Why Fox Corp’s Advertising Power and Streaming Bet Make It a Buy Now

The Super Bowl LIX broadcast shattered records, drawing 127.7 million viewers and generating $800 million in ad revenue—a historic high. This milestone isn’t just a one-off win for Fox Corp (FOX.A) but a testament to its dual engines of traditional media dominance and streaming growth. With Tubi’s 97 million monthly active users and a $1 billion annual ad revenue run rate, Fox is positioned to capitalize on advertiser demand while navigating near-term cost pressures. Here’s why investors should act now.

The Advertising Updraft: A Supersized Audience and Pricing Power

Fox’s Q3 fiscal 2025 results highlighted a 27% revenue surge to $4.37 billion, driven by the Super Bowl’s record-breaking ad sales. The event’s $800 million haul—a 65% year-over-year jump in ad revenue—showed advertisers are still willing to pay top dollar for mass reach. But Fox isn’t relying solely on one-off events. Its Tubi streaming platform is unlocking a new, younger audience: 34% of Tubi viewers are aged 18–34, and 77% lack cable, making them a holy grail for brands targeting cord-cutters.

This demographic diversification is key. Tubi’s 22% year-over-year ad revenue growth and 90% on-demand viewing (which commands higher CPMs than passive linear streaming) suggest it’s not just a cost center but a profit engine in disguise. Meanwhile, Fox’s traditional TV arm leveraged the Super Bowl to boost affiliate fees and ad pricing, with Television segment revenue up 40% despite margin pressures.

Cost Pressures: Temporary Hurdle or Structural Threat?

Critics point to Fox’s $354 million net income drop in Q3 as evidence of structural issues. But this masks the reality: the decline was driven by one-time costs, including $50 million in annualized tariff impacts and sports programming amortization for the Super Bowl. Adjusted EBITDA, which strips out these noise factors, rose to $856 million, while free cash flow nearly doubled year-to-date to $1.81 billion.

Fox’s management is aggressively countering these costs. A $25 million annual savings program—targeting G&A and supply chain efficiencies—will start yielding results in Q2 2025. The closure of a Taiwan manufacturing site and commodity-indexed pricing for products like Marucci baseball bats further insulate margins. These moves suggest costs are a temporary drag, not a terminal illness.

Tubi: The Digital Moat That Justifies a Buy

Fox’s Tubi streaming platform is its sleeper hit. With 50 million monthly active users (and counting), it’s the third-largest AVOD platform in the U.S., trailing only YouTube and Peacock. Yet it’s far from saturated: Tubi’s Gen Z/Millennial skew and multicultural audience overlap—50% of viewers identify as non-white—align perfectly with brands’ diversity goals.

CEO Lachlan Murdoch’s “FAST-first” strategy (Free Ad-Supported Streaming TV) is paying off. Tubi’s $1 billion annual ad revenue target is within reach, and its Tubi Takeover ads (which command 2x CPMs of standard spots) are a unique selling point. Even in a crowded streaming market, Tubi’s no-subscription model and focus on short-form, bingeable content (e.g., its hit Sidelined series) give it a niche no Netflix or Disney+ can match.

The Bottom Line: Buy Now, Reap Later

Fox’s stock trades at just 10x forward EV/EBITDA, a discount to peers like Disney (DIS) and Paramount Global (PARA). This valuation ignores two critical facts:
1. Free cash flow resilience: Despite one-time costs, Fox’s $4.8 billion in cash and $1.8 billion in nine-month free cash flow give it a war chest to weather storms.
2. Underpenetrated growth: Tubi’s $1 billion ad run rate is just the start. Its FAST ecosystem and exclusive originals (like the Dinklage-led Thicket) are early bets on a $20 billion U.S. AVOD market.

Risk? Yes. Tariffs and sports rights costs could linger. But with $250 million in buybacks already executed in Q3, and a $1.15 billion remaining authorization, Fox is rewarding shareholders while it grows.

Final Call: Buy Fox Corp

Fox Corp is a value play with growth legs. Its Super Bowl dominance and Tubi’s scalability give it two channels to advertiser dollars, while cost-cutting ensures margins stabilize. With shares down 15% YTD and free cash flow poised to rebound, this is the time to bet on Fox’s strategic resilience. The next Super Bowl may not be until 2026, but the stock’s rally could start much sooner.

Rating: Buy
Target Price: $45 (based on 12x 2025E EBITDA)