Murdoch: Eventually, Everyone Will Go Direct-To-Consumer

Fox exec says biggest hurdle is not damaging existing distribution ecosystem

21st Century Fox executive chairman Lachlan Murdoch said direct-to-consumer offerings are inevitable for programmers, but that content providers have to be careful not to damage their existing relationships with traditional distributors, who continue to pay most of their bills.

“Make no mistake, everyone will go direct-to-consumer,” Murdoch said at the Goldman Sachs Communacopia conference Wednesday. “I don’t think there is a major media company on the planet that ultimately won’t have a direct-to-consumer product launched in the short to near term.  We need to make sure that we don’t damage the current ecosystem, which is very profitable to all of us, in the process of going direct-to-consumer.”

The Walt Disney Co. announced plans to launch a direct-to-consumer of its flagship sports network ESPN next year and a similar offering of its Disney library content in 2019. And Viacom, Discovery Communications, Scripps Networks and A+E Networks are said to be considering the launch of their own DTC offering in the coming weeks. 

READ MORE: Viacom's Bakish predicts sports-free skinny bundle this year

Fox, Murdoch said, has focused on its core brands and invested heavily to make sure they resonate with viewers and are included in virtually every skinny and fat programming package available. But he added in the new OTT world, there won’t be just one model that succeeds in and of itself, adding that the best content will win the day.

“There will be a tremendous amount of competition amongst these different platforms and business models,” Murdoch said. “Ultimately it’s more choice for the consumer. If you produce great content and great channels, I’ll think we’ll do very well out of it as well.”

That also translates into digital MVPDs, Where he said in “every case,” Fox channels have secured higher affiliate fees than they get with traditional distributors. In addition, the data associated with digital viewing enables Fox to get higher rates from advertisers.   

“There is no instance where we’re not doing better in a world where there is more digital subscribers than in an analog world,” Murdoch said.  

READ MORE: Fox seeing big gains in non-linear ad sales

Murdoch also commented on delays associated with Fox’s planned consolidation of its interest in U.K. satellite company Sky.

Fox initiated the $15 billion purchase of the 60% of Sky it doesn’t already own late last year. While the company had believed it would move swiftly through the process, it has faced delays as regulators have balked at giving the Murdoch family even more control of British media. On Tuesday, UK. Secretary of State for Digital, Culture, Media and Sport Karen Bradley, said she would refer the proposal for a full six-month review by the Competition and Markets Authority.  

“We’re disappointed that it’s taken six months to come to this point,” Murdoch said a the Goldman Sachs Communacopia conference, adding that there are no grounds for referral to another agency based on broadcast standards. “As we are likely to be referred, we’d like to be referred as soon as possible.”