Fox Corp (FOX) stock intrinsic value fair value estimate & owner earnings analysis

Fox Corporation owns the FOX broadcast network, FOX News Media, FOX Sports, 29 local television stations and the Tubi free streaming service. Revenue was $17.1 billion in the fiscal year ended June 2026. It earns money from advertising and from fees paid by cable, satellite and streaming distributors, and its biggest costs are sports rights and news and entertainment content. How we measured earning power. We start from operating cash flow, remove swings in working capital (the timing of receivables, programming payments and similar items), subtract stock compensation as a real cost, and subtract only the part of capital spending needed to keep the business running. On that basis, earnings per diluted share were $3.42, $2.72, $3.44, $3.83, $3.13, $4.08, $5.30 and $6.61 for fiscal 2019 through fiscal 2026. Working capital swung sharply in fiscal 2026 (a $1.5 billion outflow, mainly a $1.1 billion increase in receivables and other assets and $0.5 billion of programming payments net of programming payable), and removing it is why the latest figure looks so high. Over the eight years working capital has been a net cash drain of roughly $2.2 billion, which we did not adjust for but which argues against relying on the latest year. We used the median of fiscal 2022 to fiscal 2026, $4.08 per share. That window covers a midterm and a presidential election, two Super Bowl broadcasts (February 2023 and February 2025) and the growth of Tubi, and it avoids leaning on the two highest years, fiscal 2025 (Super Bowl and election advertising) and fiscal 2026 (a large working-capital outflow removed from the figure). Owner earnings per share rose about 25% in fiscal 2026 ($6.61 against $5.30); we do not carry that rate forward because part of it came from a shrinking share count and the rest is not something contracted or secured, and we start the first year of every case flat. Base case, $49.7 per share. Earnings hold at $4.08 for ten years, then decline about 5% a year afterwards. What is credited: the Fox News audience and the network's sports rights, which the company describes as secured under long-term contracts, with distribution fees paid under multi-year contracts. What is left out: continued Tubi growth (view time grew 20% in fiscal 2026 and Tubi carries over 350,000 titles, but growth in an advertising market is not yet secured), any margin gains, and share buybacks. The decline after year ten reflects that pay-TV subscriber losses have to be offset by higher fees per subscriber, and nothing in the filings guarantees that. Bear case, $26.9 per share. Earnings start at $3.13, the lowest level since fiscal 2020, fall 3% a year for ten years as subscriber losses outrun fee increases and sports rights costs rise, then fall 6% a year. We also deduct about $1.35 billion, or $3.07 per share, for the Smartmatic defamation lawsuit, which seeks $2.7 billion; the amount is set at about half the claim, in line with the roughly $800 million Fox paid to settle the Dominion case in April 2023. Fox says a loss is neither probable nor reasonably estimable. Bull case, $70.9 per share. Earnings stay at $5.30, the median of fiscal 2024 to 2026, for ten years and then decline 3% a year. That is the level the business has shown in fiscal 2025 and fiscal 2026, with Tubi and news carrying it as the older cable and broadcast businesses age. The big open item is the pending acquisition of Roku, agreed on June 14, 2026 for $96.00 in cash plus 0.9693 Fox Class A shares per Roku share. Fox has committed financing of up to $12.0 billion in bridge and term loans on top of $6.6 billion of existing senior notes and $4.2 billion of cash. If regulators block it, Fox owes Roku a termination fee of about $1.2 billion. We do not include Roku in any case because it has not closed and the filing gives us nothing to price its earning power or the effect of the extra debt and shares. If the deal closes, this valuation will need to be redone and per-share value could move materially either way. What would make this wrong: a Smartmatic verdict near the full claim, losing a major sports package on worse terms (the FIFA World Cup is the next significant package due for renewal), faster loss of pay-TV households, or a Roku deal that is expensive relative to what it earns. The margin-of-safety price is about $31 per share, roughly 38% below our base value and just above the bear case, given a large pending legal claim, exposure to sports-rights renewals and the size of the pending acquisition.