During his 45-minute session at the 2016 Bank of America Merrill Lynch Media, Communications & Entertainment Conference on Sept. 14, 21st Century Fox Executive Chairman Lachlan Murdoch touched on the company’s strong upstream position, the company’s continual investment in brands and content, and STAR India’s impressive growth, among other topics.
Here are seven key quotes from the session, which was moderated by Bank of America Merrill Lynch analyst Jessica Reif Cohen and is available for replay:
On the upstream-flowing value for content owners: “[It’s] been very important for us to have the strongest content brands possible and [drive] the strongest amount of content and really [invest] in that content. So I think this year alone we’ll invest another an additional $200 million just in the content…in the FX brands and in National Geographic content. [We] see as downstream distribution becomes more and more competitive, the value will flow upstream to the content owners.”
On the importance of investing in talent, brands and content: “[We’ve] always viewed – and we’re surprised when sometimes our competitors don’t do this, but we’ve always viewed investing in people and talent in the actual [shows] as important, as we continue to drive these brands and improve them. We never see ourselves sitting back and saying, ‘FX is a great brand…and we’re willing to sit back and not invest in it.’ You’ll always have to keep refreshing and investing in the brand and in their content.”
On the impressive streaming numbers for hotstar in India: “…STAR is not [simply] a distribution platform. A lot of people think of it as a distribution platform, but STAR is really a content owner and program producer and by brand, it’s a channel owner in a way that our FOX Networks Group here is in the United States… And just have this in perspective: Those streaming numbers for hotstar, [if you compare them with Netflix in India], Netflix is about 6 percent the size of hotstar, so we are very bullish on the Indian market and the prospects of hotstar.”
On working with CEO James Murdoch: “[James] and I’ve run the business completely together and call it 50-50, or joined at the hip or however you want to describe it. And I think the key to that and the reason why it works is we talk every day. We make sure we share all the information. We share in all the major decisions, and we’re very close in that way. Also from a reporting point of view, everyone knows that they report to both of us, but the way that doesn’t become cumbersome is that James and I are sharing information all the time so people don’t have to tell both of us – report twice – they can report to one of us and they’re effectively speaking to us both. So everything is transparent and we work very closely together.”
On Hulu and the core bundle: “We are excited being a partner at Hulu [and] also being a content and channel provider to Hulu. We see their concept of a core bundle as incredibly important as we see television evolving in a digital age. Our core bundle is different from a skinny bundle or a la carte… For us, as a provider of our channels and our content at Hulu, it’s important that we make sure that we receive roughly the same amount of value per subscriber from Hulu or from a third-party over-the-top digital MVPD as we do from traditional MVPDs. So as a cable bundle, as cable basic slowly declines where those consumers are going to get their viewing and watch our content, we’re made whole. We lose no value if someone’s watching an MVPD or digital MVPD.”
On a direct-to-consumer future: “Direct-to-consumer is in all of our futures, there is no doubt about that. And we are preparing for that. I think we have the strongest brands that allow us to succeed in the direct-to-consumer future… And so our first step along this path is actually to make TV Everywhere work and then make a great experience for consumers. So now, in sort of next six months, [we will] upgrade all of our television network platforms. So it’s [FOX NOW], FOX Sports GO, FOX News, Nat Geo TV – all those digital platforms will have one point of authentication. They will be able to share programming and data amongst themselves… All of our RSNs will be able to stream live on those digital platforms with all of our local sports rights… So that’s the first step. But from that step, you’ve really built a digital platform where then you can extend that to a direct-to-consumer offering down the road, and for us that would mostly likely be a bundle of our channels as opposed to an a la carte offering. But that’s probably a couple years away.”
On FOX News’ quick response to the lawsuit and its future: “[We] pretty aggressively addressed those allegations. I think July 6 was when Gretchen Carlson sued Mr. Ailes and the lawsuit landed. And I think Roger resigned within two weeks… Within a couple of days, we launched an internal investigation, and I think we moved with a great deal of alacrity and speed and protected the business and the employees of the business in everywhere we could as fast as we [could]. [It’s] hard to imagine another organization that could have moved [that] quickly. And so, moving forward, we have promoted a number of people within the organization to work with our father as the interim CEO. And if you think about that, he’s actually been – he’s probably been the one executive who’s spent the most time at FOX News over the last several years, in the newsroom talking to the journalists and the producers. It’s going from strength to strength.”
