges could result in the limitation or loss of the Company’s intellectual property rights. Even if not valid, such claims may result in substantial costs and diversion of resources that could have an adverse effect on the Company’s operations.
The Company is subject to complex laws, regulations, rules, industry standards and contractual obligations related to privacy and personal data protection, which are evolving, inconsistent and potentially costly.
We are subject to U.S. federal and state laws and regulations, as well as those of other countries, relating to the collection, use, disclosure and security of personal information. The number and complexity of these laws and regulations continues to increase. For example, many states have passed legislation imposing broad obligations on businesses’ collection, use, handling and disclosure of personal information of their respective residents and imposing fines for noncompliance. In addition, the E.U., the U.K. and other countries have privacy and data security legislation with significant penalties for violations that apply to certain of the Company’s operations. New privacy and data protection laws and regulations, including in connection with children and teens, continue to be introduced and interpretations of existing privacy laws and regulations, some of which may be inconsistent with one another, continue to evolve. As a result, significant uncertainty exists as to their application and scope. Compliance with these laws and regulations may be costly and could require the Company to change its business practices, including in connection with the use of AI-enabled technologies and data-driven targeted advertising. Although the Company expends significant resources to comply with data privacy and protection laws, we have been and may continue to be subject to legal claims and may be subject to regulatory action despite these efforts. Any such actions could result in damage to our reputation or brands, loss of customers or revenue, and other negative impacts to our operations. The Company may also be subject to liability under relevant contractual obligations and may be required to expend significant resources to defend, remedy and/or address any claims. The Company may not have adequate insurance coverage to compensate it for any losses that may occur. For more information, see Item 1, “Business – Government Regulation – Privacy and Information Regulation.”
Risks Relating to Legal and Regulatory Matters
Changes in laws and regulations, or the interpretation or enforcement thereof, may have an adverse effect on the Company’s business, financial condition or results of operations.
The Company is subject to a variety of laws and regulations in the jurisdictions in which its businesses operate, as described in Item 1 “Business – Government Regulation.” The U.S. television broadcasting and traditional MVPD industries are highly regulated by federal laws and regulations issued and administered by various federal agencies, including the FCC. Among other things, the Company is required to apply for and operate in compliance with licenses from the FCC to operate its television stations, purchase a new television station, or sell an existing television station. The Company may be subject to investigations or fines under FCC rules and policies, or delays in its renewal and other applications with the FCC. From time to time, the FCC considers whether virtual MVPDs should be considered MVPDs (as defined and regulated by the FCC), which could negatively impact the Company’s distribution model.
The Company could be adversely affected by new laws and regulations, changes in existing laws and regulations, changes in judicial and regulators’ interpretations of laws and regulations or in regulators’ priorities or activities, as well as by the threat that additional laws or regulations may be forthcoming. In particular, the legal and regulatory landscape governing new technologies such as AI remains unsettled and is an area of
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increasing regulatory focus. Developments in this area may adversely impact the Company’s business, including through increased legal liability risk and compliance costs associated with the use of AI and large language models. In addition, new laws and regulations may vary between local, state, federal and international jurisdictions and may conflict, and the enforcement of these laws and regulations may be inconsistent and unpredictable, further intensifying compliance risks. Changes in the legal or regulatory landscape could require FOX to change or limit certain of its business practices in ways that negatively impact the Company, including its competitive position and its ability to generate revenues. FOX could also incur substantial costs to comply with new and existing laws and regulations and could face substantial penalties or other liabilities, reputational damage or increased scrutiny from regulators or stakeholders if it fails to comply with such laws and regulations. Any of the foregoing could have a material adverse effect on FOX’s business, financial condition or results of operations.
The Communications Act and FCC regulations limit the ability of non-U.S. citizens and certain other persons to invest in us.
The Company owns broadcast station licensees in connection with its ownership and operation of U.S. television stations. Under the Communications Act of 1934, as amended, which we refer to as the Communications Act, and the FCC rules, without the FCC’s prior approval, no broadcast station licensee may be owned by a corporation if more than 25% of its stock is owned or voted by non-U.S. persons, their representatives, or by any other corporation organized under the laws of a foreign country. The Company’s Amended and Restated Certificate of Incorporation authorizes the Board to take action to prevent, cure or mitigate the effect of stock ownership above the applicable foreign ownership threshold, including: refusing to permit any transfer of Common Stock to or ownership of Common Stock by a non-U.S. stockholder; voiding a transfer of Common Stock to a non-U.S. stockholder; suspending rights of stock ownership if held by a non-U.S. stockholder; or redeeming Common Stock held by a non-U.S. stockholder. We are currently in compliance with applicable U.S. law and continue to monitor our foreign ownership based on our assessment of the information reasonably available to us, but we are not able to predict whether we will need to take action pursuant to our Amended and Restated Certificate of Incorporation. The FCC could review the Company’s compliance with applicable U.S. law in connection with its consideration of the Company’s renewal applications for licenses to operate the broadcast stations the Company owns.
The failure or destruction of satellites or transmitter facilities the Company depends on to distribute its programming could materially adversely affect its businesses and results of operations, as could changes in FCC regulations governing the availability and use of satellite transmission spectrum.
The Company uses satellite systems to transmit its broadcast and cable networks to affiliates. The distribution facilities include communications satellites, uplinks, downlinks and studio and transmitter facilities. Transmissions may be disrupted or degraded as a result of local disasters, extreme weather, power outages, terrorist attacks, cyberattacks or other events that impair on-ground uplinks or downlinks or studio and transmitter facilities, or as a result of an impairment of a satellite. Currently, there are a limited number of communications satellites available for the transmission of programming. If a disruption occurs, failure to secure alternate distribution facilities in a timely manner could have a material adverse effect on the Company’s business and results of operations. In the event of a business disruption of the Company’s television station and cable network studio and transmitter facilities, a failure to restore such facilities in a timely manner could have a material adverse effect on the Company’s businesses and results of operations. In recent years, the FCC has reallocated a large portion of satellite transmission spectrum known as the “C-Band” used by the television industry to transmit programming to free up spectrum for the next generation of commercial wireless broadband services. This has reduced the availability and use of satellite transmission spectrum for the television industry, and the FCC is reallocating additional spectrum in the future. For more information, see Item 1, “Business – Government Regulation – The Communications Act and FCC Regulation.” The decreased availability of satellite transmission spectrum could diminish the quality of and increase interference to our transmissions, which could significantly hinder the Company’s ability to deliver its programming to broadcast affiliates and traditional MVPDs.
The Company could be subject to significant tax liabilities.
We are subject to taxation in U.S. federal, state and local, as well as certain international jurisdictions. Changes in tax laws, regulations, practices or the interpretations thereof could adversely affect the Company’s
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results of operations or its tax assets. Judgment is required in evaluating and estimating our provision and accruals for taxes. In addition, transactions occur during the ordinary course of business or otherwise for which the ultimate tax determination is uncertain.
Tax returns are routinely audited, tax-related litigation or settlements may occur, and certain jurisdictions may assess income tax liabilities against us. The final outcomes of tax audits, investigations, and any related litigation could result in materially different tax recognition from our historical tax provisions and accruals. These outcomes could conflict with private letter rulings, opinions of counsel or other interpretations provided to the Company. If these matters are adversely resolved, we may be required to recognize additional charges to our tax provisions and pay significant additional amounts with respect to current or prior periods or our taxes in the future could increase, which could have a material adverse effect on our financial condition or results of operations.
Unfavorable litigation or governmental investigation results could require us to pay significant amounts or lead to onerous operating procedures.
From time to time, we are subject to various legal proceedings (including class action and individual lawsuits, administrative complaints, regulatory investigations and arbitration proceedings), involving claims relating to, among other things, competition, intellectual property rights, employment and labor matters, personal injury and property damage, free speech, data privacy and protection, regulatory requirements and advertising, marketing and selling practices. See Note 14, “Commitments and Contingencies,” to the accompanying consolidated financial statements included in this Form 10-K for a discussion of certain of these matters. The Company has incurred significant expenses defending against the defamation and disparagement matters described in Note 14, including the payment of approximately $800 million to settle the Dominion matter and a related lawsuit in April 2023.
The Company continues to believe the Smartmatic and other lawsuits alleging defamation or disparagement as well as related derivative lawsuits are without merit and intends to defend against them vigorously, including through any appeals. However, the outcome of these pending matters is subject to significant uncertainty, and it is possible that an adverse resolution of one or more of these pending matters could result in reputational harm and/or significant monetary damages, injunctive relief or settlement costs. There can be no assurance that the ultimate resolution of these pending matters will not have a material adverse effect on the Company's business, financial condition, results of operations or cash flows.
We also spend substantial resources complying with various regulatory and government standards, including any related investigations and litigation. We may incur additional significant expenses in the future defending against any lawsuit or government charge and may be required to pay amounts or otherwise change our operations in ways that could adversely impact our businesses, results of operations, financial condition or cash flows. In addition, regardless of merit or outcome, litigation and government investigations are time-consuming and costly to defend, divert management’s attention and resources away from our business, may result in reputational harm and may impair our ability to conduct our business.
Risks Relating to Our Ownership Structure Certain of the Company’s directors and significant stockholders may have actual or potential conflicts of interest because of their equity ownership in News Corp or because they also serve as directors of News Corp.
In June 2013, 21CF completed the separation of its businesses into two independent publicly traded companies by distributing to its shareholders shares of a new company called News Corporation (“News Corp”). Certain of the Company’s directors and significant stockholders own shares of common stock of News Corp, and the individual holdings may be significant for some of these individuals compared to their total assets. In addition, FOX’s Executive Chair and Chief Executive Officer, Lachlan K. Murdoch, also serves as the Chair of News Corp. This ownership of or service to both companies may create, or may create the appearance of, conflicts of interest when these individuals are faced with decisions that could have different implications for News Corp and the Company. In addition to any other arrangements that the Company and News Corp may agree to implement, the Company and News Corp have agreed that officers and directors who serve at both companies will recuse themselves from decisions where conflicts arise due to their positions at both companies.
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Our Amended and Restated By-laws acknowledge that our directors and officers, as well as certain of our stockholders, including K. Rupert Murdoch, certain members of his family and certain family trusts (so long as such persons continue to own, in the aggregate, 10% or more of the voting stock of each of News Corp and the Company), each of which we refer to as a covered stockholder, are or may become stockholders, directors, officers, employees or agents of News Corp and certain of its affiliates. Our Amended and Restated By-laws provide that any such overlapping person will not be liable to us, or to any of our stockholders, for breach of any fiduciary duty that would otherwise exist because such individual directs a corporate opportunity to News Corp instead of us. The provisions in our Amended and Restated By-laws could result in an overlapping person submitting any corporate opportunities to News Corp instead of us.
Certain provisions of the Company’s Amended and Restated Certificate of Incorporation, Amended and Restated By-laws, Delaware law and the ownership of the Company’s Common Stock by LGC Holdco, LLC may discourage takeovers and the concentration of ownership will affect the voting results of matters submitted for stockholder approval.
The Company’s Amended and Restated Certificate of Incorporation and Amended and Restated By-laws contain certain anti-takeover provisions that may make more difficult or expensive a tender offer, change in control, or takeover attempt that is opposed by the Company’s Board or certain stockholders holding a significant percentage of the voting power of the Company’s outstanding voting stock. In particular, the Amended and Restated Certificate of Incorporation and Amended and Restated By-laws provide for, among other things:
•a dual class common equity capital structure, in which holders of FOX Class A Common Stock can vote only in very specific, limited circumstances;
•a prohibition on stockholders taking any action by written consent without a meeting (unless there are three record holders or fewer);
•special stockholders’ meeting to be called only by a majority of the Board, the Chair or vice or deputy chair, or upon the written request of holders of not less than 20% of the voting power of our outstanding voting stock;
•the requirement that stockholders give the Company advance notice to nominate candidates for election to the Board or to make stockholder proposals at a stockholders’ meeting;
•the requirement of an affirmative vote of at least 65% of the voting power of the Company’s outstanding voting stock to amend or repeal our Amended and Restated By-laws;
•restrictions on the transfer of the Company’s shares; and
•the Board to issue, without stockholder approval, preferred stock and series common stock with such terms as the Board may determine.
These provisions could discourage potential acquisition proposals and could delay or prevent a change in control of the Company, even in the case where a majority of the stockholders may consider such proposals desirable.
In addition, all of the shares of FOX Class A Common Stock and the majority of the shares of FOX Class B Common Stock formerly held by the Murdoch Family Trust have been transferred to LGC Holdco, a Delaware limited liability company owned by certain Murdoch family trusts (collectively, the “LGC Family Trusts”). LGC Holdco beneficially owns less than one percent of the outstanding FOX Class A Common Stock and approximately 38.8% of the FOX Class B Common Stock. The voting and disposition of the shares of FOX Class A Common Stock and FOX Class B Common Stock held by LGC Holdco is, subject to certain limited exceptions, decided solely by a managing director of LGC Holdco’s sole manager who is appointed, and may be replaced, by Lachlan K. Murdoch. As a result, Lachlan K. Murdoch may be deemed the beneficial owner of the shares owned by LGC Holdco. Lachlan K. Murdoch, however, disclaims beneficial ownership of such shares.
This ownership concentration of FOX Class B Common Stock by LGC Holdco and associated concentration of voting power could discourage third parties from making proposals involving an acquisition of the Company. Additionally, such ownership concentration increases the likelihood that proposals submitted for stockholder approval that are supported by LGC Holdco will be adopted and proposals that are not supported
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by LGC Holdco will not be adopted, whether or not such proposals to stockholders are also supported by the other holders of FOX Class B Common Stock. LGC Holdco’s interests may be different from, or conflict with, the interests of the Company’s other stockholders and, as a result, this concentration of ownership may have the effect of delaying, preventing or deterring a change in control of the Company and may negatively affect the market price of its common stock.
The Board has approved a $12 billion stock repurchase program for the FOX Class A common stock and FOX Class B common stock, which has and in the future could increase the percentage of FOX Class B Common Stock held by LGC Holdco. The Company has entered into a stockholders agreement with LGC Holdco and the LGC Family Trusts pursuant to which the parties have agreed not to take actions that would result in LGC Holdco and the LGC Family Trusts owning, collectively with Lachlan K. Murdoch and certain of his family members (collectively, the “Murdoch Individuals”), more than 44% of the outstanding voting power of the shares of FOX Class B Common Stock (the “Ownership Threshold”). LGC Holdco and the LGC Family Trusts would forfeit votes to the extent necessary to ensure that they and the Murdoch Individuals collectively do not exceed the Ownership Threshold, except where a Murdoch Individual votes his or her own shares differently from the others on any matter.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 1C. CYBERSECURITY
The Company maintains a cybersecurity program that is designed to identify, detect, assess and manage cybersecurity risks. The Company’s senior management and its Board are actively involved in the oversight of the Company’s risk management program, of which cybersecurity is an important part. The Company’s cybersecurity program, which aligns to the National Institute of Standards and Technology Cybersecurity Framework (the “NIST Framework”) includes, among other things:
• regular internal and external penetration testing of our technology environments at the application, infrastructure and network level, covering the systems, products and practices collecting or storing confidential business and personal information— including user data—in accordance with the Company’s security policies. This testing is conducted multiple times a year by third-party firms;
• third-party provider security assessments to evaluate associated risks and appropriate internal and third-party provider security controls;
• processes to manage security risks and vulnerabilities;
• mandatory company-wide cybersecurity compliance and information handling training;
• a documented cybersecurity incident response plan that establishes procedures, roles, responsibilities and communication protocols for internal staff and external resources in the event of a cybersecurity incident;
• cybersecurity tools that assist with the automation and orchestration of security alert response based on the relative risk; and
• threat intelligence sharing relationships with industry partners, peers and government agencies, as needed and appropriate.
FOX’s cybersecurity program is based on recognized best practices and standards applicable to our industry. The Company engages a third-party firm to assess the overall maturity of its program against the NIST Framework on a bi-annual basis. This evaluation includes an assessment of how the program evaluates and mitigates risk, as well as how it compares against industry benchmarks. The results of this evaluation are provided to the Audit Committee of the Board.
The Company’s Chief Information Security Officer (“CISO”) leads the Company’s dedicated information security department, which monitors FOX’s prevention, detection, mitigation and remediation efforts related to cyber threats. The CISO regularly consults with the Company’s Co-Chief Privacy Officers, and the Company’s Chief Technology Officer (“CTO”) provides additional oversight of the cybersecurity program, and previously served as the Company’s CISO.The CISO has over 15 years of experience in cybersecurity, information
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security and technology, including a background in broadcast media and networking and systems engineering, and has held numerous industry certifications.
The CISO is in regular communication with senior management regarding cybersecurity matters and provides frequent routine (generally weekly) updates to the Company’s Executive Chair and Chief Executive Officer, Chief Operating Officer (“COO”), Chief Financial Officer (“CFO”), CTO and Chief Legal and Policy Officer. As part of the Company’s incident response plan process, cybersecurity risk events of a certain criteria are communicated in a timely manner to the Company’s incident response governing body, which is comprised of members of senior management, including the COO, CTO and CFO. The Company tests the effectiveness of the incidence response plan and assesses its response capabilities by conducting executive tabletop exercises involving detailed topical cybersecurity scenarios with these executives, as well as technical tabletop exercises including technical and operational personnel. The Company also has processes in place that are designed to ensure that decisions regarding public disclosure and reporting of cybersecurity incidents can be made in a timely manner.
The Company’s Board has an active role, as a whole and at the committee level, in overseeing the management of the Company’s risks. The Audit Committee of the Board is responsible for (i) overseeing the Company’s policies and practices with respect to risk assessment and risk management, including with respect to cybersecurity and the use of AI, (ii) overseeing the Company’s financial and other major risk exposures and the steps taken to monitor and control them and (iii) providing guidance to the Board on such matters.
The Audit Committee regularly reviews and discusses FOX’s cybersecurity risks and receives updates from the CISO on how the Company identifies, assesses and mitigates these risks. The CISO provides the Audit Committee with quarterly reports regarding cybersecurity issues and risks, including information regarding progress on efforts to strengthen and enhance the Company’s cybersecurity program. The Audit Committee also periodically devotes additional meeting time, as needed, to in-depth discussions on a particularly relevant cybersecurity topic, including industry trends and relative risks. In addition to the quarterly reports, cybersecurity incidents meeting certain criteria are reported to the Audit Committee outside of regularly scheduled quarterly updates as necessary.
From time to time, the Company experiences cybersecurity threats and attacks. Although no cybersecurity incident has materially affected the Company’s businesses to date, FOX expects to continue to be subject to cybersecurity threats and attacks and there can be no assurance that the Company will not experience a material incident. For more information, see Item 1A., “Risk Factors—Risks Relating to Cybersecurity, Piracy, Privacy and Data Protection.”
ITEM 2. PROPERTIES
FOX owns the FOX Studio Lot in Los Angeles, California. The historic lot is located on over 50 acres of land and has over 1.8 million square feet of space for both administration and production/post-production services available to service FOX and a wide array of industry clients, including 15 sound stages, theaters and screening rooms, editing rooms and other television and film production facilities. The FOX Studio Lot provides two primary revenue streams — the lease of a portion of the office space to third parties and the operation of studio facilities for third-party productions.
In addition to the FOX Studio Lot in Los Angeles, California, FOX also owns and leases various real properties, primarily in the U.S., that are utilized in the conduct of its businesses. Each of these properties is considered to be in good condition, adequate for its purpose and suitably utilized according to the individual nature and requirements of the relevant operations. FOX’s policy is to improve and replace property as considered appropriate to meet the needs of the individual operations.
ITEM 3. LEGAL PROCEEDINGS
See Note 14—Commitments and Contingencies to the accompanying Consolidated Financial Statements of FOX under the heading “Legal and Other Contingencies” for a discussion of the Company’s legal proceedings.
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ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
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PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Fox Corporation’s Class A Common Stock, par value $0.01 per share (the “Class A Common Stock”), and Class B Common Stock, par value $0.01 per share (the “Class B Common Stock” and, together with the Class A Common Stock, the “Common Stock”), are listed and traded on The Nasdaq Global Select Market (“Nasdaq”) under the symbols “FOXA” and “FOX,” respectively. As of June 30, 2026, there were approximately 11,700 holders of record of shares of Class A Common Stock and approximately 2,400 holders of record of shares of Class B Common Stock.
We expect to continue to pay semi-annual dividends, although each dividend is subject to approval by the Company’s Board of Directors (See Note 11—Stockholders’ Equity to the accompanying Consolidated Financial Statements under the heading “Dividends”).
Below is a summary of the Company’s repurchases of its Class A Common Stock and Class B Common Stock during fiscal 2026:
(in millions)
Total first quarter fiscal 2026
Class B Common Stock — —
Total second quarter fiscal 2026
Total third quarter fiscal 2026
Total fourth quarter fiscal 2026
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In total, the Company repurchased approximately 32 million shares of Common Stock for approximately $2 billion during fiscal 2026.
ITEM 6. [RESERVED]
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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Readers should carefully review this document and the other documents filed by Fox Corporation (“FOX” or the “Company”) with the Securities and Exchange Commission (the “SEC”). This section should be read together with the consolidated financial statements and related notes appearing elsewhere in this Annual Report on Form 10-K. The consolidated financial statements are referred to as the “Financial Statements” herein.
INTRODUCTION
Basis of Presentation
The Company’s financial statements are presented on a consolidated basis.
Management’s discussion and analysis of financial condition and results of operations is intended to help provide an understanding of the Company’s financial condition, changes in financial condition and results of operations. This discussion is organized as follows:
•Overview of the Company’s Business—This section provides a general description of the Company’s businesses, as well as developments that occurred either during the fiscal year ended June 30, (“fiscal”) 2026 or early fiscal 2027 that the Company believes are important in understanding its results of operations and financial condition or to disclose known trends.
•Results of Operations—This section provides an analysis of the Company’s results of operations for fiscal 2026 and 2025. This analysis is presented on both a consolidated and a segment basis. In addition, a brief description is provided of significant transactions and events that impact the comparability of the results being analyzed.
•Liquidity and Capital Resources—This section provides an analysis of the Company’s cash flows for fiscal 2026 and 2025, as well as a discussion of the Company’s outstanding debt and commitments, both firm and contingent, that existed as of June 30, 2026. Included in the discussion of outstanding debt is a discussion of the amount of financial capacity available to fund the Company’s future commitments and obligations, as well as a discussion of other financing arrangements.
•Critical Accounting Policies and Estimates—This section discusses accounting policies considered important to the Company’s financial condition and results of operations, and which require significant judgment and estimates on the part of management in application and the Company’s use of estimates and assumptions consistent with U.S. generally accepted accounting principles (“GAAP”). In addition, Note 2—Summary of Significant Accounting Policies to the accompanying Financial Statements summarizes the Company’s significant accounting policies, including the critical accounting policy discussion found in this section.
•Caution Concerning Forward-Looking Statements—This section provides a description of the use of forward-looking information appearing in this Annual Report on Form 10-K, including in Management’s Discussion and Analysis of Financial Condition and Results of Operations. Such information is based on management’s current expectations about future events which are subject to change and to inherent risks and uncertainties. Refer to Item 1A. “Risk Factors” in this Annual Report for a discussion of the risk factors applicable to the Company.
Refer to Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2025 as filed with the SEC on August 6, 2025 for management’s discussion and analysis of our financial condition and results of operations for fiscal 2024, including comparison to fiscal 2025.
OVERVIEW OF THE COMPANY’S BUSINESS
The Company is a news, sports and entertainment company, which manages and reports its businesses in four operating segments: Cable Network Programming, Television, Credible and the FOX Studio Lot with the
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following two reportable segments:
•Cable Network Programming, which produces and licenses news and sports content distributed through traditional cable television systems, direct broadcast satellite operators and telecommunication companies (“traditional MVPDs”), virtual multi-channel video programming distributors (“virtual MVPDs”) and other digital platforms, primarily in the U.S.
•Television, which produces, acquires, markets and distributes programming through the FOX broadcast network, advertising-supported video-on-demand (“AVOD”) service Tubi, 29 full power broadcast television stations, including 11 duopolies, and other digital platforms, primarily in the U.S. Eighteen of the broadcast television stations are affiliated with the FOX Network and 11 are affiliated with MyNetworkTV. The segment also includes various production companies that produce content for the Company and third parties.
The Credible and the FOX Studio Lot operating segments do not meet the criteria under GAAP to be separately reported as a reportable segment or aggregated with other operating segments, and as such are presented as part of Corporate and Other, which is not a reportable segment. Corporate and Other principally consists of FOX One, the Company’s direct-to-consumer subscription streaming service launched in August 2025, Credible, the FOX Studio Lot and corporate overhead costs. Credible is a U.S. consumer finance marketplace. The FOX Studio Lot, located in Los Angeles, California, provides television and film production services along with office space, studio operation services and includes all operations of the facility.
We use the term "MVPDs" to refer collectively to traditional MVPDs and virtual MVPDs.
The Company’s Cable Network Programming and Television segments derive the majority of their revenues from distribution fees for the transmission of content and advertising sales. For fiscal 2026, the Company generated revenues of $17 billion, of which approximately 47% was generated from distribution revenue, approximately 43% was generated from advertising, and approximately 10% was generated from other operating activities.
Distribution revenue primarily includes (i) monthly subscriber-based license and retransmission consent fees paid by programming distributors that carry the Company’s cable networks and owned and operated television stations, (ii) fees received from non-owned and operated television stations that are affiliated with the FOX Network and (iii) monthly or annual subscription fees for the right to access and stream content on the Company’s direct-to-consumer streaming services. U.S. law governing retransmission consent provides a mechanism for the television stations owned by the Company to seek and obtain payment from MVPDs that carry the Company’s broadcast signals.
Advertising revenue primarily includes (i) sales of commercial time within the Company’s network programming and (ii) sales of advertising on the Company’s owned and operated television stations and various digital properties.
For more information, see Item 1. “Business” and Item 1A. “Risk Factors.”
Roku Transaction
On June 14, 2026, the Company and Roku, Inc. (“Roku”) entered into a definitive agreement (the “Merger Agreement”) under which the Company has agreed to acquire Roku for a combination of cash and FOX Class A Common Stock (the “Roku Transaction” or the “Merger”). Upon the terms and subject to the conditions of the Merger Agreement, FOX will pay $96.00 in cash and 0.9693 shares of FOX Class A Common Stock for each share of Roku Class A Common Stock and Roku Class B Common Stock outstanding immediately prior to the effective time of the merger. The exchange ratio is fixed and will not be adjusted. Following the completion of the Merger, Roku will be a wholly-owned subsidiary of FOX.
Each of the Boards of Directors of FOX and Roku have unanimously approved the transaction, which is also subject to requisite approval by FOX and Roku stockholders, clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, the receipt of consents or approvals under certain other antitrust laws and certain investment screening laws and other customary conditions. The Merger Agreement contains customary termination rights and provides that each party will be required to pay the other party a
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termination fee of approximately $866 million if the Merger Agreement is terminated in certain circumstances, including due to a change in the recommendation of its board of directors. In addition, FOX will be required to pay Roku a termination fee of approximately $1.2 billion if the Merger Agreement is terminated under certain circumstances related to the failure to obtain certain regulatory approvals or upon the entry of a permanent restraint under certain antitrust laws or investment screening laws. FOX has also agreed to reimburse Roku for up to $70 million for reasonable third-party costs and expenses incurred by Roku in connection with the transaction if FOX is unable to obtain the required approval of its Class B Common stockholders of the issuance of FOX Class A Common Stock in connection with the transaction.
The Company expects to fund the cash portion of the Merger consideration with a combination of debt and cash on hand. In connection with the Merger Agreement, in June 2026, the Company entered into a commitment letter under which the lenders provided $12.0 billion of commitments ($11.0 billion of which is available as of June 30, 2026) to provide senior unsecured bridge loans (the “Bridge Facility”) and a term loan credit agreement under which the lenders committed to provide a $1.0 billion senior unsecured term loan facility (the “Term Loan Facility”) (See Note 9—Borrowings to the accompanying Financial Statements).
RESULTS OF OPERATIONS
Results of Operations—Fiscal 2026 versus Fiscal 2025
The following table sets forth the Company’s operating results for fiscal 2026, as compared to fiscal 2025:
For the years ended June 30,
(in millions, except %) Better/(Worse)
Revenues
Selling, general and administrative (2,367) (2,168) (199) (9) %
Depreciation and amortization (410) (385) (25) (6) %
Restructuring, impairment and other corporate matters (151) (350) 199 57 %
Equity losses of affiliates (20) (29) 9 31 %
Less: Net income attributable to noncontrolling interests (42) (30) (12) (40) %
** not meaningful
Overview—The Company’s revenues increased $826 million or 5% for fiscal 2026, as compared to fiscal 2025, due to higher distribution, advertising and content and other revenues. The increase of $278 million or 4% in distribution revenue was due to higher average rates per subscriber and higher fees received from television stations that are affiliated with the FOX Network of approximately $440 million, partially offset by the approximately $160 million impact of a lower average number of subscribers. The increase of $474 million or
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7% in advertising revenue was primarily due to sports programming led by the broadcasts of the Fédération Internationale de Football Association ("FIFA") Men’s World Cup and additional National Football League (“NFL”) and Major League Baseball (“MLB”) postseason games and higher pricing partially offset by the absence of the February 2025 broadcast of Super Bowl LIX. The remaining impact was primarily due to continued digital growth led by the Tubi AVOD service and higher news pricing,partially offset by lower political advertising revenue due to the absence of the 2024 presidential and congressional elections and lower news ratings. The increase of $74 million or 4% in content and other revenues was primarily due to higher sports sublicensing revenue and higher digital content revenue.
Operating expenses increased $335 million or 3% for fiscal 2026, as compared to fiscal 2025, primarily due to costs associated with the launch of FOX One and higher digital content costs. This increase was partially offset by lower sports programming rights amortization led by the absence of the February 2025 broadcast of Super Bowl LIX partially offset by soccer rights, including the broadcast of the FIFA Men’s World Cup,andhigher NFL costs, including the broadcast of an additional NFL postseason game.
Selling, general and administrative expenses increased $199 million or 9% for fiscal 2026, as compared to fiscal 2025, primarily due to higher employee costs and costs associated with the launch of FOX One.
Depreciation and amortization—Depreciation and amortization expense increased $25 million or 6% for fiscal 2026, as compared to fiscal 2025, primarily due to technology equipment placed into service in fiscal 2026.
Restructuring, impairment and other corporate matters—See Note 4—Restructuring, Impairment and Other Corporate Matters to the accompanying Financial Statements.
Interest expense, net—Interest expense, net increased $47 million or 21% for fiscal 2026, as compared to fiscal 2025, primarily due to lower interest income as a result of lower interest rates and lower average cash and cash equivalent balances, partially offset by a lower average amount of debt outstanding.
Non-operating other, net—See Note 20—Additional Financial Information to the accompanying Financial Statements under the heading “Non-Operating Other, net.”
Income tax expense—The Company’s tax provision and related effective tax rate of 24% and 25% for fiscal 2026 and fiscal 2025, respectively, was higher than the statutory rate of 21% primarily due to state taxes and other permanent items.
Net income—Net income decreased $566 million or 25% for fiscal 2026, as compared to fiscal 2025, primarily due to a change in fair value of the Company’s investments in equity securities, partially offset by higher Segment EBITDA (as defined below) and lower legal settlement and other costs associated with the discontinuation of Venu Sports in fiscal 2025. These changes resulted in lower income before income tax expense and a corresponding lower provision for income tax.
Segment Analysis
The Company’s operating segments have been determined in accordance with the Company’s internal management structure, which is organized based on operating activities. The Company evaluates performance based upon several factors, of which the primary financial measure is Segment EBITDA (defined below). Due to the integrated nature of these operating segments, estimates and judgments are made in allocating certain assets, revenues and expenses. Intersegment transactions principally relate to the sublicensing of sports content, direct-to-consumer streaming services and rental of studio and administrative space, which are recorded consistently with the recognition of transactions with third parties and are eliminated in consolidation.
Segment EBITDA is defined as Revenues less Operating expenses and Selling, general and administrative expenses. Segment EBITDA does not include: Depreciation and amortization, Restructuring, impairment and other corporate matters, Equity earnings (losses) of affiliates, Interest expense, net, Non-operating other, net and Income tax expense. Effective July 1, 2025, the Company no longer removes the impact of amortization of cable distribution investments when calculating Segment EBITDA. Prior periods were not restated as the impact of the change is immaterial to the calculation. Management believes that Segment
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EBITDA is an appropriate measure for evaluating the operating performance of the Company’s operating segments because it is the primary measure used by the Company’s chief operating decision maker, the Chief Executive Officer, to monitor actual versus budget and prior fiscal year financial results, forecast future periods and perform competitive analyses to evaluate performance and allocate resources.
Fiscal 2026 versus Fiscal 2025
The following tables set forth the Company’s Revenues and Segment EBITDA for fiscal 2026, as compared to fiscal 2025:
For the years ended June 30,
(in millions, except %) Better/(Worse)
Revenues
For the years ended June 30,
(in millions, except %) Better/(Worse)
Segment EBITDA
** not meaningful
Cable Network Programming (43% of the Company’s revenues in fiscal 2026 and 2025)
For the years ended June 30,
(in millions, except %) Better/(Worse)
Revenues
Selling, general and administrative (687) (635) (52) (8) %
Amortization of cable distribution investments — 10 (10) (100) %
Revenues at the Cable Network Programming segment increased $418 million or 6% for fiscal 2026, as compared to fiscal 2025, due to higher distribution, advertising and content and other revenues. Distribution
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revenue increased $222 million or 5% as higher average rates per subscriber were partially offset by a decrease in the average number of subscribers. The increase of $156 million or 10% in advertising revenue was primarily due to higher news and sports pricing and the broadcast of the FIFA Men’s World Cup,partially offset by lower ratings. The increase of $40 million or 4% in content and other revenues was primarily due to higher sports sublicensing revenue.
Cable Network Programming Segment EBITDA increased $69 million or 2% for fiscal 2026, as compared to fiscal 2025, due to the revenue increases noted above, partially offset by higher expenses. Operating expenses increased $287 million or 9% primarily due to higher sports programming rights amortization and production costs led by soccer rights, including the broadcast of the FIFA Men’s World Cup. This increase was partially offset by lower newsgathering costs due to the absence of the 2024 presidential election. Selling, general and administrative expenses increased $52 million or 8% principally due to higher employee costs and technology costs.
Television (56% and 57% of the Company’s revenues in fiscal 2026 and 2025, respectively)
For the years ended June 30,
(in millions, except %) Better/(Worse)
Revenues
Selling, general and administrative (1,127) (1,072) (55) (5) %
Revenues at the Television segment increased $341 million or 4% for fiscal 2026, as compared to fiscal 2025, due to higher advertising, distribution and content and other revenues. The increase of $318 million or 6% in advertising revenue was primarily due to sports programming led by the broadcasts of the FIFA Men’s World Cup and additional NFL and MLB postseason games and higher pricing partially offset by the absence of the February 2025 broadcast of Super Bowl LIX. Also contributing to this increase was continued digital growth led by the Tubi AVOD service. These increases werepartially offset by lower political advertising revenue principally due to the absence of the 2024 presidential and congressional elections. Distribution revenue remained relatively consistent primarily due to higher average rates per subscriber partially offset by a lower average number of subscribers at the Company’s owned and operated television stations and higher fees received from television stations that are affiliated with the FOX Network. The increase of $17 million or 3% in content and other revenues was primarily due to higher digital content revenue.
Television Segment EBITDA increased $493 million or 52% for fiscal 2026, as compared to fiscal 2025, primarily due to the revenue increases noted above and lower expenses. Operating expenses decreased $207 million or 3% primarily due to lower sports programming rights amortization led by the absence of the February 2025 broadcast of Super Bowl LIX partially offset by the broadcast of the FIFA Men’s World Cup and higher NFL costs, including the broadcast of an additional NFL postseason game. Also partially offsetting this decrease was higher digital content costs. Selling, general and administrative expenses increased $55 million or 5% primarily due to higher employee costs, partially offset by lower legal costs.
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Corporate and Other
For the years ended June 30,
(in millions, except %) Better/(Worse)
Selling, general and administrative (609) (513) (96) (19) %
** not meaningful
Revenues within Corporate and Other for fiscal 2026 and 2025 include distribution revenue at FOX One and revenues generated by Credible and the operation of the FOX Studio Lot. Operating expenses for fiscal 2026 and 2025 include costs associated with the launch of FOX One and advertising and promotional expenses at Credible. Selling, general and administrative expenses for fiscal 2026 and 2025 primarily relate to employee costs, professional fees, costs associated with the launch of FOX One and the costs of operating the FOX Studio Lot.
Corporate and Other EBITDA decreased $280 million or 80% for fiscal 2026, as compared to fiscal 2025, primarily due to intercompany FOX branded content and marketing costs associated with the launch of FOX One, which more than offset related distribution revenue.
Non-GAAP Financial Measures
Adjusted EBITDA is defined as Revenues less Operating expenses and Selling, general and administrative expenses. Adjusted EBITDA does not include: Depreciation and amortization, Restructuring, impairment and other corporate matters, Equity earnings (losses) of affiliates, Interest expense, net, Non-operating other, net and Income tax expense. Effective July 1, 2025, the Company no longer removes the impact of amortization of cable distribution investments when calculating Adjusted EBITDA. Prior periods were not restated as the impact of the change is immaterial to the calculation.
Management believes that information about Adjusted EBITDA assists all users of the Company’s Financial Statements by allowing them to evaluate changes in the operating results of the Company’s portfolio of businesses separate from non-operational factors that affect Net income, thus providing insight into both operations and the other factors that affect reported results. Adjusted EBITDA provides management, investors and equity analysts a measure to analyze the operating performance of the Company’s business and its enterprise value against historical data and competitors’ data, although historical results, including Adjusted EBITDA, may not be indicative of future results (as operating performance is highly contingent on many factors, including customer tastes and preferences).
Adjusted EBITDA is considered a non-GAAP financial measure and should be considered in addition to, not as a substitute for, net income, cash flow and other measures of financial performance reported in accordance with GAAP. In addition, this measure does not reflect cash available to fund requirements and excludes items, such as depreciation and amortization and impairment charges, which are significant components in assessing the Company’s financial performance. Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies.
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Fiscal 2026 versus Fiscal 2025
The following table reconciles Net income to Adjusted EBITDA for fiscal 2026, as compared to fiscal 2025:
For the years ended June 30,
(in millions)
Add
Amortization of cable distribution investments — 10
Depreciation and amortization 410 385
Restructuring, impairment and other corporate matters 151 350
Equity losses of affiliates 20 29
Non-operating other, net 773 (438)
The following table sets forth the computation of Adjusted EBITDA for fiscal 2026, as compared to fiscal 2025:
For the years ended June 30,
(in millions)
Selling, general and administrative (2,367) (2,168)
Amortization of cable distribution investments — 10
LIQUIDITY AND CAPITAL RESOURCES
Current Financial Condition
The Company has approximately $4.2 billion of cash and cash equivalents as of June 30, 2026 and an unused five-year $1.0 billion unsecured revolving credit facility (See Note 9—Borrowings to the accompanying Financial Statements). In addition, the Company can draw on the Term Loan Facility and commitments under the Bridge Facility to finance the cash portion of the Merger consideration (See Note 3—Acquisitions, Disposals and Other Transactions to the accompanying Financial Statements). The Company also has access to global capital markets, subject to market conditions. As of June 30, 2026, the Company was in compliance with all of the covenants under the Company’s facilities, and it does not anticipate any noncompliance with such covenants.
The principal uses of cash that affect the Company’s liquidity position include the following: the acquisition of rights and related payments for entertainment and sports programming; operational expenditures including production costs; marketing and promotional expenses; expenses related to broadcasting the Company’s programming; employee and facility costs; capital expenditures; acquisitions, including redeemable noncontrolling interests; income taxes, interest and dividend payments; debt repayments; legal settlements; and stock repurchases.
In addition to the transactions disclosed within Note 3—Acquisitions, Disposals, and Other Transactions to the accompanying Financial Statements, the Company has evaluated, and expects to continue to evaluate, possible acquisitions and dispositions of certain businesses and assets. Such transactions may be material and may involve cash, the Company’s securities or the assumption of additional indebtedness.
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Sources and Uses of Cash—Fiscal 2026 vs. Fiscal 2025
Net cash provided by operating activities for fiscal 2026 and 2025 was as follows (in millions):
Net cash provided by operating activities $ 1,970 $ 3,324
The decrease in net cash provided by operating activities during fiscal 2026, as compared to fiscal 2025, was primarily due to lower advertising receipts due to the absence of Super Bowl LIX and the 2024 presidential and congressional elections partially offset by the FIFA Men’s World Cup in the current year and higher sports programming payments.
Net cash used in investing activities for fiscal 2026 and 2025 was as follows (in millions):
Net cash used in investing activities $ (705) $ (537)
The increase in net cash used in investing activities during fiscal 2026, as compared to fiscal 2025, was primarily due to an increase in the Company’s investments and capital expenditures, partially offset by a decrease in the Company’s acquisitions.
Net cash used in financing activities for fiscal 2026 and 2025 was as follows (in millions):
Net cash used in financing activities $ (2,411) $ (1,755)
The increase in net cash used in financing activities during fiscal 2026, as compared to fiscal 2025,was primarily due to activity under the stock repurchase program, including the $1.5 billion accelerated share repurchase transaction (See Note 11—Stockholders’ Equity to the accompanying Financial Statements under the heading “Stock Repurchase Program”), and the Company’s purchase of noncontrolling interest, partially offset by the repayment of $600 million of senior notes that matured in April 2025.
Stock Repurchase Program
See Note 11—Stockholders’ Equity to the accompanying Financial Statements under the heading “Stock Repurchase Program.”
Dividends
Dividends paid in fiscal 2026 totaled $0.56 per share of FOX’s Class A Common Stock, par value $0.01 per share (the “Class A Common Stock”), and Class B Common Stock, par value $0.01 per share (the “Class B Common Stock” and, together with the Class A Common Stock, the “Common Stock”). Subsequent to June 30, 2026, the Company declared a semi-annual dividend of $0.29 per share on both the Class A Common Stock and the Class B Common Stock. The dividend declared is payable on September 23, 2026 with a record date for determining dividend entitlements of September 02, 2026.
Based on the number of shares outstanding as of June 30, 2026, and the new annual dividend rate stated above, the total aggregate cash dividends expected to be paid to stockholders in fiscal 2027 is approximately $245 million.
Debt Instruments
Borrowings include senior notes (See Note 9—Borrowings to the accompanying Financial Statements). During fiscal 2025, cash used in the repayment of borrowings was $600 million for the 3.050% senior notes which matured and were repaid in full in April 2025.
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Ratings of the Senior Notes
The following table summarizes the Company’s credit ratings as of June 30, 2026:
Rating Agency Senior Debt Outlook
Moody’s Baa2 Stable
Standard & Poor’s BBB Stable
Revolving Credit Agreement
In June 2023, the Company entered into an unsecured $1.0 billion revolving credit facility with a maturity date of June 2028 (See Note 9—Borrowings to the accompanying Financial Statements).
Bridge Facility
In connection with the Merger Agreement, in June 2026, the Company entered into a commitment letter for the Bridge Facility which may be drawn on for the purpose of financing the cash portion of the Merger consideration (See Note 3—Acquisitions, Disposals and Other Transactions to the accompanying Financial Statements).
Term Loan Agreement
In connection with the Merger Agreement, in June 2026, the Company entered into the Term Loan Facility to fund the cash portion of the Merger consideration, which has a maturity date of two years after the closing of the Roku Transaction and the Term Loan Facility is funded (See Note 9—Borrowings to the accompanying Financial Statements).
Commitments and Contingencies
The Company has commitments under certain firm contractual arrangements (“firm commitments”) to make future payments. These firm commitments secure the future rights to various assets and services to be used in the normal course of operations. For additional details on commitments and contingencies see Note 14—Commitments and Contingencies to the accompanying Financial Statements under the headings “Licensed Programming,” “Other commitments and contractual obligations” and “Legal and Other Contingencies.”
Pension and other postretirement benefits and uncertain tax benefits
The table in Note 14—Commitments and Contingencies to the accompanying Financial Statements excludes the Company’s pension and other postretirement benefits (“OPEB”) obligations and the gross unrecognized tax benefits for uncertain tax positions as the Company is unable to reasonably predict the ultimate amount and timing. The Company made contributions of $36 million and $40 million to its pension plans in fiscal 2026 and 2025, respectively. The majority of these contributions were voluntarily made to improve the funded status of the plans. Future plan contributions are dependent upon actual plan asset returns, interest rates and statutory requirements. Assuming that actual plan asset returns are consistent with the Company’s expected plan returns in fiscal 2027 and beyond and that interest rates remain constant, the Company would not be required to make any material contributions to its pension plans for the immediate future. Required pension plan contributions for the next fiscal year are not expected to be material but the Company may make voluntary contributions in future periods. Payments due to participants under the Company’s pension plans are primarily paid out of underlying trusts. Payments due under the Company’s OPEB plans are not required to be funded in advance, but are paid as medical costs are incurred by covered retiree populations, and are principally dependent upon the future cost of retiree medical benefits under the Company’s OPEB plans. The Company does not expect its net OPEB payments to be material in fiscal 2027 (See Note 15—Pension and Other Postretirement Benefits to the accompanying Financial Statements for further discussion of the Company’s pension and OPEB plans).
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
An accounting policy is considered to be critical if it is important to the Company’s financial condition and results of operations and if it requires significant judgment and estimates on the part of management in its application. The development and selection of these critical accounting policies and estimates have been determined by management of the Company and the related disclosures have been reviewed with the Audit
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Committee of the Company’s Board of Directors. For the Company’s summary of significant accounting policies, see Note 2—Summary of Significant Accounting Policies to the accompanying Financial Statements.
Use of Estimates
See Note 2—Summary of Significant Accounting Policies to the accompanying Financial Statements under the heading “Use of Estimates.”
Revenue Recognition
Revenue is recognized when control of the promised goods or services is transferred to the Company’s customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. The Company considers the terms of each arrangement to determine the appropriate accounting treatment. Significant judgments used in revenue recognition include the identification of performance obligations and the allocation of consideration, including those contracts containing bundled advertising sales or licenses.
The Company generates advertising revenue from sales of commercial time within the Company’s network programming, and from sales of advertising on the Company’s owned and operated television stations and various digital properties. Advertising revenue from customers is recognized as the commercials are aired or streamed. Certain of the Company’s advertising contracts have guarantees of a certain number of targeted audience views, referred to as impressions, where the performance obligation is the guarantee and revenue is recognized as the guarantee is satisfied. For contracts without guarantees, the individual advertising spots are the performance obligation and consideration is allocated based on its relative standalone selling price. Advertising contracts, which are generally short-term, are billed monthly for the spots aired or streamed during the month, with payments due shortly thereafter.
The Company generates distribution revenue from affiliate fees for agreements with MVPDs for cable network programming and retransmission fees for the broadcast of the Company’s owned and operated television stations and for agreements with independently owned television stations that are affiliated with the FOX Network. In addition, the Company generates distribution revenue from subscription fees for the Company’s direct-to-consumer streaming services. Affiliate fee revenue is recognized as the Company satisfies the performance obligation by continuously making the programming available to the customer over the term of the agreement. For contracts with affiliate fees based on the number of the affiliate’s subscribers, revenues are recognized based on the contractual rate multiplied by the estimated number of subscribers each period. For contracts with fixed affiliate fees, revenues are recognized based on the relative standalone selling price of the network programming provided over the contract term, which generally reflects the invoiced amount. Affiliate contracts are generally multi-year contracts billed monthly with payments due shortly thereafter. Subscription revenue for the Company’s direct-to-consumer streaming services are recognized evenly over the subscription period.
Inventories
Licensed and Owned Programming
The Company incurs costs to license programming rights and to produce owned programming. Licensed programming includes costs incurred by the Company for access to content owned by third parties. The Company has single and multi-year contracts for sports and non-sports programming. Licensed programming is recorded at the earlier of payment or when the license period has begun, the cost of the program is known or reasonably determinable and the program is accepted and available for airing. Advances paid for the right to broadcast sports events within one year and programming with an initial license period of one year or less are classified as current inventories included within Inventories, net in the Consolidated Balance Sheets, and license fees for programming with an initial license period of greater than one year are classified as non-current inventories included within Other non-current assets in the Consolidated Balance Sheets. Licensed programming is predominantly amortized as the associated programs are made available over the shorter of the license period or the period in which an economic benefit is expected to be derived. The costs of multi-year sports contracts are primarily amortized based on the ratio of each contract’s current period attributable revenue to the estimated total remaining attributable revenue. Estimates can change and, accordingly, are reviewed periodically and amortization is adjusted as necessary. Such changes in the future could be material.
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Owned programming, included within Other non-current assets in the Consolidated Balance Sheets, includes content internally developed and produced as well as co-produced content. Capitalized costs for owned programming, including direct costs, production overhead and development costs, are predominantly amortized using the individual-film-forecast-computation method, which is based on the ratio of current period revenue to estimated total future remaining revenue, and related costs are expensed as incurred. Future remaining revenue includes imputed license fees for content used by FOX as well as revenue expected to be earned based on distribution strategy and historical performance of similar content. Changes to estimated future revenues may result in impairments or changes in amortization patterns. When production partners distribute owned programming on the Company’s behalf, the net participation in profits is recorded as content license revenue. Projects in-process are written off at the earlier of abandonment or three years after initial capitalization.
Inventories are evaluated for recoverability when an event or circumstance occurs that indicates that fair value may be less than unamortized costs. The Company will determine if there is an impairment by evaluating the fair value of the inventories, which are primarily supported by internal forecasts as compared to unamortized costs. Where an evaluation indicates unamortized costs, including advances on multi-year sports rights contracts, are not recoverable, amortization of rights is accelerated in an amount equal to the amount by which the unamortized costs exceed fair value. Owned programming is predominantly monetized and tested for impairment on an individual basis. Licensed programming is predominantly monetized as a group and tested for impairment on a channel, network, or daypart basis. The recoverability of certain sports rights is assessed on an aggregate basis. The Company recognized impairments of approximately $90 million, $40 million, and $40 million in fiscal 2026, 2025 and 2024, respectively, related to owned programming at the Television segment, which were recorded in Operating expenses in the accompanying Consolidated Statements of Operations.
Goodwill and Other Intangible Assets
The Company’s intangible assets include goodwill, Federal Communications Commission (“FCC”) licenses, MVPD affiliate agreements and relationships and trademarks and other copyrighted products.
The Company accounts for its business combinations under the acquisition method of accounting. The total cost of acquisitions is allocated to the underlying net assets acquired, based on their respective estimated fair values at the date of acquisition. Goodwill is recorded as the difference between the consideration transferred to acquire entities and the estimated fair values assigned to their tangible and identifiable intangible net assets and is assigned to one or more reporting units for purposes of testing for impairment. Determining the fair value of assets acquired and liabilities assumed requires management’s judgment and often involves the use of significant estimates and assumptions, including assumptions with respect to future cash inflows and outflows, discount rates, long-term growth rates, asset lives, market multiples and relevant comparable transactions, among other items. Identifying reporting units and assigning goodwill to them requires judgment involving the aggregation of business units with similar economic characteristics and the identification of existing business units that benefit from the acquired goodwill. The judgments made in determining the estimated fair value assigned to each class of intangible assets acquired, their reporting unit, as well as their useful lives can significantly impact net income. The Company allocates goodwill to disposed businesses using the relative fair value method.
Carrying values of goodwill and intangible assets with indefinite lives are tested annually for impairment, or earlier if events occur or circumstances change that would more likely than not reduce the fair value below its carrying amount. The Company’s impairment review is based on a discounted cash flow analysis and market-based valuation approach that requires significant management judgment. The Company uses its judgment in assessing whether assets may have become impaired between annual valuations. Indicators such as unexpected adverse economic factors, unanticipated technological changes or competitive activities, loss of key personnel and acts by governments and courts, may signal that an asset has become impaired and require the Company to perform an interim impairment test.
The direct valuation method used for FCC licenses requires, among other inputs, the use of published industry data that is based on subjective judgments about future advertising revenues in the markets where the Company owns television stations. This method also involves the use of management’s judgment in estimating appropriate terminal growth rates, operating margins and discount rates reflecting the risk of a market participant in the broadcast industry. The resulting fair values for FCC licenses are sensitive to these long-term
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assumptions and any adverse changes to such assumptions could result in an impairment to existing carrying values in future periods and such impairment could be material.
During fiscal 2025, the Company recorded a non-cash impairment charge for intangible assets of approximately $70 million primarily related to FCC licenses in Restructuring, impairment and other corporate matters in the Statements of Operations within the Television segment. Based on the Company’s annual assessment, the carrying value of FCC licenses in certain markets exceeded their fair value primarily as a result of updated market data, including lower expected future advertising revenue. Additionally, the fair value of FCC licenses in certain markets exceeded their respective carrying value by less than 10% as of June 30, 2025.
During fiscal 2026, the Company recorded a non-cash impairment charge for intangible assets of approximately $64 million primarily related to FCC licenses in Restructuring, impairment and other corporate matters in the accompanying Consolidated Statements of Operations within the Television segment. Based on the Company’s annual assessment, the carrying value of FCC licenses in certain markets exceeded their fair value primarily as a result of updated market data, including lower expected future advertising revenue. Additionally, the fair value of FCC licenses in certain markets exceeded their respective carrying value by less than 10% as of June 30, 2026. An increase to the discount rate of 0.5 percentage points, or a decrease to the terminal growth rate of 0.5 percentage points, assuming no changes to other long-term assumptions, would cause the aggregate fair value of FCC licenses to fall below the aggregate carrying value by approximately $125 million and $90 million, respectively. Further adverse changes in market conditions may result in additional non-cash impairment charges.
During fiscal 2026, the Company determined that the goodwill included in the accompanying Consolidated Balance Sheets as of June 30, 2026 was not impaired based on the Company’s annual assessment and there are no reporting units at risk of impairment. While the Company believes its judgments represent reasonably possible outcomes based on available facts and circumstances, adverse changes to the assumptions, including prevailing market conditions, discount rates, competitive factors, comparable public company trading values and expected future cash flows, could negatively impact the fair value of our reporting units and potentially result in a non-cash goodwill impairment charge in future periods. The Company will continue to monitor its goodwill and indefinite-lived intangible assets for any possible future non-cash impairment charges.
See Note 2—Summary of Significant Accounting Policies to the accompanying Financial Statements under the heading “Annual Impairment Review” for further discussion.
Income Taxes
The Company is subject to income tax primarily in various domestic jurisdictions. The Company computes its annual tax rate based on the statutory tax rates and tax planning opportunities available to it in the various jurisdictions in which it earns income. Tax laws are complex and subject to different interpretations by the taxpayer and respective governmental taxing authorities. Significant judgment is required in determining the Company’s tax expense and in evaluating its tax positions, including evaluating uncertainties.
The Company records valuation allowances to reduce deferred tax assets to the amount that is more likely than not to be realized. In making this assessment, management analyzes future taxable income, reversing temporary differences and ongoing tax planning strategies. Should a change in circumstances lead to a change in judgment about the realizability of deferred tax assets in future years, the Company would adjust related valuation allowances in the period that the change in circumstances occurs, along with a corresponding increase or charge to income.
Employee Costs
The Company participates in and/or sponsors various pension, savings and postretirement benefit plans. Pension plans and postretirement benefit plans are closed to new participants with the exception of a limited number of employees covered by collective bargaining agreements. The measurement and recognition of costs of the Company’s pension and OPEB plans require the use of significant management judgments, including discount rates, expected return on plan assets and other actuarial assumptions.
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For financial reporting purposes, net periodic pension expense is calculated based upon a number of actuarial assumptions, including a discount rate, an expected rate of return on plan assets and mortality. The Company considers current market conditions, including changes in investment returns and interest rates, in making these assumptions. The expected long-term rate of return is determined using the current target asset allocation of 22% equity securities, 71% fixed income securities and 7% in other investments, and applying expected future returns for the various asset classes and correlations amongst the asset classes. A portion of the fixed income investments is allocated to cash to pay near-term benefits.
The discount rate reflects the market rate for high-quality fixed income investments on the Company’s annual measurement date of June 30 and is subject to change each fiscal year. The discount rate assumptions used to account for pension and other postretirement benefit plans reflect the rates at which the benefit obligations could be effectively settled. The rate was determined by matching the Company’s expected benefit payments for the plans to a hypothetical yield curve developed using a portfolio of hundreds of high-quality corporate bonds.
The key assumptions used in developing the Company’s fiscal 2026, 2025 and 2024 net periodic pension expense for its plans consist of the following:
(in millions, except %)
Discount rate for service cost 5.6 % 5.5 % 5.3 %
Discount rate for interest cost 5.0 % 5.3 % 5.4 %
Assets
Expected rate of return 5.9 % 5.6 % 5.3 %
Actuarial gain $ 14 $ 4 $ —
Discount rates are volatile from year to year because they are determined based upon the prevailing rates as of the measurement date. The Company will utilize discount rates of 5.6% and 5.1% in calculating the fiscal 2027 service cost and interest cost, respectively, for its plans. The Company will use an expected long-term rate of return of 6.1% for fiscal 2027 based principally on the future return expectation of the plans’ asset mix. Changes in assumptions and differences between assumptions and actual experience has resulted in accumulated pre-tax net losses on the Company’s pension and postretirement benefit plans, which as of June 30, 2026 were $145 million as compared to $170 million as of June 30, 2025. These deferred losses are being systematically recognized in future net periodic pension expense. Unrecognized losses in excess of 10% of the greater of the market-related value of plan assets or the plans’ projected benefit obligation (“PBO”) are recognized over the average future service of the plan participants or average future life of the plan participants.
The Company made contributions of $36 million, $40 million and $86 million to its pension plans in fiscal 2026, 2025 and 2024, respectively. The majority of these contributions were voluntarily made to improve the funding status of the plans. Future plan contributions are dependent upon actual plan asset returns, statutory requirements and interest rate movements. Assuming that actual plan returns are consistent with the Company’s expected plan returns in fiscal 2027 and beyond and that interest rates remain constant, the Company would not be required to make any material statutory contributions to its pension plans for the immediate future. The Company will continue to make voluntary contributions as necessary to improve funded status.
Changes in net periodic pension expense may occur in the future due to changes in the Company’s expected rate of return on plan assets and discount rate resulting from economic events. The following table
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highlights the sensitivity of the Company’s pension obligations and expense to changes in these assumptions, assuming all other assumptions remain constant:
Changes in Assumption Impact on AnnualPension Expense Impact on PBO
Net periodic pension expense for the Company’s pension plans is expected to decrease from $35 million in fiscal 2026 to approximately $28 million in fiscal 2027, primarily due to asset gains recognized during fiscal 2026.
Legal Matters
The Company establishes an accrued liability for legal claims and indemnification claims when the Company determines that a loss is both probable and the amount of the loss can be reasonably estimated. Once established, accruals are adjusted from time to time, as appropriate, in light of additional information. The amount of any loss ultimately incurred in relation to matters for which an accrual has been established may be higher or lower than the amounts accrued for such matters. Any fees, expenses, fines, penalties, judgments or settlements which might be incurred by the Company in connection with the various proceedings could affect the Company’s results of operations and financial condition. See Note 14—Commitments and Contingencies to the accompanying Financial Statements under the heading “Legal and Other Contingencies” for a discussion of the Company’s legal proceedings.
CAUTION CONCERNING FORWARD-LOOKING STATEMENTS
This document contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical or current fact are “forward-looking statements” for purposes of federal and state securities laws, including any statements regarding (i) the Roku Transaction; (ii) future earnings, revenues or other measures of the Company’s financial performance; (iii) the Company’s plans, strategies and objectives for future operations; (iv) proposed new programming or other offerings; (v) future economic conditions or performance; and (vi) assumptions underlying any of the foregoing. Forward-looking statements may include, among others, the words “may,” “will,” “could,” “should,” “would,” “likely,” “anticipates,” “expects,” “intends,” “plans,” “projects,” “believes,” “estimates,” “outlook” or any other similar words.
Although the Company’s management believes that the expectations reflected in any of the Company’s forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any forward-looking statements. The Company’s future financial condition and results of operations, as well as any forward-looking statements, are subject to change and to inherent risks and uncertainties, such as those disclosed or incorporated by reference in our filings with the SEC. Important factors that could cause the Company’s actual results, performance and achievements to differ materially from those estimates or projections contained in the Company’s forward-looking statements include, but are not limited to, government regulation, economic, strategic, political and social conditions and the following factors:
•the impact of the Roku Transaction, which may be affected by various factors, including closing conditions, regulatory approvals, termination of the Merger Agreement, restrictions on the Company’s ability to pursue alternative transactions, potential litigation, business disruptions while the transaction is pending, impacts on the Common Stock, increased indebtedness, and the Company’s ability to integrate operations and realize anticipated benefits post-closing, as well as the risk that the transaction may be delayed or not completed at all;
•evolving technologies and distribution platforms and offerings and changes in consumer behavior as consumers seek more control over when, where and how they consume content, and related impacts on advertisers and MVPDs;
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•declines in advertising expenditures due to various factors such as the economic prospects of advertisers or the economy, evolving technologies and distribution platforms and related changes in consumer behavior and shifts in advertisers’ expenditures, the evolving digital advertising market, major sports events and election cycles and the evolution of audience measurement methodologies;
•further declines in the number of subscribers to MVPD services;
•the failure to enter into or renew on favorable terms, or at all, affiliation or carriage agreements or arrangements through which the Company makes its content available for viewing through online video platforms;
•the highly competitive nature of the industry in which the Company’s businesses operate;
•the popularity of the Company’s content, including special sports events; and the continued popularity of the sports franchises, leagues and teams for which the Company has acquired programming rights;
•the Company’s ability to renew programming rights, particularly sports programming rights, on sufficiently favorable terms, or at all;
•damage to the Company’s brands or reputation;
•the inability to realize the anticipated benefits of the Company’s acquisitions, investments and other strategic initiatives, and the effects of any combination or significant acquisition, disposition or other similar transaction involving the Company;
•the loss of key personnel;
•labor disputes, including labor disputes involving professional sports leagues whose games or events the Company has the right to broadcast;
•lower than expected valuations associated with the Company’s reporting units, indefinite-lived intangible assets, investments or long-lived assets;
•a degradation, failure or misuse of the Company’s network and information systems and other technology relied on by the Company that causes a disruption of services or improper disclosure of personal data or other confidential information;
•content piracy and signal theft and the Company’s ability to protect its intellectual property rights;
•the failure to comply with laws, regulations, rules, industry standards or contractual obligations relating to privacy and personal data protection;
•changes in tax, federal communications or other laws, regulations, practices or the interpretation or enforcement thereof;
•the impact of any investigations or fines from governmental authorities, including FCC rules and policies and FCC decisions regarding revocation, renewal or grant of station licenses, waivers and other matters;
•the failure or destruction of satellites or transmitter facilities the Company depends on to distribute its programming and changes in the availability and use of satellite transmission spectrum;
•unfavorable litigation outcomes or investigation results that require the Company to pay significant amounts or lead to onerous operating procedures;
•changes in GAAP or other applicable accounting standards and policies;
•the Company’s ability to secure additional capital on acceptable terms; and
•the other risks and uncertainties detailed in Part I, Item 1A. “Risk Factors” in this Annual Report.
Forward-looking statements in this Annual Report speak only as of the date hereof, and forward-looking statements in documents that are incorporated by reference hereto speak only as of the date of those documents. The Company does not undertake any obligation to update or release any revisions to any forward-looking statement made herein or to report any events or circumstances after the date hereof or to reflect the occurrence of unanticipated events or to conform such statements to actual results or changes in our expectations, except as required by law.
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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company has exposure to two types of market risk: changes in interest rates and stock prices. The Company neither holds nor issues financial instruments for trading purposes.
The following sections provide quantitative and qualitative information on the Company’s exposure to interest rate risk and stock price risk. The Company makes use of sensitivity analyses that are inherently limited in estimating actual losses in fair value that can occur from changes in market conditions.
Interest Rates
The Company’s current financing arrangements and facilities include $6.7 billion of outstanding fixed-rate debt, before adjustments for unamortized discount and debt issuance costs (See Note 9—Borrowings to the accompanying Financial Statements).
Fixed and variable-rate debts are impacted differently by changes in interest rates. A change in the interest rate or yield of fixed-rate debt will only impact the fair market value of such debt, while a change in the interest rate of variable-rate debt will impact interest expense, as well as the amount of cash required to service such debt. As of June 30, 2026, all the Company’s financial instruments with exposure to interest rate risk were denominated in U.S. dollars and no variable-rate debt was outstanding. Information on financial instruments with exposure to interest rate risk is presented below:
As of June 30,
(in millions)
Fair Value
Sensitivity Analysis
Stock Prices
The Company has common stock investments in publicly traded companies that are subject to market price volatility. Information on the Company’s investments with exposure to stock price risk is presented below:
As of June 30,
(in millions)
Fair Value
Total fair value of common stock investments $ 467 $ 1,249
Sensitivity Analysis
Concentrations of Credit Risk
See Note 2—Summary of Significant Accounting Policies to the accompanying Financial Statements under the heading “Concentrations of Credit Risk.”
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
FOX CORPORATION
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Management’s Report on Internal Control Over Financial Reporting 56
Reports of Independent Registered Public Accounting Firm (PCAOB ID: 42) 57
Notes to the Consolidated Financial Statements 65
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MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management of Fox Corporation is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended. The Company’s internal control over financial reporting includes those policies and procedures that:
•pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of Fox Corporation;
•provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America;
•provide reasonable assurance that receipts and expenditures of Fox Corporation are being made only in accordance with authorization of management and directors of Fox Corporation; and
•provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on the consolidated financial statements.
Fox Corporation’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. Because of its inherent limitations, internal control over financial reporting, no matter how well designed, may not prevent or detect misstatements. Also, the assessment of the effectiveness of internal control over financial reporting was made as of a specific date. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management, including the Company’s principal executive officer and principal financial officer, conducted an evaluation of the effectiveness of Fox Corporation’s internal control over financial reporting as of June 30, 2026, based on the framework set forth in “Internal Control — Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. Based on this evaluation, management determined that, as of June 30, 2026, Fox Corporation maintained effective internal control over financial reporting.
Ernst & Young LLP, the independent registered public accounting firm who audited and reported on the Consolidated Financial Statements of Fox Corporation included in the Annual Report on Form 10-K for the fiscal year ended June 30, 2026, has audited the Company’s internal control over financial reporting. Their report appears on the following page.
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and the Board of Directors of Fox Corporation
Opinion on Internal Control Over Financial Reporting
We have audited Fox Corporation’s internal control over financial reporting as of June 30, 2026, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Fox Corporation (the Company) maintained, in all material respects, effective internal control over financial reporting as of June 30, 2026, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of June 30, 2026 and 2025, the related consolidated statements of operations, comprehensive income, equity and cash flows for each of the three years in the period ended June 30, 2026, and the related notes and our report dated August 6, 2026 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
New York, New York
August 6, 2026
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and the Board of Directors of Fox Corporation
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Fox Corporation (the Company) as of June 30, 2026 and 2025, the related consolidated statements of operations, comprehensive income, equity and cash flows for each of the three years in the period ended June 30, 2026, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at June 30, 2026 and 2025, and the results of its operations and its cash flows for each of the three years in the period ended June 30, 2026, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of June 30, 2026, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report datedAugust 6, 2026 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters