Fox bolsters streaming bet with plans for new subscription offering

Recasts first paragraph, adds background, CEO comments from analyst call throughout, adds analyst comment in paragraph 11

By Rishi Kant

Feb 4 (Reuters) - Fox Corp FOXA.O is planning to launch a subscription-based streaming service by the end of 2025, the media company said on Tuesday, entering the Netflix-dominated arena to tap audiences outside its mainstay cable television business.

Shares of the Murdoch family-controlled company rose more than 4% in early trading, as it also reported second-quarter sales and profit above Wall Street expectations thanks to a surge in election-driven advertising on its news network.

The owner of Fox News has largely sat out the streaming race between legacy media and companies such as Netflix NFLX.O, betting instead on ad revenue from its free Tubi streaming service that has about 97 million monthly active users and has a third of its viewers in the 18-34 age group coveted by advertisers.

Tubi is set to stream the Super Bowl for the first time on Sunday, alongside Fox Sports.

Fox had also planned to team up with Walt Disney Co DIS.N and Warner Bros Discovery WBD.O for a live-sports streaming venture called Venu, but the much-heralded effort was shelved earlier this year due to substantial legal opposition.

Fox wants to reach "a large population obviously that are now outside of the traditional cable bundle, either cord-cutters or cord-nevers," CEO Lachlan Murdoch told analysts on a call, referring to its plan for the subscription streaming service.

The U.S. cable industry is losing millions of viewers each year to streaming, forcing legacy media firms including Comcast to rethink their once-lucrative traditional TV businesses.

Murdoch signaled Fox would not put its new streaming service ahead of cable TV, a business it remains heavily dependent on.

"We're huge supporters of the traditional cable bundle, and we always will be," he told analysts, adding that Fox's subscriber expectation for the new streaming service will be "modest and the service will be priced accordingly".

The new service will feature all Fox content, including its news network, according to a company spokesperson.

Some analysts warned the move could be risky.

"The subscription streaming market is already crowded, another entrant will make competition fiercer and profits more difficult to obtain consistently," said Emarketer analyst Ross Benes.

Fox's announcements followed a strong fiscal second quarter, with its revenue of $5.08 billion beating LSEG-compiled analyst estimates of $4.85 billion. Its adjusted profit of 96 cents was also higher than estimates of 67 cents.

The results benefited from the U.S. presidential election in November, with research firm Magna Global estimating political commercials brought in $6 billion of revenue for legacy media.

Fox's advertising revenue rose to $2.42 billion from about $2 billion last year. The company also got a boost from higher Major League Baseball ratings for the 2024 season, it said.