Fox Corporation (FOXA) Cash Flow Statement

The OCF/NI ratio oscillates wildly, from 11.46 in 2026Q3 to -2.92 in 2026Q2, indicating that net income is a poor proxy for cash generation in any given quarter. The positive gap in strong quarters likely stems from upfront affiliate fee collections and political ad prepayments, while negative quarters reflect timing of sports rights payments. Investors should focus on annualized cash conversion rather than quarterly noise, as the cumulative OCF over the ten quarters ($9.5B) far exceeds cumulative net income ($4.9B), suggesting high earnings quality on a multi-quarter basis.

The FCF trajectory is highly event-driven, with peaks in quarters containing the World Cup and political ad cycles, and troughs in off-cycle quarters. Despite the volatility, the trailing twelve-month FCF (sum of last four quarters) is approximately $3.6B, implying a sustainable FCF margin in the mid-teens, which is competitive against peers like WBD (6.0%) and DIS (8.4%). The negative FCF quarters are not indicative of structural deterioration but rather the lumpy nature of sports rights payments and working capital swings.

CapEx/Revenue is consistently low (1.5%-3.6%), indicating a asset-light model where physical infrastructure is minimal. However, the real capital intensity lies in content rights, which are expensed through D&A and working capital changes rather than CapEx. The negative working capital changes in several quarters (e.g., -$1.5B in 2026Q4) likely reflect cash payments for sports rights exceeding the expense recognized, suggesting that maintenance capital for content is substantial and growing. This implies that reported FCF may overstate distributable cash if rights costs continue to escalate.

The volatility in working capital is the primary driver of quarterly OCF swings, with positive changes in quarters like 2025Q3 and 2026Q3 reflecting strong collections, and negative changes in 2026Q4 and 2026Q2 reflecting prepayments for rights. This pattern suggests that Fox's cash conversion cycle is heavily influenced by the timing of major sports events, which require upfront cash outlays. The company's ability to manage payables and collections appears efficient, but the magnitude of swings warrants monitoring, as a prolonged negative working capital trend could strain liquidity despite the large cash balance.

Capital deployment has been consistent, with quarterly buybacks ranging from $100M to $1.6B, and dividends averaging around $100M per quarter. The $1.6B buyback in 2026Q2 coincided with a negative FCF quarter, suggesting management is willing to use balance sheet cash to support returns. The low dividend yield (implied ~1.5%) relative to peers like CMCSA (5.1%) indicates a focus on total return through buybacks rather than income. The Roku acquisition, if completed, would represent a significant deployment shift, but its cash impact is not yet reflected in the data.

The cumulative divergence between OCF and net income is substantial, indicating that earnings understate cash generation, likely due to non-cash charges like D&A and favorable working capital timing. This gap suggests that Fox's reported net income is conservative, and the company has generated more cash than accounting profits would imply. However, the gap may narrow if sports rights amortization accelerates or if legal settlements require cash outflows. Investors should view the cumulative OCF as a more reliable indicator of economic earnings power than net income, given the recurring nature of the gap.