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Volume 24 No. 217
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What Does 21st Century Fox' Deal With Disney Mean For The Future Of Murdoch's Empire?

With 21st Century Fox' sale of several properties and assets to Disney, Fox Exec Chair Rupert Murdoch is "making a calculation about changing winds in the media industry, while doubling down on news and sports," according to Rabil & Flint of the WALL STREET JOURNAL. The deal with Disney "leaves the remaining Fox company with assets including the Fox News and Fox Business cable news networks, the FS1 cable sports channel, the Big Ten Network and a television broadcasting business that consists of 28 local TV stations and the Fox broadcast network, which carries college and professional football as well as baseball games." Murdoch: "I know a lot of you are wondering, ‘Why are the Murdochs making such a momentous decision? Are we retreating?’ Absolutely not. We are pivoting at a pivotal moment." Fox co-Chair Lachlan Murdoch said, "While the merged business (with Disney) is about scale, the new Fox is about returning to our roots as a lean, aggressive challenger brand, focused at the beginning on must-watch news and live sports." Rabil & Flint note the company, for now being "referred to as new 'Fox' as it sheds the Twentieth Century Fox studio from which it derived its name, will have" about $9B in debt, $10B in annual revenue and $2.8B of Ebitda (WALL STREET JOURNAL, 12/15). Rupert Murdoch said, "We're pivoting back to our first love, which is news and sports -- things that happen in real time" (WALL STREET JOURNAL, 12/15).

DRASTIC DOWNSIZE: In L.A., Meg James notes Murdoch is "drastically downsizing his empire and charting a far different path forward" than what Disney Chair & CEO Bob Iger is pursuing. Sources said that Murdoch "simply lacked confidence that Fox in the future could be as dominant as it has been in the past." Murdoch plans to "build a scrappier company that is expected to take advantage of consumers’ increased appetite for news and live sports, including NFL games and the World Series." Such live programming is "particularly attractive to advertisers because viewers don’t skip the commercials" (L.A. TIMES, 12/15). Also in L.A., Stephen Battaglio notes this deal means Fox will be the "only broadcast network without a studio to supply its scripted shows." That has current and former Fox execs and their competitors "wondering what the network will look like -- and whether it can have long-term viability." Even without scripted programs, Fox’ stations and affiliates "will be able to command subscriber fees because of its rights" to the NFL’s Sunday games. Many of the events Fox has the rights for on FS1, such as MLB, college football, World Cup soccer and NASCAR, are "likely to get more prime-time exposure on the broadcast network." Former Fox media consultant Preston Beckman: “As long as they have their NFL package and baseball they are OK." But in the long term, a dependence on sports programming means Fox has "less control over its destiny" (L.A. TIMES, 12/15).

KING LEAR? In N.Y., Amy Chozick notes Murdoch's news properties will "allow him to maintain the political influence that he has cultivated." People close to Murdoch do "not envision a scenario" in which either of his sons "thrives long-term at the top of a company that doesn't have their father's stamp on the door" (N.Y. TIMES, 12/15). CNBC.com's Erick Jackson wrote under the header, "The 5 Biggest Misconceptions About The Disney-Fox Deal." One of the "biggest mistaken conclusions" about Fox' deal with Disney is that Murdoch "is retreating" (CNBC.com, 12/14).