Fox Corp. unveiled an “insanely simple” new structure at its first-ever Investor Day Thursday, saying the new company plans to focus its programming almost entirely on live events, like news and sports. Rupert Murdoch first took the stage at the Midtown Manhattan event to explain why the company chose to slim down through the sale of its entertainment and film assets to Disney for $71.3 billion. The company is “pivoting at a pivotal moment,” said the 88-year-old chairman. “We could see a shift coming in media and the danger to the industry,” he said, adding that Fox’s film and TV studios were too small to compete as stand-alones against deep-pocketed tech companies moving into the space. Fox Chief Executive Lachlan Murdoch then took the stage to explain that under the new structure, Fox will get half of its revenue from advertising and half from affiliate relations, or fees for programming. The content that will be driving the ad revenues will be 70 percent devoted to news, sports and other live events, he said. The emphasis on live programming, like football games and breaking news, seeks to distinguish Fox from other broadcasters in an industry that has seen scheduled programming transform into “anytime viewing” thanks to services like Netflix and YouTube. “We’re standing apart from the mob and focusing on the power of now,” the younger Murdoch said of the focus on live programming. The new business model is “insanely simple,” Murdoch told the crowd. “We outpunch competitors in the amount of live television we deliver to American households.” The Disney sale has left Fox with four key brands: Fox News Channel, the country’s most-watched basic cable network; Fox Sports; Fox Network, the national television broadcast network; and Fox Television Stations, which owns and operates 28 broadcast stations in the US. Elder son Lachlan said Fox was “returning to its roots” with the leaner structure — one that would leave it “unencumbered by assets and strategies and attitudes that are not built for today’s eco-system.” He cited Fox Broadcasting as an example, saying it is now “free to commission the best content from any studio.” Fox Sports Chief Executive Eric Shanks also took the stage to detail the company’s move into legalized sports betting through a $235 million investment in Stars Group, the Toronto-based gaming and online gambling company. The partnership is called FOX Bet and will create apps for wagering on sports and other real-time contests. Fox sees sports betting becoming a $7 billion business by 2025, Shanks said.<doc-sep>Fox Sports is entering the legalized sports betting arena “ambitiously, aggressively, but also responsibly,” the division’s chief, Eric Shanks, declared during the Fox Corp. investor day Thursday. Fox Bet, a new offering catering to those newly permitted to lay wagers in multiple states after a Supreme Court ruling cleared the path, will be “up and running by this football season,” Shanks said. He did not offer a detailed look at the service, which was made possible by a partnership between Fox and Canadian gambling outfit The Stars Group, which was announced yesterday. Fox will become the first established media company to put its name on betting products aiming to compete in states with legalized betting against companies like FanDuel and DraftKings. In exchange for a $236 million investment in Stars, Fox gets about 5% of the company. Related Story Rupert And Lachlan Murdoch Kick Off Fox Investor Day: The push into betting was among several key points in Shanks’ presentation to Wall Street investors as the company showed off its newly slimmed-down make-up in the first detailed way since the mid-March closing of the Disney deal. That transaction saw two-thirds of Fox migrate to Disney, leaving broadcast, news and sports holdings. (Disney CEO Bob Iger affirmed on Wednesday that the company does not have any plans to explore sports gambling.) Fox Sports chief Eric Shanks Live sports across the traditional media landscape has become a crucial element for anyone with a stake in TV or streaming, and Fox is particularly well-positioned to take advantage of it, Shanks said. “You see it now, or you regret missing it forever,” he said, noting the company will carry the Super Bowl in February and has locked up baseball’s World Series in a long-term deal. “Our rights portfolio is second to none,” he said, describing sports viewing as “the single most essential trend in our business.” In 1998, Shanks said, 25% of the top 100 programs in total ratings were sports. By 2018, with on-demand viewing and streaming redefining primetime, the percentage surged to 88%, with 63 of the top 100 programs being NFL broadcasts. (Fox indicated its view of sports by having lead play-by-play man Joe Buck deliver the introductory “please be seated” announcements today, and even disclosures about “non-GAAP accounting measures.”) For advertisers, Shanks said, “content is essentially fungible.” If brands want to reach incremental audiences, off-network, recycled programming “will always likely be available to you.” On the other hand, “if you want to build reach in chunks of five, 10 or 15 million at a time … Fox Sports is the most powerful option.” One chart that flashed on the screen tallied up total minutes of viewing in 2018, arriving at 615 billion as the total across Fox Sports and its cable siblings, FS1 and FS2. Unspoken during Shanks’ portion (though acknowledged by CEO Lachlan Murdoch and COO John Nallen) was the unloading of 22 regional sports networks as part of the Disney deal. Disney recently sold 21 of the networks to a Sinclair Broadcast Group-led set of buyers, with the flagship YES Network sold back to the New York Yankees, with Amazon and Sinclair also in the mix on that deal, which has yet to formally close. Murdoch and Nallen both reaffirmed that Fox Corp. decided early on in the auction of the RSNs, which was agreed to by Disney as a condition of regulatory approval of the merger, that they would not seek to re-acquire the networks.<doc-sep>FOX is “returning to its roots” following a blockbuster deal with Disney, and now stands “at the apex” of the media industry, Executive Chairman and CEO Lachlan Murdoch said Thursday at the company’s first-ever investor day. FOX is now leaner and stronger, with a focus on news, sports and broadcasting, he told the crowd. “We have created a company extremely well-positioned for growth,” Lachlan Murdoch said. “FOX is the best brand you could ever want.” LACHLAN MURDOCH TELLS FOX CORPORATION STAFF, 'WE ARE BOLD, RISK-TAKING, GRITTY UNDERDOGS' Founder Rupert Murdoch opened up the event by explaining his “new journey” that emerged when Disney’s acquisition of 21st Century Fox became official earlier this year, leaving Fox Sports, Fox News, Fox Television Stations and Fox Broadcasting as a stand-alone company with his son, Lachlan, at the helm. “The creation of FOX, both from conception and over the past many months of preparation and molding, was designed to endow it with strong assets and unique positions to successfully compete in this rapidly evolving media landscape,” Lachlan Murdoch said. Fox News CEO Suzanne Scott told investors that it’s currently the “best time” for FOX, saying the cable network has the “incredible honor” of presenting the news to its audience – and viewers trust the content they’re consuming. “There are moments where, it seems, as a nation we have stood still to watch together, mourn together and celebrate together. And it’s the coverage of these moments on every platform that has created an unbreakable bond between Fox News and the audience,” Scott said. Scott told investors that if they only have one takeaway from the presentation, it should be that “America is watching” and ratings data backs up her message. “We have had tremendous accomplishments at Fox News,” Scott said before explaining that Fox News isn’t just a television channel anymore. “The Fox News you know today started nearly 23 years ago as a small, linear cable channel. But when we think of our business now, we refer to it as Fox News Media,” she said. “Over the years, we have fundamentally transformed the business.” Scott said Fox News is now a multi-media brand that includes two fully distributed cable networks and “robust” businesses across digital, mobile, social and direct-to-consumer media. RATINGS-CHALLENGED CNN SHEDS STAFF AS NETWORK MOVES INTO LAVISH NEW DIGS “The unrivaled strength of our brand and its passionate audience have allowed us to expand our reach while maintaining relevance across all these platforms,” she said. “We have created new monetization models to capitalize on the ever-expanding choices consumers have to watch, interact, listen, read and engage with our content.” The Fox News CEO then explained that over 200 million people are reached each month between the various Fox News Media platforms – with half coming from outside the linear cable networks. “This fiscal year is on track to be our highest advertising revenue year ever,” Scott said. “Going forward, we expect advertising to continue to be a driver of business across all platforms.” While half of the 200 million monthly consumers are coming from places other than linear television, Scott pointed out that Fox News Channel continues to triumph cable news in the ratings department. “We are No. 1 in total viewing across all of cable, all dayparts, and all genres of programming. From ESPN to HGTV, from morning to night, we dominate,” Scott said. “We got here because the audience trusts us.” Scott’s presentation indicated that Fox News has an “engaged, upscale” audience and the company owns 100 percent of its content. “Fox News is the place American’s turn to when news breaks,” she said as the audience saw a chart showing dominance during major television events such as election nights. FOX COO John Nallen broke down revenue and expenses, noting that FOX is being operated in a “hallmark lean fashion” from a management perspective.<doc-sep>Rupert Murdoch opened Fox Corp.’s Investor Day presentation on Thursday with a promise that the slimmed-down company will be a Wall Street growth story. Murdoch, Fox Corp. chairman, told the crowd in New York that he decided to sell most of his Hollywood assets to Disney in order to make the most out of all that he had assembled over the past few decades. “We were pivoting at a pivotal moment while staying true of course to our principles and our purpose,” he said. Murdoch asserted that the 20th Century Fox studio and other assets were better off under the Disney umbrella in order to achieve scale rather than struggle to compete against the deep pockets of the tech giants moving into video. The remaining businesses that form the new Fox Corp. — Fox Broadcasting, Fox News and Fox Sports — will be energized with new focus and resources. “A good deal of our efforts are focused on simplifying a good deal of our structure,” Murdoch said. “We could see the shift coming in media and the danger to the industry.” Live events, news and sports will be the laser focus of the company. Murdoch and Fox Corp. CEO Lachlan Murdoch vowed not to be “distracted” by other business ventures beyond the core TV focus. “We’ve recommitted to providing great entertainment, storytelling, breaking news and challenging opinions and of course, captivating sports,” Rupert Murdoch said. Lachlan Murdoch echoed his father’s enthusiasm for the new company’s prospects. He called the company’s corporate structure “insanely simple,” with half of its revenue coming from MVPD affiliate fees and half from advertising. “Our news, sports and broadcasting assets have been reinvented into a simpler, stronger Fox,” he said. Throughout the presentation, Fox executives stressed that the leaner company is better off to compete in the U.S. TV landscape as it will focus on generating affiliate fees from MVPDs on a handful of must-have channels. “Fox will lead all other networks in the rate of growth in total retrans revenue,” Fox Corp. chief operating officer John Nallen promised. Fox’s deals with MVPDs that provide three-quarters of the company’s overall affiliate fee revenue are up for renewal in the next three years, Fox CFO Steve Tomsic said. Lachlan Murdoch was blunt in stating that the Fox broadcast network now has greater ability to shop around other studios and production entities for programming rather than having to favor the 20th Century Fox TV pipeline. On the other hand, Fox may have fewer big suppliers to choose from in the future as its larger rivals focus on feeding content to ambitious streaming efforts. “In the old structure we were more supply driven,” he said. The new system “will lead to a better, broader more competitive schedule.” The company overall is better off being “unencumbered by assets and strategies and attitudes that are not built for today’s eco-system.” Rupert Murdoch reminded the crowd of the long-term track record of Fox and the windfall that 21st Century Fox shareholders received after a bidding war for the company between Disney and Comcast last year. “Investors who have joined us have prospered,” he said. Nallen was also direct in telling analysts that the company is not for sale, not does it have a major acquisition on the horizon, at present. “We’re not running this company to sell it, we’re running it for growth,” Nallen said. Other highlights of the presentation so far: Fox Corp. has no plans to reunite with News Corp., the publishing-focused arm of the Murdoch empire that was split off from the film and TV assets in 2013, under pressure from investors. Emphasizing that the decision in 2013 was designed to bring “focus” to companies working in different media sectors, Lachlan Murdoch said he sees “no benefit to reversing those actions” after the birth of Fox Corp. in March following the completion of the $71.3 billion Disney transaction. There won’t be a Fox Corp. streaming bundle offered as a direct-to-consumer offering any time soon. Fox Corp. chief operating officer John Nallen told investors that company leaders don’t see a “meaningful opportunity” to enter the DTC arena like other media giants. Fox Sports chief Eric Shanks talked up the company’s interest in legalized sports wagering. Fox Corp. made a $235 million investment in Stars Group to create what it called “a national media and sports wagering partnership” to be named Fox Bet. Shanks said Fox’s research shows that sports betting will be a $7 billion business by 2025. Fox sees the sports wagering opportunity as “simply massive,” Shanks said, as it will become “a growth category for sports advertising at the national and local level.” Fox Entertainment head Charlie Collier disclosed that the company is launching an unscripted TV production unit and will takeover production of talent competition series “The Masked Singer” in its second season. He said the shift will allow the show to be produced at a lower cost than in season 1, which was produced by Endemol Shine North America and is now part of Disney. Craig Plestis will continue as showrunner in season 2, while Endemol Shine will still produce the show in territories outside the U.S. Collier, like other Fox executives, emphasized what he characterized as Fox’s strategic advantage in being a smaller operation overall than under the 21st Century Fox era. Fox won’t have an in-house studio to generate shows but it will command a piece of the action on shows licensed from outside shops. “We’ll have ownership and upside in the shows without the margin strain of studio overhead,” he said. “We’ll realize many of the benefits without the same level of infrastructure costs.” Collier added that Fox will “invest with discipline” in programming and related areas. “We are actively bolting on capabilities that will allow Fox Entertainment new growth.” Jack Abernethy, Fox Television Stations CEO, talked up the Fox O&O group’s strong presence in the political advertising arena in battleground states such as Pennsylvania, Illinois and Michigan. “We think the 2020 presidential election will bring another windfall of revenue in fiscal 2021,” he said.<doc-sep>
Rupert Murdoch began Fox Corp.’s investor day, appearing solo onstage to emphasize the effectiveness of the company’s evolution. The architect of the Fox empire said that even before the milestone Disney deal, which closed in March, Fox was “pivoting at a pivotal moment while staying true of course to our principles and our purpose.” In recent years, he said, “Our efforts have been focused on simplifying our structure.” The Disney deal, which involved the transfer of two-thirds of the company, “gave us the opportunity to create a more focused company.” Lachlan Murdoch, executive chairman and CEO of Fox, said the company is “returning to its roots” and is positioned “at the apex of our peers in the media business.” Related Story Fox Sports Chief Eric Shanks Touts Fox Bet Gambling Initiative, Tells Investors Rights Portfolio He described the company’s run over three-plus decades as a hand-crafted affair. “Our assets, except for the stations, were built from the ground up,” he said. Post-merger, the company consists of the Fox broadcast network, Fox News, Fox Sports, cable networks FS1, FS2 and Fox Business, and 28 local TV stations. A reunion with News Corp., the parent company of the Wall Street Journal and other news assets spun out in 2013, is not in the cards, he said. Throughout his remarks, Lachlan Murdoch emphasized the advantages of the company’s leaner structure. The company’s new composition is “insanely simple,” he said, deriving revenue from affiliate relations and advertising in almost equal proportion. The separation of Fox’s broadcast network from its studio supplier is not a disadvantage, he argued. Instead, it changes Fox from a “supply-driven programmer” to a “demand-driven one” with about 70% of its overall air time focused on news, sports and other live fare. COO John Nallen echoed sentiments from the Murdochs, disputing a scenario bandied about since the Disney deal by analysts and media observers. In slimming down, the thinking goes, Fox is out of step with rivals getting larger and is likely to merge with another entity in order to be able to compete. “We’re not running this company to sell it,” Nallen asserted. “We’re running it for growth.” While the company is not mounting a comprehensive direct-to-consumer streaming offering, as are Disney, WarnerMedia and NBCUniversal, Fox’s properties have been key ingredients in skinny bundle services. Even if consumers cut or shave the cord, Nallen argued, they can still subscribe to the Fox Nation streaming service or a cheaper, Internet-delivered bundles that feature Fox properties. The investor day is slated to be a four-hour tour through the new company, with presentations scheduled by the heads of Fox TV Stations, Fox Sports, Fox News and Fox Broadcasting. Other executives are speaking to the company’s financials and operations. On Wednesday, Fox announced third-quarter results that exceeded Wall Street expectations.