On Wednesday, 21st Century Fox Executive Chairman Lachlan Murdoch had an opportunity to discuss a wide range of topics in a conversation with Business Insider Editor-in-Chief Henry Blodget at Business Insider’s annual IGNITION conference. During the session, Lachlan talked about 21CF’s strong position in an increasingly digital industry, Fox News, going direct-to-consumer and more.
Here are some highlights from Lachlan’s conversation with Henry:
On 21CF’s strong position in the industry: “There are subscale businesses in media today, which will be the losers going forward in a digital world. And that’s absolutely the case. If you haven’t invested in your programming and your channels and you haven’t invested in your distribution platforms, you are unlikely to get on the new digital services, and subsequently you will struggle. We don’t believe we’re in that situation, and we can demonstratively point to growing affiliate fee growth. I think we’re [maybe the only large media company in America] that’s growing subscribers – net subscribers across our channels because of our mix of younger cable channels. So [we] feel very strongly about where we’re positioned to grow the company as a standalone company.”
On being part of the core bundle: “As the traditional cable business is declining, [it’s] being ameliorated by this digital growth. Now, here’s the key, though: You have to be on those digital MVPD packages. And those packages are only valuable to subscribers if they’re cheaper than the current bloated cable bundle. So to be in that core bundle, you need to have core channels that people want. So our investment in FOX, Fox News, FX, National Geographic and FOX Sports [means] tremendous consolidation of our programming and market investment in those five core brands [and] has resulted in those brands being on every single one of the significant new digital MVPDs. You can’t say that for other companies… For us, we’re seeing our investment in these core brands really starting to pay off and [that means] we’ll be winners in the new world going forward.”
On the opinion side of Fox News: “Just like the New York Times has a news organization that writes for their front page, they also have an editorial board that writes their opinion pieces. And one of the reasons why the New York Times is such a well-respected newspaper, and a very fine newspaper, is that their opinion is also very strong. There is clearly a direction and opinion that speaks to their readers. And it’s the same at Fox News. So the news organization is a completely different construct than reporting lines to the opinion pieces. And I think that’s appropriate for news.”
On Fox News’ enduring impact on TV news: “The opening for Fox News – the energy, the pace, the graphics, the production values of the channel, which now everyone has copied so it doesn’t look as unique – back when it launched, it was quite revolutionary.”
On fighting for journalism: “Both James and I, we’ve grown up in newsrooms. We understand journalism and we understand the importance of it. And, by the way, it’s something that’s sincerely and deeply under threat at the moment from a business model [standpoint], how people can afford great investigative journalism. [We] could go back to the sexual harassment cases – it’s fantastic to see some of these newspapers [like] the Washington Post [do] a huge amount of investigative journalism [so] that they can stand up to raise allegations against people. So when news organizations can remain or retain their resources to do really excellent [investigative journalism, which is really important in our democracy], that’s something we have to fight for.”
On Star India’s huge growth: “Star in India – and people don’t realize this – is an incredibly [well-rounded] media business on its own. It’s not a satellite television provider. It’s a media company that produces 17,000 hours of local content in [eight languages, including English]. That’s just entertainment content. We own global rights to that content. We’ll make $500 million this year in EBIDTA out of Star, growing to $1 billion in EBIDTA by calendar year 2020. So there’s huge growth business for us around the world.”
On a legacy of giving consumers choice: “Whether it’s entertainment or journalism, we very much see ourselves as the underdogs who like to come into a market, offer choice…and sort of break up the status quo. And that’s where we’ve been most successful.”
On going direct-to-consumer: “All media companies are going to be direct-to-consumer. So whether it’s in the next few months – and we’ll see more launches in the next few months – and over the next couple years, every single media company will have direct-to-consumer products. And, ultimately, everything will be available direct-to-consumer.”
On theatrical windows: “If we make a movie like “Kingsman: The Golden Circle,” we’ll spend about $150 million on the production of that movie, and then we’ll spend another $100 million on the launch domestically and globally for marketing that movie. So you have a $250 million creative bet that you push out, and then it historically goes to these different windows that you monetize. What’s crazy at the moment [is] it goes into theaters for about 45 days and then the theaters, by contract, have a 45-day blackout where you’re not allowed to show that to anyone before you go onto cable or video-on-demand and that sort of thing. That has to collapse. There’s no reason why, particularly with the weight of the marketing, consumers should suddenly not be allowed to get the content. The only place they get it is actually from the piracy sites. So movie theatrical windows will also collapse and will collapse quickly.”
On today’s ‘cathartic moment’: “I think this has been a fantastic thing and we should all see it as a very good year because it is completely unacceptable for men, and particularly we’re seeing powerful men, to have and allow or engage in harassment in the workplace. And the fact that we’re going through this sort of cathartic moment – not just the media, because we see it throughout all of society and all business and elsewhere – I think is a tremendous thing. And I think we come out of this as a community far, far stronger.”
