Understanding the Dual-Class Structure
Fox Corporation's dual-class structure creates two publicly traded securities: Class A (FOXA) with one vote per share and Class B (FOX) with no voting rights. The Murdoch family controls 40%+ of voting power through Class A holdings, meaning public shareholders have limited practical governance impact regardless of which class they own. However, institutional investors, index funds, and governance-focused shareholders often require voting shares as a matter of policy.
The economic interest is identical—both classes receive the same dividends and would receive the same consideration in any acquisition. The voting premium (FOXA typically trades 5-10% above FOX) reflects institutional demand and theoretical governance rights. For individual investors choosing between classes, FOX offers slightly better value while FOXA provides voting rights for those who value governance participation even within controlled company structures.
Business Overview (Identical to FOX)
Fox Corporation owns the #1 cable news network (Fox News, 22 consecutive years ratings leadership), premium sports rights (NFL, MLB, NASCAR, FIFA World Cup), the Fox broadcast network, and Tubi streaming service. CEO Lachlan Murdoch has positioned Fox as the live content specialist—news and sports that audiences watch in real-time rather than streaming later. This focus has generated consistent profitability while competitors hemorrhage cash on streaming services.
Revenue segments include Cable Networks (Fox News, Fox Business, FS1/FS2), Television (Fox broadcast, owned stations), and Tubi (free ad-supported streaming). Fox News generates $4B+ annual revenue with 50%+ operating margins—possibly the most profitable news operation in history. Combined with Fox Sports' premium advertising rates and affiliate fees, the portfolio delivers $2B+ annual free cash flow at 20%+ consolidated operating margins.
Financial Performance
- •Revenue: $14B+ annually; Cable Networks (45%), Television (40%), Tubi (15%)
- •Profitability: 20%+ operating margins; Fox News segment at 50%+ margins
- •Cash Flow: $2B+ annual free cash flow with minimal capital intensity
- •Capital Returns: $1B+ annually through dividends (1.5% yield) and buybacks
- •Valuation: 11-12x forward P/E; 5-10% premium to non-voting FOX shares
- •Political Advertising: $500M+ incremental revenue in presidential election years
Growth Catalysts
- •Sports Rights Extensions: NFL, MLB, NASCAR renewals lock in premium content through decade-end
- •Tubi Growth: Free streaming service reaching 80M+ MAUs with improving monetization
- •Affiliate Fee Increases: Retransmission negotiations driving mid-single-digit annual growth
- •Election Cycles: 2026 midterms and 2028 presidential race drive political advertising
- •Sports Betting: Fox Bet partnerships and odds integration monetize sports viewership
Risks & Challenges
- •Cord-Cutting: 5%+ annual cable subscriber losses pressure affiliate revenue base
- •Legal/Settlement Costs: Fox News litigation exposure (Dominion $787M settlement) impacts margins
- •Demographic Aging: Fox News median viewer age 65+ creates long-term audience risk
- •Murdoch Succession: Family control with uncertain post-Rupert leadership direction
- •Sports Rights Inflation: Renewal costs potentially outpacing advertising growth
Competitive Landscape
Fox News competes with CNN and MSNBC for cable news viewers, maintaining dominant ratings through conservative positioning and audience loyalty. Fox Sports competes with ESPN, NBC Sports, and CBS Sports for premium rights and advertising. The broadcast network competes with CBS, NBC, and ABC for primetime viewers and affiliate relationships.
Lachlan Murdoch's strategy emphasizes live content moats while competitors chase streaming subscribers. Fox's discipline in not launching a money-losing streaming service (Tubi is profitable through advertising) differentiates the company from Warner Bros. Discovery, Paramount, and Disney's struggling DTC efforts. However, long-term cord-cutting trends and younger generations' media consumption patterns create existential questions for all traditional media companies.
Who Is This Stock Suitable For?
Perfect For
- ✓Institutional investors requiring voting shares for governance policies
- ✓Index funds mandated to hold voting securities
- ✓ESG investors seeking governance engagement capability
- ✓Value investors willing to pay modest premium for voting rights
Less Suitable For
- ✗Cost-conscious investors (FOX offers same economics at slight discount)
- ✗Traders focused on liquidity (FOX has higher trading volume)
- ✗Investors unconcerned with governance given Murdoch control
- ✗Those uncomfortable with Fox News' political positioning
Investment Thesis
Fox Corporation Class A shares offer the same business fundamentals as Class B with voting rights that institutional investors and governance-focused shareholders require. The 5-10% premium reflects this demand rather than any economic difference. For individual investors, the choice between FOXA and FOX depends entirely on whether voting rights matter—the business exposure, dividends, and fundamental value proposition are identical.
The underlying investment case remains Fox's profitable live content focus amid media industry turmoil. Fox News' dominance, Fox Sports' premium rights, and $2B+ free cash flow generation compare favorably to money-losing streaming competitors. Lachlan Murdoch's capital discipline provides downside protection while sports rights and election cycles offer growth catalysts. Choose FOXA for voting rights or FOX for slight value—the business quality is the same.