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wenty-First Century Fox (Fox) is a global,diversified media company. Its primary operations arefilm and television production; a collection o globalentertainment; sports and news cable networks; the Foxbroadcast network and local V broadcast stations.

The Best Laid Plans

In June o 2013, the old News Corporation split itselinto two companies: the new News Corp housed the

more mature print media businesses, while the aster-growing television and film businesses were organizedas wenty-First Century Fox. Soon thereafer, Fox heldan investor event highlighting the companys growth

potential and inormed Wall Street o their expectationin the fiscal year ending June 2016 to generate $9 billiono EBIDA (earnings beore interest, taxes, depreciationand amortization a proxy measure or a business abilityto generate cash rom operations). (Fox subsequently soldits satellite pay-V businesses. Afer the divestment, theguidance was adjusted to $8.1 billion to reflect the sale.)

Wall Street cheered what seemed to be highly-visible,double-digit growth.

Unortunately, afer describing this three-year roadmap,Foxs results almost immediately took a detour. In theUnited States, a weak ad market and poor perormanceat the Fox broadcast network hit domestic earnings.Internationally, results remained strong in local currencies,but a rising US dollar increasingly dampened thecontribution o overseas earnings, when translated intodollars or Foxs financial statements. In light o thesecircumstances, management was orced to reduce their2016 earnings targettwice (once in February 2015,then again in August). Wall Street never looks avorablyon downward revisions to guidance, landing Fox in the

penalty box. Recent results have underwhelmed, andthe industry is more competitive than ever, but we dontbelieve disappointment is a new permanent state o the

world.

Cord Cutting Arrives

More recently, the entire media industry has comeunder additional investor scrutiny, as 2015 may be bestremembered as the year that cord cutting (or, the act ocancelling ones pay-V subscription in avor o internet-delivered video options) became reality. We acknowledgesubscriber rolls have shrunk, but we believe the currentloss o 1-2% o customers per year is manageable, and thebig bundle will persist longer than many have suggested.

In act, Foxs most recent quarterly results included morethan 1% increase in the aggregate number o subscribers,having won greater distribution or recently reormattednetworks like Fox Sports 1 and FXX. Combined withbrands like FX, Fox News and National Geographic, thesenetworks comprise a compelling collection o content.Finally, live sports have only increased in value as viewersgenerally watch games live (and consequently, the adstoo). Fox is uniquely positioned with must have sportscontent, thanks to its portolio o 22 regional sportsnetworks that have long-term broadcast agreements with

85% o the MLB, NBA and NHL teams in their markets(representing nearly hal o all the US-based teams in thesethree leagues).

Lost in Translation

Fox is truly a global company, generating nearly 40% o itsrevenues outside the United States, and unlike the matureUS market, pay-V is still in growth mode in manycountries around the world. In the past, investors pointed

to Foxs enviable international position as a undamentalstrength. However, the strong US dollar has mutedgrowth, and many investors have soured on exposureto oreign currencies. Over the long term, however, weremain enthusiastic about Foxs overseas opportunities. Forexample, at SAR India, management made the decisionto reinvest profits into key sports rights (principallycricket) to strengthen their position in the Indian market.Te bulk o these stepped up investments are now behindthem, and as expense growth moderates, the company

A Perspective on Twenty-First Century Foxby Drew Weitz

| 1Learn more at weitzinvestments.comor call 800-304-9745

4Q 2015 Quarterly Commentary

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7/25/2019 Weitz - 4Q2015 Analyst Corner

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orecasts SAR will progress rom being a breakevenoperation last year to generating $300 million o EBIDAthis year, growing to nearly $1 billion in EBIDA by2020. (For context, in the last fiscal year Fox earned $4.6billion o EBIDA rom all its cable channels combined.)Even under more conservative orecasts, SAR representsa tremendous growth opportunity, and Fox is well poisedto capitalize on it.

Underappreciated Assets

Te above discussions have centered on operations thatFox controls and consolidates in its financial results.Fox also has potential upside in the orm o two, non-consolidated and underappreciated assets: a 39% stake inEuropean satellite broadcast company Sky plc, and a 33%stake in Hulu. Skys shares are publicly traded, implyinga $10.6 billion value or Foxs stake, or roughly $5.25

or each Fox share (as o 1/8/2016). Management hasconsistently indicated that owning 39% o the companyisnt likely to be a permanent state, and we consider a saleor spin-off to shareholders as the most likely outcome.

Valuing Hulu is a more difficult exercise, as its financialstatements are not available. Various Wall Street researchreports have estimated Foxs stake could be worth $2-5billion (admittedly, a wide range), or roughly $1.80 perFox share at the midpoint. We view Hulu as a strategicinvestment and a partial hedge, should the traditional pay-V business break down more quickly than anticipated.

We view these assets as options that create value or Fox,

but our investment thesis doesnt require they be sold.

Valuation

We have long been attracted to media businesses ortheir subscription-based cash flows and relatively lowreinvestment needs. Coupled with the under-appreciatedassets, and a very strong balance sheet eaturing nearly $6billion o cash on hand, we believe Foxs shares are tradingat very attractive levels. With the stock priced near $26

compared with our estimation o business value in the low$40s, we believe Fox provides a compelling investmentopportunity or the Portolios.

As o December 31, 2015: wenty-First Century Fox CL A represented 3.5%, 1.5%, 3.6% and 2.2% o the Partners ValuePartners III Opportunity, Research and Balanced Funds net assets, respectively. wenty-First Century Fox CL B represen5.0% o the Value Funds net assets, respectively.

Investors should consider careully the investment objectives, risks, and charges and expenses o the Fund beore investingTe Funds Prospectus contains this and other inormation about the Fund and should be read careully beore investing.Portolio composition is subject to change at any time and reerences to specific securities, industries, and sectors reerencin this letter are not recommendations to purchase or sell any particular security. Current and uture portolio holdings arsubject to risk.

Weitz Securities, Inc. is the distributor o the Weitz Funds.

| 2Learn more at weitzinvestments.comor call 800-304-9745

Drew Weitz, research analyst and co-portolio manager, joined WeitzInvestment Management in 2008. He has been co-portolio manager o ResearFund since January 2010 and co-portolio manager o the Small/Mid-Cap ValStrategy (Hickory Fund) since December 30, 2011. Drew holds a BA in compscience rom Carleton College in Northfield, MN. While earning his degree, hspent his summers at Weitz working in various capacities. From 2004-2008 he a research associate and research analyst with Ariel Investments, a Chicago-basinvestment firm.

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