They shed little light on that aspect of their strategy, instead using a condensed conference call with Wall Street analysts to emphasize plans for the operations that will remain after the historic merger closes early next year.
It was likely their last such quarterly call as the company is currently constituted, and the execs expanded somewhat on Fox’s strong fourth quarter results. But the half-hour length of the call, about half the normal duration, left little time for blue-skying, as Disney CEO Bob Iger verged on doing yesterday.
“We haven’t been, and we won’t be, getting into any gun-jumping around trying to guess what comes next,” James Murdoch said, noting the company does not expect the deal to close before the first half of 2019. “We’re trying to operate the business on an as-is basis as effectively as we can.”
The $73.1 billion acquisition, valuing Fox at $38 a share, has been approved by shareholders and, with conditions, by the Department of Justice. It still needs the OK of a few more regulatory agencies around the world but appears to have cleared the biggest obstacles. There are many other hot topics for Fox, but the limited duration of the call left no time for questions about the company’s view of its bidding war with Comcast for control of Sky. Neither did the local station business get any air time, despite mounting speculation that Fox could be a buyer for Tribune Media stations that had been ticketed for Sinclair Broadcast Group before that merger went south.
The Murdochs were not joined on the call by their father, Rupert, but his endgame loomed over the compressed call. (The company announced that they do not plan to do a quarterly conference call in November when they report fiscal first-quarter numbers.)
One reason the younger Murdochs didn’t wax passionate about the brave new world of the studio and network assets being folded into Disney is that neither of them will be around to shepherd the combined operation. James Murdoch reportedly plans to strike out on his own, possibly with a venture capital firm. Lachlan Murdoch will remain in the Fox realm, running the slimmed-down remainder company, for now known as “New Fox,” which will control the Fox broadcast network, local TV stations and cable networks Fox News and FS1.
Most of the focus of the call was on the news and sports assets of New Fox, especially Fox News, FS1 and football on Fox.
Fox News remains one of the top-rated networks on television and plans to add a direct-to-consumer OTT service, Fox’s first, ahead of the mid-term elections in the fall, the Murdochs noted. FS1 eclipsed ESPN in total viewers in 2018 to date thanks to two and a half weeks of World Cup broadcasts and has grown every year since its 2013 launch, they said.
Fox’s broadcast network can look forward to a fall schedule that will offer a record 38 NFL telecasts, which the company expects to capture 40% of total pro football viewing in the U.S. (CFO John Nallen later cautioned that in the early part of Fox’s five-year NFL deal, it projects losses as it “fully optimizes” the rights.)
Lachlan Murdoch said the heavy investment in football — especially the acquisition of Thursday night games, which had previously rotated between NBC and CBS — had a clear strategic purpose. “The reason we chose to do that was the incredible promotional platform it gives us,” he said. “Not only for sports, but also for news and entertainment.” Programming fewer nights of the week (especially with 52 weeks a year of WWE action headed to Fox “gives us an opportunity but it gives us an advantage to really focus that programming on those nights,” he said. (The comment reinforced those of Fox co-chiefs Dana Walden and Gary Newman last week at TCA summer press tour.)
Asked about the future of Hulu, which will transition from an equal share among Fox, Disney and NBCUniversal (with WarnerMedia holding a 10% stake), James Murdoch said the company’s executives “remain very, very enthusiastic about the prospects for Hulu.” The streaming platform’s “volume growth is very, very strong,” he said, and even in not controlling it as Disney soon will, Fox appreciates “the dimension it adds to the overall company.” In terms of strategic use of Hulu in the post-merger era, he added, “I don’t think I’m going to give you guidance.”
The execs similarly evaded a question about output deals for film and TV and whether those might change in the years to come in order to fill Disney’s direct-to-consumer streaming pipeline. Because film deals expire after the expected merger close, “that’s really a matter for a later day,” James Murdoch said. On the TV side, “we remain flexible and open-minded” as to whether to sell rights (as in the example of FX’s American Crime Story going to Netflix) as opposed to reserving the rights for an in-house play.