FOXA: Upgrade to Outperform - "Less Screaming. More Streaming!"

Research evidence excerpt

FOXA: Upgrade to Outperform - "Less Screaming. More Streaming!"

July 1, 2026

Tubi's model rests on a simple idea: serve large volumes of free content to a broad audience, monetize it gently to

preserve consumer satisfaction, and pay IP owners on a success-basis. Where premium AVOD services run an

estimated 6-10 minutes of ads per hour, Tubi runs 6 minutes, keeping the experience clean and users engaged.

That light load is a competitive advantage as "streamflation" persists. With the average household now paying an

estimated >$40 per month for streaming, consumers are turning to free ad-supported services rather than

stacking another paid tier, and we expect that shift to accelerate as prices rise. Ad dollars follow engagement, which

drives our view that FAST advertising growth will outpace premium AVOD.

Exhibit 9 & 10: Consumer fatigue from streamflation drives CTV advertising, and the ad dollars are following

Source: Nielsen, Company Filings, Wolfe Research, LLC.

Tubi's revenue growth runs on three levers: CPMs, fill rates, and engagement. CPMs are flat to down and fill rates

are improving, but engagement is the real engine. Years of double-digit engagement growth have carried the top

line, and as long as that holds, which we think it will, Tubi revenue can compound sales growth at a double-digit

rate through 2030. Adding Roku’s first-party user data should accelerate that growth.

Exhibit 11: Tubi accounts for >25% of Fox’s engagement

Investors are not yet convinced that "low-calorie" free streaming hours carry real value. We think the market will

come to appreciate the strength of Tubi leadership within its niche (the dollar store of streaming?) which provides

good value to its target consumers and is hard for larger players to address for fear of cannibalization.