Fox reported that advertising revenue at its Tubi streaming platform topped ad sales for Fox Entertainment. The gains come at a time when many digital video services are reporting slowing ad sales.
“The story at Tubi is breathtaking with [fiscal] first-quarter revenue growth reaccelerating to almost 30% over last year,” Fox CEO Lachlan Murdoch said on the company’s earnings call Tuesday. “This marks the first time that Tubi revenue has surpassed the advertising revenue generated by Fox Entertainment in a meaningful way.”
So far in the current quarter, Tubi revenues are up nearly 40%, Murdoch said.
Fox acquired Tubi for $440 million in 2020. Revenue has grown quickly, with Murodch projecting that it will be a billion-dollar business in the future.
Tubi has made money in some quarters, but Fox is currently investing in Tubi, so it is running at a $50 million quarterly deficit. The streaming service lost about $200 million last year and is likely to do about the same this year, Fox chief financial officer Steve Tomsic said.
Murdoch noted that the losses were much smaller for Fox than other media companies are encountering as they attempt to build subscription streaming services with expensive original programming.
Tubi’s growth was based on a 50% increase in total viewing time, which reached a record 1.3 billion hours in the first quarter, Murdoch said. Ad prices based on costs per thousand viewers have remained relatively constant.
Viewing was consistent across all genres, he said, noting that in addition to video-on-demand, Tubi has been adding linear free ad-supported streaming television (FAST) channels.
Ad-supported streaming has been ascendant lately. Netflix and Disney Plus are jumping in with ad-supported tiers and Paramount Global’s AVOD service Pluto TV broke the 1% of total TV viewing mark in September according to Nielsen.
“Tubi’s impressive progress and growing audience engagement, and monetization is indicating that our investment strategy and operational focus is working nicely.,” he said.
Murdoch also downplayed the impact of an ad slowdown on Fox.
“Yes, the broader national advertising market is looking more fluid compared to the time of our last earnings call,“ he said. ”However, the macro impact is not uniform across our verticals,” Murdoch added, noting that the bulk of Fox’s ad sales comes from live sports and news programming.
“While we have observed some softness in the linear entertainment scatter marketplace, remember that Fox does not over-index to network entertainment,” he said. ”So any impact there is nominal to us and it has been more than offset by the digital entertainment strength delivered by Tubi.” ■
