Fox Corp

NASDAQ:FOXA

Earnings Call Analysis

FOX Defies the Odds with Impressive Earnings Despite Missing Super Bowl Boost

This quarter, Fox Corporation managed to demonstrate its resilience and strategic prowess by delivering a 7% EBITDA growth even in the absence of the Super Bowl, which had significantly bolstered the previous year's third-quarter earnings. The strength of Fox's brands and the strategic positioning of its content continue to make the company a standout in a competitive media landscape.

Affiliate Fee Revenues Shine Amid Advertising Challenges

Fox's affiliate fee revenues rose by 4% during the fiscal third quarter, driven by pricing benefits from recent renewals. This growth was a bright spot, balancing out the anticipated decline in advertising revenues. Without the Super Bowl and with fewer NFL broadcasts than last year, advertising revenue saw a dip. However, if these differences in the NFL post-season schedules were excluded, overall advertising revenues would have seen a slight increase.

Segment Performance: A Mixed Bag

Examining the performance of Fox's various segments reveals a mix of challenges and triumphs. Cable revenues dropped by 6%, but strategic cost management led to a 3% increase in EBITDA, reaching $890 million. Television segment revenues also faced a 22% decline, largely due to the absence of the Super Bowl and fewer NFL playoff games, leading to a 40% decrease in TV ad revenues. Despite this, the segment's EBITDA surged by 24%, thanks to effective cost-cutting measures like reduced programming costs.

Steady Leadership in News and Sports

Fox News once again ended the third quarter as the most-watched cable network in both total day and primetime. The network successfully navigated moderating direct response pricing declines and lower digital traffic with improved national pricing. In sports, Fox Sports enjoyed robust performance across its portfolio. Notably, the NFC Championship game drew 56 million viewers, marking a 19% increase from last year and becoming the most-watched in over a decade. This viewership success underscores the continued demand for live sports.

Tubi’s Remarkable Growth Trajectory

Tubi, Fox's ad-supported streaming service, saw impressive growth with a 22% revenue increase, driven by a 36% rise in Total View Time and a 20% jump in monthly active users to nearly 80 million. Tubi has solidified its position as the most-watched free TV and movie streaming service in the U.S., thanks to its expansive content library. Interestingly, 90% of Tubi's viewing is on-demand, making it highly valuable to advertisers.

Strategic Focus on Live Content and Digital Innovation

Looking ahead, Fox Corporation aims to capitalize on must-watch events such as the upcoming presidential election cycle and the next Super Bowl. Tubi’s leadership position in the ad-supported streaming market further strengthens Fox’s advertising proposition. Additionally, Fox is excited about its new sports-focused digital distribution platform, set to launch this fall, which targets sports fans outside the traditional TV bundle.

Financial Health and Shareholder Returns

Fox Corporation ended the quarter with a robust balance sheet, holding $3.8 billion in cash and maintaining a net leverage of just 1x. The company generated a strong free cash flow of $1.39 billion and returned significant capital to shareholders through a $300 million share buyback and nearly $125 million in dividends. This disciplined financial management not only supports ongoing operations but also enables strategic investments and capital returns.

Cautiously Optimistic Outlook

Despite some headwinds, such as difficult comparables for Tubi in the next quarter, Fox remains optimistic about its future. The company expects strong political advertising revenues in fiscal '25, driven by national and local races and ballot issues. Operationally, Fox’s strategy of focusing on live and on-demand content positions it well amid evolving viewer preferences and advertising market dynamics.

Earnings Call Transcript 2024-Q3

[Operator]

Ladies and gentlemen, thank you for standing by. Welcome to the Fox Corporation Third Quarter Fiscal Year 2024 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

I'll now turn the conference over to Chief Investor Relations Officer, Ms. Gabrielle Brown. Please go ahead, Ms. Brown.

[Gabrielle Brown, executive]

Thank you, operator. Good morning, and welcome to our fiscal 2024 third quarter earnings call.

Joining me on the call today are Lachlan Murdoch, Executive Chair and Chief Executive Officer; John Nallen, Chief Operating Officer; and Steve Tomsic, our Chief Financial Officer. First, Lachlan and Steve will give some prepared remarks on the most recent quarter, and then we'll take questions from the investment community.

Please note that this call may include forward-looking statements regarding Fox Corporation's financial performance and operating results. These statements are based on management's current expectations, and actual results could differ from what is stated as a result of certain factors identified on today's call and in the company's SEC filings.

Additionally, this call will include certain non-GAAP financial measures, including adjusted EBITDA or EBITDA, as we refer to it on this call. Reconciliations of non-GAAP financial measures are included in our earnings release and our SEC filings, which are available in the Investor Relations section of our website.

And with that, I'm pleased to turn the call over to Lachlan.

[Lachlan Murdoch, executive]

Thank you, Gabby, and thanks, everyone, for joining us this morning. This quarter, FOX continued to distinguish itself from its peers, delivering 7% EBITDA growth and demonstrating again the strength of our brands and the advantages of our strategy. This result is even more impressive when considering we are comping to last year's third quarter, which enjoyed a significant tailwind from Super Bowl LVII.

In the fiscal third quarter, total affiliate revenue fees grew 4% with positive growth at both our Television and Cable segments, driven by pricing benefits from our recent renewals. Headline advertising revenues were down during the quarter as expected, due to the absence of the Super Bowl and fewer NFL broadcast than in the prior year.

If not for the difference in our NFL post season schedule, our total advertising revenues would have increased a few percent. Overall, advertising trends at FOX are clearly moving in the right direction, both in the scatter market and in early upfront discussions.

Demand for sports remains robust, while trends at FOX News are improving across the board, including the fact that we have now fully lapped the direct response market issue that had adversely impacted FOX News DR revenues.

And while there wasn't much of a primary season this year, we do expect strong political advertising for national and local races, as well as local ballot issues in the first half of our fiscal '25, which would largely benefit our station group. As we look to our annual upfront presentation next week, our focus on live content and must-watch events, such as the coming presidential election cycle and next year's Super Bowl combined with Tubi's position as the most watched free TV and movie streaming service will favor our enviable position with advertisers across the FOX portfolio.

Operationally, FOX News again ended the third quarter as the most watched cable network in total day and primetime. FOX News also strengthened its leadership position inside the category gaining share to now again, command 50% of total day viewing.

These gains are underpinned by a dedicated team of journalists and staff, who are focused on delivering coverage and insights on current events most relevant to our viewers. Building from our strength in primetime, we are expanding our leadership across day parts, whether that be mornings with FOX & Friends, afternoons with the 5 or late nights with Gutfeld. And we expect this momentum to continue as we ramp action coverage heading into the fall.

Tubi ended the third quarter with 22% revenue growth driven by a 36% increase in Total View Time and 20% growth in monthly active users to just under 80 million MAUs. Our expansive content library and our differentiated user base have solidified Tubi's position as the most watched free TV and movie streaming service in the U.S. with 1.6% of total TV viewing, ahead of Peacock, MAX, The Roku Channel, Paramount+ and Pluto TV and only marginally behind Disney+.

From its debut in Nielsen’s 'The Gauge', in February of '23 to the most recent Gauge in March of '24 Tubi's share of total U.S. TV view time grew 60%, which is faster than any other streaming service over that same period of time.

Apart from just its growing scale Tubi is also unique and uniquely valuable to advertisers through its reach and through its engagement. Over 60% of Tubi users are classified as Cord-cutters or Cord-nevers and 90% of those user time watching is proactively on demand as opposed to passively watching a FAST channel.

This positions Tubi very well as an important part of the growing digital streaming advertising marketplace. We are look forward to showcasing Tubi's strengths at next week's upfront.

FOX Sports had an impressive quarter with strength across all areas of our portfolio. We finished the 30th anniversary of the NFL on FOX on a high note with 3 NFC playoff games on FOX averaging an incredible 45 million viewers. This was capped with the NFC Championship game growing over 56 million viewers, which is 19% higher than last year's NFC Championship game and the most watched in over a decade.

This season also reinforced FOX solid position in college sports with strong viewers from both college football and college basketball. In fact, in the current academic year, FOX's are the most watched college football, men's college basketball and women's college basketball games across the regular season. College sports has grown to become the second biggest source of FOX viewership behind only the NFL.

Total consumption of college sports on FOX has grown by over 40% through the last 5 years. And in the March quarter, we launched the UFL, United Football League, the result of the merger of the USFL and XFL. With this merger, the outlook for spring football is promising, and we are pleased with the results through the midpoint of the season.

While the sports calendar in our upcoming fiscal fourth quarter tends to be quieter, FOX Sports is excited to present its summer of soccer, featuring over 200 hours of live soccer coverage across our platform starting with the UEFA, European Football Championship on June 14 and Copa America on June 20.

This summer will also feature a new schedule from FOX Entertainment, with returning favorites like Gordon Ramsay's Food Stars and exciting new shows like The 1% Club. This follows a successful spring slate that featured 2 of the top 5 new primetime series in Krapopolis, and The Floor. With Krapopolis, ranking as the #1 new primetime entertainment show and The Floor as the #1 game show season to date.

Last quarter, we announced the formation of a new sports-focused digital distribution platform with our partners Disney and Warner Bros. Discovery. We are happy to have hired truly a world-class CEO in Pete Distad and he is off to a flying start.

In just several weeks, the JV now has over 150 engineers and executives dedicated to building a unique innovative product, which focuses on sports fans outside of the traditional TV bundle. We've already launched an internal data service, which I have been trialing this past week, and I have to say, it's an incredibly exciting product and we can't wait to launch it this fall.

Today's media market is certainly dynamic, but the strength and leadership of our brands and their capacity to convert those strengths financially underscores our considered strategy. Underpinned by our best-in-class balance sheet, we ended the quarter with $3.8 billion in cash and just 1x net leverage. We remain committed to driving long-term shareholder value creation through the thoughtful balance of managing our existing businesses, pursuing new adjacencies and returning capital to our shareholders.

And with that, I'll hand it over to Steve.

[Steven Tomsic, executive]

Thanks, Lachlan, and good morning, everyone. FOX's strategy continues to deliver solid results. Even with the comparison to our blockbuster NFL schedule of the prior year, we posted total revenues of $3.45 billion and grew adjusted EBITDA by 7% to $891 million. Total company affiliate fee revenues grew 4% over the prior year with growth at both our Television and Cable segments, supported by a recent cycle of affiliate renewals.

Reflecting the event-driven nature of our business, advertising revenues on a headline basis were down 34% as we compare against last year's broadcast of the Super Bowl, along with 2 less NFL playoff broadcasts in the current year quarter. As Lachlan just mentioned, if not for the impact of these NFL schedule items, total company advertising revenues would have grown low single digits.

Total company other revenues were down 22% versus the prior year, primarily the result of the timing of sports of licensing revenues, which were more weighted towards our fiscal second quarter this year. Total company expenses fell 21% year-over-year, primarily a result of the NFL postseason schedule differences I just mentioned.

Net income attributable to stockholders of $666 million or $1.40 per share compared to the net loss of $54 million or negative $0.10 per share reported in the prior year period. This year-over-year variance reflects the growth in EBITDA as well as the absence of last year's FOX News Media litigation charge and a current quarter book gain on the merger transaction of the USFL, which is now being deconsolidated in connection with the formation of the United Football League. Excluding these and other noncore items, adjusted EPS was $1.09, up 16% against last year's $0.94.

Now let's turn to our segment results. At Cable, revenues were $1.47 billion, down 6% from the prior year quarter, while EBITDA grew 3%. Cable affiliate fee revenues were up 1%, with growth in pricing from our distribution renewals outpacing the impact of -- from industry subscriber declines running in the mid-8% range. Cable advertising revenues fell by 6% or $20 million.

At the national sports networks, advertising revenues were down due to the absence of last year's Super Bowl-related programming, and the World Baseball Classic. At FOX News, ad revenues were impacted by moderating direct response pricing declines and lower digital traffic, partially offset by higher national pricing.

Cable other revenues decreased $89 million, primarily a result of the timing of sports sublicensing revenues, which were more weighted towards our fiscal second quarter. Cable expenses were 16% lower than the prior year, primarily due to the timing of the associated sports sublicensing expenses, lower costs at FOX News and the deconsolidation of the USFL. All in, and despite segment revenues being down 6%, quarterly adjusted EBITDA at Cable grew 3% over the prior year quarter to reach $890 million.

Turning to our Television segment, where revenues were $1.94 billion, down 22% from the prior year, while EBITDA increased 24%. TV affiliate fee revenues grew 9% over the prior year as price increases across our owned and operated as well as 30 FOX-affiliated stations more than offset the impact from subscriber declines.

As mentioned previously, TV advertising revenues were impacted this quarter by the composition of our post-season NFL schedule, namely the absence of last year's Super Bowl and 2 less NFL playoff games. As a result, on a headline basis, TV advertising revenues were down 40%.

TV Other revenues increased $30 million, primarily the result of the timing of deliveries from our entertainment production companies. While total TV revenues were down versus the prior year, this was more than offset by a 24% decrease in TV expenses.

Expenses were lower in the quarter, primarily due to the impact of the NFL schedule along with fewer hours of original scripted primetime content, including the impact of the industry labor disputes. All in, we delivered quarterly adjusted EBITDA at the TV segment of $145 million up 24% over the prior year quarter.

Turning to cash flow, where we generated strong free cash flow of $1.39 billion in the quarter, reflecting our normal seasonal cycle of collecting advertising revenues from our fall programming, coupled with our major sports rights' payments being concentrated in the first half of our fiscal year.

From a capital return perspective, from the commencement of the third quarter through today, we have repurchased $300 million under our share buyback program, along with returning nearly $125 million to our shareholders via our semiannual dividend payment.

Our total cumulative buyback activity since the launch of the program in 2019 now amounts to $5.4 billion or 26% of our total shares outstanding and we remain committed to fully utilizing our current $7 billion authorization. These capital return measures are supported by our robust balance sheet, where we ended the quarter with $3.8 billion in cash and $7.2 billion in gross debt.

And with that, I'll turn the call back over to Gabby to open the Q&A.

[Gabrielle Brown, executive]

Great. Thanks, Steve. And now we will be happy to take questions from the investment community.

[Operator]

[Operator Instructions] Your first question comes from the line of John Hodulik from UBS.

[John Hodulik, analyst]

Strong growth again at Tubi. I guess couple of questions on that. I mean, first, what's driving the growth in TVT. Any color you guys can provide on CPMs. Disney yesterday gave you a little color on some weakness in connected TV CPMs. And then three, any color you can provide on dilution at Tubi and maybe how you guys view future profitability of that business?

[Lachlan Murdoch, executive]

Thanks very much, John. So let me -- I'll start. I'm not quite sure what I understand what you mean by dilution at Tubi, but let me start with the other 2. The growth at Tubi continues to be incredibly strong. I think TVT growth comes from both new subscribers or new viewers finding the platform.

As you'd be aware, we've very efficiently be marketing the platform to bring more people to it, and it's becoming a wider and wider known and loved brand in the marketplace. And the reason for that is we have -- we've talked about it on calls before, with 250,000 movies and television series, on the platform. And now over 250 in fact, I think, around 270 live Fast Channels on the platform, it really does offer a tremendous product for everyone who's utilizing it.

But it's very interesting because of all those Fast Channels and all those 2,300 movies and TV series, 90% of the viewing comes on demand. And this is very important because when the viewing comes on demand and it's proactively on demand as opposed to passively sort of sitting back and watching our Fast Channel, that's much more valuable to advertisers. And it certainly is something that we're going to make a big deal about at our upfront presentations next week.

So because of that, we are very confident we can hold our CPMs at Tubi. We're already very efficient with our CPMs. I think some of our competitors priced themselves when they entered the AVOD market over the past 12 and 18 months are very high, and we're seeing the marketplace then having to drop CPMs as new entrants add supply to the market.

So that's affecting the market overall. It certainly has an impact on the market for advertising for Tubi. But from a CPM point of view, it's not really going to be a big impact to us. I should just say, though, that next quarter, we are going to be facing difficult comps in the fourth quarter.

I think if you remember, this time last year, Tubi was up 47%, in revenue, and that's going to be a very difficult comp for us next quarter. So there will be some headwinds for the whole marketplace, but from a comp point of view for Tubi as well in the next quarter. So that's just a slight word of caution.

[Operator]

Your next question comes from the line of Robert Fishman from Moffett.

[Robert Fishman, analyst]

Given all the press about the NBA negotiations underway. I'm Just curious if you can think a little bit as far as your broader sports rights go? And how do you think about the value of FOX broadcast network as you negotiate those future sports, right?

And then the flip side of that is you feel like you're at a competitive disadvantage without your own SVOD service to compete for future rights? And then if I can, just separately, given all the M&A discussion in the industry, what are your latest thoughts on monetizing some of your strategic noncore assets like your FanDuel option and Studio Lot?

[Lachlan Murdoch, executive]

Thanks, Roger (sic) [ Robert ]. So with the NBA, obviously, I can't sort of comment on other people's sort of negotiations and where that may or may end up. And in terms of how we think about it affecting the value of the FOX network and our sports portfolio. We're very happy with our sports portfolio.

We obviously look at -- right packages as they come up, but we see them as a portfolio or a bouquet of sports rights that we have, and we feel very strong with the current portfolio that we have, which is one of the reasons why we didn't pursue the NBA in this round of negotiations.

But I think it does go to the value of broadcast television because sports leagues still need reaches the -- is still incredibly important for them, for them to drive their fan bases, for them to get the maximum amount of viewership to their games and matches. And so the value of the FOX network and frankly, are our strategically kind of our position station group to any sports league only increases over time is what we're seeing.

And therefore, I don't think coming of -- second part of your question, I don't think we are strategically disadvantaged with not having a subscription video-on-demand service because we found in the past, we can partner with others. Well, frankly, the leagues to tend to partner with others, we can take the rights where we can broadcast to the most amount of Americans -- possible and they can allocate rights to SVODs as needed. But they're never going to be able to live entirely without a broadcast network and the broadcast distribution. M&A?

[Steven Tomsic, executive]

Yes. So Robert, just in terms of the M&A picture, the way our posture on sort of what near-term noncore assets, like we're strong believers in the sports betting market in this country. We read with interest you all now to put $1 billion value on it. And so it is now our intention is to see through and eventually exercise.

And then the Studio Lot, we think, is a long-term asset for us. We have development plans for that. And so we don't any change in posture around early monetization of those assets. We think they are incredibly valuable for the long-term.

[Lachlan Murdoch, executive]

And I'd just remind you, it's not only the value of the option, but also the equity that we have in Flutter, which is today worth over $900 million.

[Gabrielle Brown, executive]

Next question please operator?

[Operator]

Your next question comes from the line of Ben Swinburne from Morgan Stanley.

[Benjamin Swinburne, analyst]

Just sort of a question around kind of your products coming to market, the streaming JV and also maybe how Tubi might fit in, any more you can share with us on sort of what you think is really differentiated about the product? We haven't seen it yet, you have.

And I noticed in the Disney deck yesterday that it says that a definitive agreement hasn't been signed yet. So I didn't know if there was something holding it up or if that meant anything or any update on sort of the go-forward plan?

And then I'm wondering Tubi with its reach as an app-based service, is that an opportunity for maybe bundling the JV product or merchandising and in some way, you have a pretty interesting direct customer relationship with Tubi. I know it's a different kind of product offering. But I was curious, if you thought about leveraging that asset or those 2 assets together to create more value for the company.

[Lachlan Murdoch, executive]

Thanks very much, Ben. So first of all, as I said, I've got actually in the room behind me, I've got the beta version of the streaming app and I don't think we've announced the name yet, so I won't inadvertently do it on this call. I hope not yet anyway.

And -- but look, it's something that we've been able to engage with, and it is really looking tremendously exciting, as I said in my comments. It's very innovative. It's designed to be entirely focused on the Cord-nevers, Cord-cutters, people who are not in the cable bundle.

And we frankly can't -- won't be able to compare it to a tier of live channels. It's a very different digital-first product which I'm -- when you eventually get it and get to enjoy it, you'll understand how groundbreaking certainly in this country, it really is.

In terms of the speed, everyone are running at a sort of full pace to get the product finished and delivered. Obviously, there's the fun side of it, which is like the user interface and how you use it, which has been great to use, but there's a ton of work, obviously, in engineering behind that in ingesting content from multiple partners and being able to combine that into one sort of seamless platform.

So there's a tremendous amount of work that's being done to get them -- to get us over the line this autumn but we're incredibly excited. And so there's no -- I wouldn't read anything into a final deal terms being signed. It's just a matter of everyone running on all cylinders to get this finished.

So -- on Tubi, sorry, the Tubi. We don't see Tubi is a very different product. We don't see an opportunity at this stage, or we haven't contemplated an opportunity at this stage to bundle the sports service with Tubi. I think it makes potentially more sense to bundle sports with other SVOD services, which you'll likely see as we go forward.

[Gabrielle Brown, executive]

Next question please.

[Operator]

Your next question comes from the line of Jessica Ehrlich from Bank of America.

[Jessica Reif Cohen, analyst]

A couple of questions. First, on political advertising. Lachlan, you seem pretty confident that it will come back, but I guess the question is really -- will it come back to linear the way it has in the past and what's your overall outlook?

Second, on M&A, you may have the strongest balance sheet in the industry. So I was just wondering, if you could explore what opportunities you see out there? There seems to be a lot of things going on in the industry.

And then finally, just a follow-up on Tubi, which has -- I mean such incredible momentum you've really pulled away from certainly all the other Fast Channels and competing with the big SVOD channels or network platforms. What does it look like over the next 3 years or so?

[Lachlan Murdoch, executive]

Great. Thanks, Jessica. So on -- let me start with political. We are confident -- obviously we're disappointed for multiple reasons that there wasn't a more competitive primary season. But we certainly know this is an election which both sides of politics or all sides of politics are very focused on, have raised a tremendous amount of money, and that money will flow ultimately to local television. And we are extremely confident of that.

One of the reasons we're confident in addition to the amount of money that we know has been raised are just a position of our stations -- specific stations within the group and how that aligns with the political map. If you look at the tight -- so putting aside presidential election and everyone focuses on [indiscernible] call to talk about sort of national trends and people focus on presidential. But you have to look below presidential and look at sort of Senate races.

So we have tight Senate races in key markets where we have big stations. And you have to remember, Jessica, these are big new stations, right? And political money tends to run alongside news on local news. And so there's tight races in Arizona, in -- these are presented in Michigan, tight races Senate race in Pennsylvania and in Wisconsin. And also, of course, our DC station will benefit from tight race in Maryland.

In addition, you've got a lot of issues on the ballot in different markets. So Arizona, Florida, I think Maryland again all have a lot of issue money flowing into those onto the ballot.

So we think it's going to be an incredibly strong political season. We're just starting later than we had first expected. And then you traditionally have -- when you have a primary -- more contested primers. So we'll start to see the benefit of that in the first half of our next fiscal '25 for us.

The next question on M&A and the balance sheet, I agree wholeheartedly. I think we have the best balance sheet in the industry. So I think that's the math. That's just a fact. And so we continue to look for accretive opportunities that would align with our kind of strategic goals and initiatives, and we'll continue to do that. We obviously don't want our balance sheet to go to waste, but we haven't found anything yet that we're going to do or follow. So -- but it is something we are keeping a close eye on.

And then on Tubi, what is -- how does Tubi look over the next 3 years? Well, Tubi continues to grow. Obviously, as you get to scale, the growth trajectory, which is just harder to comp with the growth that we've had over the last couple of years. But Tubi continues to grow.

Money will continue to flow from linear entertainment television, particularly cable entertainment networks into streaming AVOD and SVOD with advertising supported SVOD services. That trend will not slow and Tubi will be one of the main beneficiaries of that money flow. So we're confident in the continued growth of Tubi. And under the leadership of Anjali, it just goes from strength to strength.

[Gabrielle Brown, executive]

Operator, we have time for one more question.

[Operator]

Okay. That question comes from the line of Michael Morris from Guggenheim.

[Michael Morris, analyst]

Two questions, if I could. The first one is on the JV and some of your existing distribution partners have brought up concerns. That it's in some way unfair to them for you to have a sports-only JV. It seems that you would disagree by virtue of the fact that you're moving forward. So I'd love if you could address those concerns and whether you think there will be changes in the marketplace or whether you think those concerns are unfounded?

And the second question, a bit more on the model, perhaps for Steve, television profit was, I think, notably strong in the quarter, given that on a year-over-year basis, you did not have the Super Bowl or those extra playoff games. So can you maybe unpack a little bit?

We would think that those types of events would be uniquely profitable so to show profit growth as you comp those challenges. I'd be curious if you could talk about sort of the sustainability and whether maybe we're overestimating how profitable those games are?

[Lachlan Murdoch, executive]

Thanks, Mike. Well, let me start. So on the sports joint venture and how we certainly view it and how we discuss it with our distribution partners. I think the first thing, and this is incredibly important to us is that we are wholly and fundamentally supportive of the traditional cable television bundle.

It will continue to be, for a very long time, our #1 revenue stream. And we are all in to support our distributors in every way we can in that bundle and supporting their subscribers and their business. So that's -- that is absolutely a fundamental fact for us.

Having said that, we've always said it's important for us to put our brands where viewers are, right? And in the universe of sports fans that don't currently take a cable bundle, that is the universe that the sports joint venture will be entirely focused on, and it's frankly important to us that because we are so invested in the cable bundle, that the sports joint venture will be very targeted and very focused on the nontraditional pay TV viewer universe.

And we think we can very cleverly and very -- in a very targeted way market to those subscribers so that we minimize any cannibalization of the traditional -- of traditional subscribers. And so we're very open with our distributors. We're very open with how important they are to us and also how -- because of that importance, how we can focus the sports joint venture and the areas that needs to be focused on.

[Steven Tomsic, executive]

Mike, it's Steve. Just in terms of television profitability. So quarter-to-quarter, we were up close to $30 million. The way to think about it is the single biggest event was Super Bowl, which was a high tens of million dollars EBITDA contribution last year versus this year. But then you look at NBC to offset that, we grew affiliate fee in the segment by about $70 million. And so one for the other basically is a push, TV was a push quarter-on-quarter in terms of EBITDA deficit there.

And so then what's left is the biggest EBITDA sort of driver of contribution when you look at it from a quarter-on-quarter perspective, is the change in entertainment programming costs, which was an ongoing push towards from scripted towards unscripted to get dollar cost per hour down without harming dealership as well as the impact of the strikes. And so that's -- there's a lot of other puts and takes in there, but there are sort of the big 3 things that driver.

[Gabrielle Brown, executive]

At this point, we are out of time. But if you have any further questions, please give me or Charlie Costanzo a call. Thanks so much for joining us today.

[Operator]

Ladies and gentlemen, that does conclude your conference call for today. Thank you for using AT&T Executive Teleconference. You may now disconnect.