Fox Corp. CEO Lachlan Murdoch sees “a gap in the market for football” that the USFL can exploit when the professional league kicks off its inaugural season on April 16.
The new operation controlled by Fox is unrelated to the 1980s iteration (one of whose teams, the New Jersey Generals, was owned by Donald Trump) that was essentially sued out of existence by the NFL. Both NBC and Fox will broadcast USFL games this spring, giving it significant TV real estate that previous failed attempts at alternative pro football leagues have not had.
Murdoch said at an investor conference that the NFL is directly involved and is supporting the launch. “The NFL has actually been tremendously helpful to us in thinking through and setting up the USFL,” Murdoch said at the Morgan Stanley Technology, Media & Telecom Conference. “They haven’t tried to obstruct it at all. In fact, it’s the opposite. They’ve helped us.”
Because of the partnership structure, Murdoch added, “the financial risk to us is not significant, but the upside and the opportunity is significant.” Fox owns all of the IP and rights, he noted, and over time the league’s eight franchises could be acquired by outside investors looking to cash in on America’s seemingly unquenchable football thirst.
As bullish as Murdoch is on the new league, he said during the 45-minute session that opting out of Thursday Night Football (whose rights shifted to Amazon) is “the right strategic move.” Fox’s broadcast network is still a rights holder with Sunday NFC games, which are typically the highest-rated of the week, and the network will carry next February’s Super Bowl.
The Super Bowl and soccer’s World Cup in November and December (plus October’s World Series, if Major League Baseball resolves a labor dispute with players) are helping Fox’s upfront ad sales, Murdoch said. “We’re seeing strong demand in the upfront,” Murdoch said. “It’s a unique year for us” given the additional sports on the calendar. Scatter pricing, he noted, has been 20% to 25% higher than upfront inventory.
Mid-term elections are also apt to stimulate ad buys at Fox’s local station group. In 2018, the last mid-term year, Fox netted about $180 million. “This year, early indications are that we’ll easily surpass that,” Murdoch said.
Fox News, meanwhile, is “under-monetized” when it comes to advertising, given the network’s ratings momentum. More viewers tuned into Joe Biden’s State of the Union address last week on Fox than on the next-most-viewed network, ABC. “Advertisers have noticed” the way the network “represents middle America.” Without mentioning a source or a specific number, Murdoch also said more registered Democrats and independent voters watch Fox News than watch MSNBC or CNN.
“We’re really competing with the broadcast networks” rather than cable peers, he said.
Asked by moderator Ben Swinburne, a media analyst for Morgan Stanley, about some advertisers’ reluctance to buy time on Fox News, Murdoch said the network actually has “a broader array of advertisers than before.”
Financially, Fox News has an attractive profile, with some of the best margins in all of media. “We are an essential part of the bundle,” meaning while advertising makes up almost half of FNC revenue, retransmission fees are continuing to grow at a healthy rate. The company will have almost 70% of its renewals with pay-TV operators coming up over the next two years, just in time for the 2024 presidential race. “It’s a tremendous opportunity for us to capture our audience share and ratings success and translate that to pricing,” he said.
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