Fox Corp. CEO Lachlan Murdoch is certain that that the company’s new sports venture with Disney and Warner Bros. Discovery will be “additive” and not threaten Fox’s still-lucrative pay-TV business.
The venture was announced Tuesday and has set media tongues wagging. The topic dominated Fox’s 30-minute quarterly earnings call, which was where Murdoch made his comments, enabling execs to largely elude tougher questions about a 20% year-over-year decline in advertising revenue in the quarter.
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“The key market, the market that we will be driving toward, is currently outside the traditional pay-TV bundle today,” Murdoch said, describing most of that population as “cord-nevers,” the industry term for customers who have never had a pay-TV subscription. “There’s tens of millions of them. This is a very large market and a large opportunity that we can address without undermining the traditional bundle.”
The new venture will bring 14 linear networks into a package that can be bundled with Max, Hulu and ESPN+. The programming licenses are non-exclusive, meaning that the sports being carried won’t be exclusive.
“We’ve done lots of sensitivity analysis and we would not be launching this product if we thought it was going to significantly affect our pay-TV affiliate partners. That’s really important to us,” Murdoch said. “For the consumer who wants to get it all at an affordable price, the big bundle is still the best way to get that programming. … We are confident that this product will be additive.”
The exec said the portfolio of networks contained on the service (whose pricing and branding is still being determined) are a “tremendous” selection representing the “majority of sports in this country.” Additional partners like NBCUniversal, he said, are not being considered as additional participants in the venture as of now.
Murdoch said the member companies in the JV had been working for months to finalize the initiative. Based on initial prototypes he has seen, he assured analysts on the call that the streaming service would be “unique and innovative.”
Asked about the risk to the company’s profit engine, Fox News, Murdoch said it was “quite low,” given the focus on cord-nevers. “Our distributors, our partners, really value that channel,” he said.
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