FOXA Fox Corporation (Class A)
Live sports and news tollbooth at an ad trough; cheap, buyback-driven, with Roku optionality.
The story
Fox is a mature, asset-light tollbooth on live sports (NFL, MLB, college) and Fox News, the two genres still aggregating mass audiences in a cord-cutting world. Revenue growth is low-single-digit as affiliate-fee pricing offsets subscriber erosion, and margins are cyclical around advertising and sports-rights amortization. The pending Roku acquisition is an option on streaming distribution scale, not yet a changed business. It is a cash-return story in early maturity, priced near fair value.
Kept prior drivers: the facts since August (deeper DOJ review of Roku, margin dip to 15.6% on ad softness and rights amortization) are cyclical or unresolved, not structural. The 15.6% trough margin reverting to a through-cycle 17.5% over 4 years remains consistent with the 14-21% historical band, and 4% growth reflects affiliate-fee pricing offset by cord-cutting, with Roku treated as free optionality rather than banked growth. Beta of 1.05 sits appropriately below the 1.1 industry anchor for a news/sports franchise with sticky fees.
Value drivers
| Revenue growth (Y1) | 4.0% |
| Terminal growth | 2.0% |
| Forecast horizon | 6y |
| Target operating margin | 17.5% |
| Years to target margin | 4 |
| Sales-to-capital | 0.94 |
| Beta | 1.05 |
| Failure probability | 2.0% |
| Cost of capital (WACC) | 8.8% |
| Terminal WACC | 8.6% |
Valuation bridge
| PV of explicit FCFF | 8.38B |
| PV of terminal value | 20.74B |
| Equity value | 25.82B |
| ÷ shares → per share | $61.23 |
News
neutral +0.15 · 8 articles
- Is Disney Stock A Bargain Or Just A Slower Grower?
- Fox (FOXA) Faces a Deeper DOJ Review of Roku (ROKU). Can the Deal Still Deliver?
- Why FOX (FOXA) Stock Is Up Today
- Nike downgraded, Affirm upgraded: Wall Street's top analyst calls
- Zacks Industry Outlook Netflix, Fox , Roku and Sirius
- 4 Broadcast Radio & TV Stocks to Watch From a Prospering Industry
- DOJ Requests Additional Information Regarding Fox, Roku Deal
- Market Chatter: Fox, Roku Deal Faces Wider DOJ Antitrust Inquiry
Projected free cash flow to the firm
| Yr | Revenue | Growth | Margin | NOPAT | Reinvest | FCFF | PV |
|---|---|---|---|---|---|---|---|
| 1 | 17.81B | 4.0% | 16.1% | 2.17B | 728.77M | 1.45B | 1.33B |
| 2 | 18.45B | 3.6% | 16.6% | 2.32B | 682.12M | 1.64B | 1.38B |
| 3 | 19.04B | 3.2% | 17.0% | 2.46B | 628.16M | 1.83B | 1.42B |
| 4 | 19.58B | 2.8% | 17.5% | 2.60B | 567.23M | 2.03B | 1.45B |
| 5 | 20.05B | 2.4% | 17.5% | 2.66B | 499.81M | 2.16B | 1.42B |
| 6 | 20.45B | 2.0% | 17.5% | 2.71B | 426.50M | 2.29B | 1.38B |
Key risks
- Cord-cutting acceleration eroding affiliate fees faster than pricing can offset
- Sports rights cost inflation compressing the 17.5% target margin
- Roku deal blocked by DOJ, or closed at a rich price with costly integration
Catalysts
- Cyclical ad recovery plus political/olympic-year spend lifting margins toward 17.5%
- Roku approval adding streaming distribution and Tubi monetization scale
- Persistent buybacks and dividends shrinking the share count at a below-intrinsic price