Fox's Live Strategy: Assessing Scalability and Valuation in a Shifting Media Landscape

Fox's investment thesis is clear: live programming is the scalable engine for capturing high-margin advertising revenue and driving audience growth. The company's recent performance in the critical upfront market provides the first proof point. For the second year in a row, the Fox portfolio delivered double-digit revenue growth, with advertisers committing a staggering 35% increase in dollars to Tubi and a similar boost to Fox News. This isn't just about securing deals; it's about meeting a fundamental advertiser need. As the evidence notes, sports has been key to the ad-sales game so far this year because it remains the format that dependably generate[s] the large, simultaneous viewing audiences that advertisers and distributors crave.

To accelerate this live content pipeline, Fox has made a strategic bet on talent and production. Its investment in the creative studio Shadow Lion, co-founded by Tom Brady, aims to fast-track the development of talent-led originals and marquee live events. The partnership, which includes a hub on the FOX lot, is already targeting high-impact projects like the Fanatics Flag Football Classic and a docuseries on the University of Michigan football program. This move directly addresses the need for fresh, culturally resonant live events that can draw massive, captive audiences.

This strategy is built on a stable, high-value foundation. Fox News, the network's anchor, saw a robust 12% increase in prime time viewership in 2025, solidifying its dominance in cable news. That growing, loyal audience provides a premium base for live programming and commands top advertising rates. The combination is powerful: a proven live audience driver (Fox News), a strategic investment to produce more live content (Shadow Lion), and a market validation that advertisers are willing to pay a premium for the large, simultaneous viewership that live events deliver. This setup positions Fox to capture a larger share of the advertising dollar as the media landscape shifts.

Financial Impact and Scalability of the Model

The live programming strategy is translating directly into top-line growth and profitability. For the full fiscal year, Fox delivered record financial results, with revenues reaching $16.30 billion and adjusted EBITDA climbing to $3.62 billion. That represents a robust 26% year-over-year increase in profitability, demonstrating the model's power to scale earnings alongside revenue.

The engine behind this expansion is advertising, which grew 7.1% year over year to $1.07 billion in the fourth quarter alone. This growth is a direct function of the live content push: stronger news ratings and pricing, coupled with continued digital growth led by the Tubi AVOD service, are driving advertisers to pay more for the large, simultaneous audiences that live events command. This is the core scalability lever-each new live event or high-rated news cycle expands the premium ad inventory, lifting margins as the cost structure scales more slowly.

The company is now building the infrastructure to capture even more of this value directly. Fox has announced plans to launch a new stand-alone streamer by the end of 2025. This move is a critical next step for scaling its digital footprint and revenue. By creating a dedicated platform, Fox aims to capture more direct-to-consumer revenue streams, reduce reliance on third-party aggregators, and build a larger, more loyal audience base that can be monetized through subscriptions and targeted advertising. This complements the existing Tubi model and positions the company to benefit from the long-term shift toward streaming.

The financial momentum provides the runway for these investments. With a solid operational and financial momentum entering fiscal 2026, and a balance sheet that supports it, Fox is well-positioned to execute this dual-track growth: leveraging its live content strength to drive current ad revenue while building the digital platform for future dominance. The record results show the strategy works; the new streamer is the plan to make it work on a larger scale.

Valuation and Growth Trajectory

The numbers tell a clear story: Fox is executing a powerful growth strategy, but the market is still pricing it as a value play, not a high-growth story. The company's stock trades at a trailing price-to-earnings ratio of 12.40, a discount to its own historical average of 13.73 and a massive gap to peers like Warner Bros Discovery, which commands a P/E of 121.32. This valuation gap is the central puzzle for growth investors.

The financial results, however, show why the gap might be narrowing. In the fourth quarter, adjusted earnings per share surged 41.1% year over year, a figure that outpaced the revenue growth and underscores the model's scalability. This isn't just top-line expansion; it's a demonstration of operating leverage, where the cost structure is scaling more slowly than the premium advertising revenue from live content. The company is converting its live audience strength into profitability at an impressive clip.

The primary growth catalyst remains the monetization of its live sports and news audiences. The recent upfront market validation, with advertisers committing a 35% increase in dollars to Tubi and similar boosts to Fox News, proves the market's appetite for the large, simultaneous viewership that live events command. This sets the stage for the next phase: direct-to-consumer capture. The upcoming launch of a stand-alone streamer by the end of 2025 is the near-term milestone that could accelerate this shift. It represents a tangible step toward building a larger, more loyal digital audience that can be monetized through subscriptions and targeted advertising, moving beyond reliance on third-party platforms.

The bottom line is that the current valuation does not reflect the potential from these live programming investments. The stock trades at a discount to its own history, suggesting the market may be overlooking the scalability of the advertising engine or the future revenue streams from the new streamer. For a growth investor, the setup is compelling: a company with a proven live audience driver, a strategic investment to produce more of it, and a clear path to capture more value directly from its viewers. The valuation gap, therefore, represents a potential opportunity if the company can continue to demonstrate that its live content strategy is a durable and scalable engine for both revenue and earnings growth.

Catalysts and Key Risks

The path to realizing Fox's growth potential hinges on a few forward-looking events that will validate its live programming strategy and a set of specific risks that could challenge its margins and market share.

The most significant near-term catalyst is the upcoming World Cup 2026 rights. Fox secured the U.S. broadcast rights for the tournament, which will be a multi-year platform for live sports advertising and audience growth. This event represents a massive, guaranteed audience draw that can be monetized at premium rates, providing a clear runway for the company's advertising engine to scale. Success here would be a powerful endorsement of its ability to produce and sell large-scale live events.

Equally important is the commercial viability of its new talent-led content model. The partnership with Shadow Lion, co-founded by Tom Brady, is already targeting high-impact projects like the Fanatics Flag Football Classic. The viewership and advertising revenue generated by these events will be a critical test. If they attract large, simultaneous audiences and command strong ad rates, it will prove the model can consistently produce the premium inventory needed to justify the investment and drive future growth.

Yet this strategy carries inherent risks. The high cost of producing premium live events and originals is a direct pressure point on margins. As evidenced by the 41.1% year-over-year surge in adjusted earnings per share, the company is currently converting live content strength into profitability. However, if advertising revenue growth does not keep pace-especially if the broader economy weakens and ad budgets tighten-these production costs could compress margins. The scalability of the model depends on a steady flow of high-priced ad dollars to offset these fixed investments.

Finally, the competitive landscape remains intensely crowded. Other networks and streaming platforms are also vying for audience share and ad dollars, particularly in the live sports and news categories. While Fox News has solidified its dominance in cable news, with a 12% increase in prime time viewership in 2025, the battle for viewership and ad revenue is ongoing. The company must continuously innovate and deliver compelling live content to maintain its lead.

The bottom line is that Fox's growth thesis is now in a validation phase. The catalysts-the World Cup, Shadow Lion's live events, and the new stand-alone streamer-are tangible milestones that will demonstrate whether the company can capture more value directly from its audiences. The risks, centered on production costs and competition, are real but manageable if the advertising engine continues to perform. For a growth investor, the setup is one of high-stakes validation: success would confirm a scalable, high-margin model; failure to meet the commercial expectations of its new ventures would challenge the entire growth trajectory.