STRICTLY PRIVATE AND CONFIDENTIAL

Date
Fox Corp (NASDAQ: FOXB) Buy
Agenda
MICC would like to discuss the following:

3 Thesis

4-6 Company Intro

7-10 Industry Analysis

11-16 M&A Strategy

17-20 Comps, Debt, and Valuation

AGENDA
Investment Thesis
OpenText is the Market Leader in EIM and is Expanding into New Verticals

1/ Strong and Stable Market Position

Acquisitions of Dell ECM and HP Exstream have made OpenText the #1 player in
EIM
Tremendous growth potential in EIM and adjacent verticals

2/ Undervalued with lots of Upside

Operational and Valuation Metrics are better than peers
Recent pull-back in tech prices makes entry into OTEX very attractive

3/ Proven M&A Success

Total Growth Strategy has delivered revenue growth of 15% CAGR over
the past 6 years
INVESTMENT THESIS

Recommendation: Buy $3,000 at $33.16 / share

3
Fox Overview
Insert Tag

 Fox Corp. is a US focused media company that operates Fox’s Brands

cable networks, the Fox Broadcast network and Fox
affiliated local TV stations.
 Cable networks focus on programming national news
(Fox News Channel, Fox Business Network) and sports
(Fox Sports 1&2, Fox Deportes). Format nice
 The Broadcast segment focuses on national sports, local
news and to a lesser extent entertainment programming

Key Metrics (Sales, EBITDA)

Some other Metric

COMPANY OVERVIEW

4
Cable vs Broadcast Television Explained
What is it?

Cable Broadcast
Delivers programming through coaxial cables-requires paid Signal is sent over airwaves-comes at no extra cost
subscription
Has to "pitch" channel to cable operator Relies on advertising revenue
Fox News, FX The Simpsons, Masterchef
INDUSTRY ANALYSIS

Source Gartner

5
Cable Programming
Life Sciences is Inefficient in Technology Innovation and Integration

Fox’s Cable Networks Fox has the Highest Mix of Sports + News
In $US millions

Add # of monthly
viewers and
Distributor Color
$/subscriber/mo cost

Cable Growth Drivers

 FOX News Channel remains the strongest cable network in the industry with a large number of
renewals in FY2020
 FOX Sports still relatively cheap compared to ESPN w. strong portfolio
 Secular Trend: Sports and News hasBlah blah
increased fromblah
18.4% of Live Viewing Hours to 23.2% of
INDUSTRY OVERVIEW

Viewing Hours in 2018 format

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Cable Programming Slide 2

Fox News is King Fox’s Sports Coverage

Color

Renewals and Political Ads Driving Fox Growth Fox is Well Positioned for NFL Renewal
INDUSTRY OVERVIEW

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Broadcast Television
Insert Tag

Fox Network’s Reach

 FOX network delivers approximately 15 hours of weekly

primetime programming to 208 local market affiliates,
reaching approximately 99.9% of all U.S. television
households.
 FTS owns and operates 28 stations in 17 markets, reaching
38% of U.S. TV households. FTS owns stations in nine of NOT SURE WHAT TO PUT:
the top ten largest DMAs, and duopolies in 11 DMAs,
including the three largest DMAs (New York, Los Angeles LMK IF YOU HAVE ANY

and Chicago).
The FOX Network is an independent network that relies
IDEAS
more on sports, though its

Broadcast TV Growth Drivers

 Strategy built around sports programming gives FOX Network better ad inventory and the ability to
seek higher distribution fees through these long term rights
 Entertainment programming strategy is still largely “business as usual”: loss of 21 st Century Fox
means that independent studios will be eager to pitch their shows to FOX
COMPANY OVERVIEW

 Retransmission and Reverse Comp could reach over $2 billion by F2020

 Station footprint aligns with NFC markets and acquisition activity could pick up as broadcasters
consolidate

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Broadcast Television Slide 2

Fox’s Broadcast Programming Station footprint aligns with NFC markets

Color

Retransmission Consent Reverse Comp Growth

 55% of the FOX Network’s affiliate revenue is derived
from the company’s owned and operated stations
 Fox generally has ~30% of its subscriber footprint up for
renewal in any given year
 Historically Fox has lagged CBS and ABC: from F2016-
2018, FOX grew its retransmission consent by a CAGR of
INDUSTRY OVERVIEW
 FTS owns and operates 28 stations in 17 markets, reaching
38% of U.S. TV households.
 FTS owns stations in nine of the top ten largest DMAs,
and duopolies in 11 DMAs, including the three largest
DMAs (New York, Los Angeles and Chicago).
 FTS has 17 Nextstar stations with agreements that expire

12%, compared to 18% for CBS and 16% for ABC at the end of 2019 and we expect high teens growth
 With the recent addition of TNF and the upcoming WWE
programming to its network we expect retrans revenue
growth to catch up to peers at ~15% CAGR

12% to 18% CAGR

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Broadcast Television Slide 2

Fox’s Broadcast Programming Station footprint aligns with NFC markets

Color

Retransmission Consent Reverse Comp Growth

 55% of the FOX Network’s affiliate revenue is derived
from the company’s owned and operated stations
 Fox generally has ~30% of its subscriber footprint up for
renewal in any given year
 Historically Fox has lagged CBS and ABC: from F2016-
2018, FOX grew its retransmission consent by a CAGR of
INDUSTRY OVERVIEW
 FTS owns and operates 28 stations in 17 markets, reaching
38% of U.S. TV households.
 FTS owns stations in nine of the top ten largest DMAs,
and duopolies in 11 DMAs, including the three largest
DMAs (New York, Los Angeles and Chicago).
 FTS has 17 Nextstar stations with agreements that expire

12%, compared to 18% for CBS and 16% for ABC at the end of 2019 and we expect high teens growth
 With the recent addition of TNF and the upcoming WWE
programming to its network we expect retrans revenue
growth to catch up to peers at ~15% CAGR

12% to 18% CAGR

10
FOX Insider Financial Incentives

Color

Snyder: this is all you, format as you see fit

INDUSTRY OVERVIEW

11
FOX’s Corporate Strategy / How to use FCF

Color

DC/Snyder
INDUSTRY OVERVIEW

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 Competitive Analysis
OpenText looks Cheaper and Performs Better than its Peers

S ummary Gro wth Pro fitability Ope ratio nal Valuatio n

LTM To tal Re ve nue LTM EBITDA PEG Ratio Gro s s Marg in % EBITDA Marg in % S G&A Marg in % TEV/EBITDA TEV/R
Nic he Clo ud Co mpanie s
Ope n Te xt (Nas daqGS :OTEX) 2,841.7 829.6 1.00x 73.1% 29.2% 25.84% 12.8x 3.8x
De s c arte s S ys te ms (TS X:DS G) 259.8 83.2 1.41x 72.9% 32.0% 24.70% 28.8x 9.2x
Co ns te llatio n S o ftware (TS X:CS U) 2,917.1 408.2 1.35x 36.7% 14.0% 11.24% 36.0x 5.0x
Pe g as ys te ms (Nas daqGS :PEGA) 829.6 (8.7) 3.47x 64.7% (1.0%) 48.03% NM 4.8x
Bo x (NYS E:BOX) 554.7 (104.1) NM 72.7% (18.8%) 72.49% NM 4.5x
Dro pbo x (Nas daqGS :DBX) 1,247.7 (363.4) 5.09x 68.5% (29.1%) 54.64% NM 7.1x

Ente rpris e Clo ud Co mpanie s

Mic ro s o ft (Nas daqGS :MS FT) 114,906.0 47,543.0 1.86x 65.2% 41.4% 19.57% 16.0x 6.6x
HP (NYS E:HPE) 30,566.0 3,039.0 0.82x 29.8% 9.9% 16.10% 10.1x 1.0x
Orac le (NYS E:ORCL) 39,920.0 16,155.0 1.70x 79.7% 40.5% 24.48% 11.4x 4.6x
Ado be (Nas daqGS :ADBE) 8,572.0 3,090.2 1.85x 87.1% 36.0% 37.02% 36.9x 13.3x
S AP S E (DB:S AP) 27,419.2 7,103.8 2.29x 69.6% 25.9% 32.90% 18.6x 4.8x
IBM (NYS E:IBM) 80,373.0 16,954.0 1.19x 45.5% 21.1% 24.53% 8.1x 1.7x

S ummary S tatis tic s Keep this to general Financial metrics

LTM To tal Re ve nue LTM EBITDA NTM PEG LTM Gro s s Marg inLTM EBITDA Marg inLTM S G&A Marg in TEV/EBITDA TEV/R
Ratio % % % LTM LTM
Hig h 114,906.0 47,543.0 5.09x 87.1% 41.4% 72.49% 36.9x 13.3x
Lo w 259.8 (363.4) 0.82x 29.8% (29.1%) 11.24% 8.1x 1.0x
Me an 27,960.5 8,536.4 2.10x 62.9% 15.6% 33.25% 20.7x 5.7x
Me dian 8,572.0 3,039.0 1.78x 68.5% 21.1% 24.70% 17.3x 4.8x
COMPETITIVE ANALYSIS

Open Text performs better than the median in all metrics we examined

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Comps 2

Pick 4 Media related metrics and compare them to peers

INDUSTRY OVERVIEW

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Valuation
Little Downside With Lots of Upside

Synder: IDC if you do sum of parts or DCF. Let me know if you need
any help
VALUATION

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