For the second year in a row, one of Rupert Murdoch’s sons speaking at the Goldman Sachs Annual Communacopia Conference attacked the 90-day exclusive window movie theaters have for new releases — and supported a new premium video-on-demand system.
Last year Fox CEO James Murdoch riled theater owners by attacking the “crazy hold-backs” they demand, drawing a sharp response from NATO’s John Fithian. Today the exec’s brother, Executive Chairman Lachlan Murdoch, carried the flag, saying the status quo “has to change.”
“You spend way too much making a film in the first place,” he said. “Then you spend tens and tens of millions of dollars marketing that film. You go into a 45-day theatrical window, and then there’s a blackout for another 45 days where the consumer can’t access that content anywhere no matter what they’re willing to pay or do. … A lot of piracy happens in that 45 days.”
He added, cryptically, that the arrangement “will change sooner rather than later.”
Pressed for details, he referenced 20th Century Fox Film CEO Stacey Snider’s prediction at a different conference last week and said “you’ll see these windows start to change within the next 12 months.”
Theater owners say that the 90-day window is important for their financial health but are discussing possible terms that might give them a cut of the home video revenues.
For the most part, Murdoch remains enthusiastic about the movie business, even after this year’s disappointing summer domestic box office sales.
If you compare the top four family animated films from last summer and this one, “there’s a difference of $488 million, which is down 50%,” he says. “That actually makes up for about 90% of the drop in box office from last summer to this summer. I guess what that means is that, fundamentally, the films weren’t good enough as an industry.”
But things should snap back next year.
“There’s a huge lineup,” Murdoch about 2018’s films ,including Fox’s Deadpool 2. “It will be a big summer next year. And when you compare year on year — you can mark my words: There’ll be a tremendous uplift.”
Murdoch kicked off the session reiterating his disappointment with yesterday’s announcement by Karen Bradley, the UK’s Secretary of State for Digital, Culture, Media and Sport, that she’ll probably refer Fox’s £11.7B takeover bid for Sky to the Competition and Markets Authority (CMA) for review on the grounds of media plurality and commitment to broadcasting standards.
“As we’re likely to be referred, we’d like to be referred as soon as possible,” Murdoch said. “Then a clock starts to tick so we can close by the middle of next year. That’s our No. 1 priority. We’re very confident we get through the CMA process.”
Asked about Fox’s policies for licensing shows to streaming services, Murdoch said he prefers non-exclusive deals. That’s been an issue with the company’s new, ad-free FX+ offering on Comcast systems, which costs $5.99 a month.
It has all episodes of 36 series but not American Crime Story.
“We sold to Netflix because they offered us a very high price,” he said. “That show will still appear on FX. But we won’t have the library rights. And that’s ultimately not a great thing for the consumer, and it’s disappointing that that show won’t be on FX+… But the fact that Netflix was able to offer an extraordinary price for that show, we had a commitment to our participants to take that offer.”