21st Century Fox executive chair Lachlan Murdoch put into words what most pay TV operators feared in the wake of the programmer’s plans to pare down to select broadcast and cable assets while beefing up on sports rights – when the dust settles distributors can expect retransmission consent fees for its broadcast stations to rise.
Fox agreed in December to sell its film and TV production studios, regional sports networks and FX, FXX and National Geographic cable networks to The Walt Disney Co. for about $66.1 billion, while keeping its broadcast network, TV stations, and cable channels Fox News Channel, Fox Business, FS 1 and FS 2 and the Big Ten Network. More than a month later, the programmer agreed to pay $3.3 billion over five years for rights to Thursday Night Football games.
“We see great potential to increase our retransmission revenue quite aggressively,” Lachlan Murdoch said on a conference call to discuss fiscal second quarter results. “We think that for two reasons, one obviously is the focus and investment in sports with the new NFL Thursday night packages, but also being a more focused company with fewer channels in our bundle [we] will be able to drive our retrans for the stations quite aggressively.”
His brother, CEO James Murdoch, was equally encouraged by the retrans potential of the deal.
“It’s still a growth trajectory in terms of getting what we think is a fair price, given the strength of the network, the strength of the stations and the size of that audience,” James Murdoch said.
And although the premium paid for Thursday Night Football was high -- nearly 50% -- for content that has suffered declining ratings, Fox believes adding the Thursday night games to its existing Sunday NFL package could grow viewership.
“When you look at the licensing that the NFL has undertaken, with expanding to Thursday night and we’ve talked in the past about what fragmentation can do to the overall audience on each individual day,” he continued. “We think the right answer is to concentrate that audience and to have Fox be the clear leader in NFL broadcasting.”
He added that having the extra night of football will help Fox’s other shows in terms of promotion and will also solidify the network’s position as a sports leader.
“In general, as the scarcity value of large audiences coming together around national events continues to rise, we really want Fox to be the home of that kind of compelling product,” James Murdoch said.