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Lachlan Murdoch told a Morgan Stanley conference that “scripted and unscripted reality TV is important to bind the ecosystem.”
By Alex Weprin
Media & Business Writer
Fox Corp. CEO Lachlan Murdoch says that his company remains committed to entertainment even as it has pivoted its focus to news and sports, telling a Morgan Stanley conference that scripted dramas and reality shows are “important to bind the ecosystem” it has created.
At the same time, Murdoch argued that Fox News, with its ratings dominance (he said that Fox News “competes more with broadcast” than with cable, at least with regard to ratings) and Fox Sports are helping the company improve its bottom line.
Specifically, Murdoch said that Fox has shifted its revenue mix to be distribution-heavy, relying on cable carriage fees and broadcast retransmission fees to provide growth. “Advertising to distribution was about 50/50,” Murdoch said. “That shifted with the strength of our distribution and in pricing, to about 45-55 advertising to distribution.”
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With Fox News routinely topping the cable ratings charts (last week it was the number 2 network in all of TV in Monday-Friday prime, according to Nielsen), and Fox Sports keeping its events including its Sunday NFL games exclusive to broadcast, the company has been able to drive carriage and retrans fee increases.
“You have to look at how we build the value proposition to our cable distributors and to our stations,” Murdoch said.
“We don’t believe it helps to put those rights on a streaming service, we think it is very important that those rights remain exclusive to the broadcast environment, and that is one reason we can drive retrans rights,” he added, specifically referring to Fox’s NFL games. “We provide a premium to them that others don’t.”
As for entertainment on the Fox broadcast network, Murdoch said that even after it sold its entertainment business to Disney, scripted and unscripted remain “important” to the network.
“Scripted and unscripted reality TV is important to bind the ecosystem, the stations, to what Fox Sports does. Having said that it is a tough business now. People aren’t used to tuning into a drama on 9 o’clock on a Tuesday night,” Murdoch said, adding that they monetize the programming by selling replays to Hulu, or by owning stakes in programs like Gordon Ramsey’s shows. “You have to have culturally important dramas and reality that people talk about,” he said.
Murdoch also defended the company’s sports investments, saying that it didn’t get the value it needed out of Thursday Night Football (now on Amazon) and chose to focus on its Sunday afternoon games. He also said that while they look at all sports rights that come up, they are picky.
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“We passed on the UFC when it came up last tie around, It was very hard for us to monetize it [from an advertising standpoint,” he said.
Murdoch said that the company expects political advertising to set a record for a midterm year, with the last midterm cycle generating $180 million in political ad revenue for the company. With Fox set to host the Super Bowl next season, it expects its entire portfolio to see an advertising bump.
he also said Fox “will always look” for M&A opportunities, noting that most of the moves it has made (Gordon Ramsey’s studio, TMZ, etc.) have been relatively small.
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