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James Murdoch: Online TV Pricing Not Undermining Pay-TV

3 Nov, 2016 By: Erik Gruenwedel


21st Century Fox CEO James Murdoch


Characterizing the emergence of online TV platforms as “an exciting moment of growth” in the pay-TV ecosystem, James Murdoch, CEO of 21st Century Fox, said services such as AT&T’s pending DirecTV Now and next year’s Hulu Live — which Fox co-owns with Disney, Comcast and Time Warner — should be embraced, not feared.

The approach is a reversal of sorts from previous Fox management policy that deferred access to traditional linear broadcast distribution with digital distribution secondary. But with Netflix and Amazon Prime increasing their global presence, and media companies rushing direct-to-consumer digital platforms to market, Murdoch is about to let his father’s pay-TV empire be left behind.

Indeed, Fox channels will feature prominently in DirecTV Now and Hulu Live, in addition to current availability on Sony PlayStation Vue and Charter Spectrum TV Plus, among others. Dish Network’s Sling TV offers access to Fox Regional Sports Networks for a premium.

But with online TV platforms priced from $20 monthly, scuttlebutt suggests entering into retransmission agreements with Web TV platforms undermines the lucrative pay-TV cash cow.

Speaking on the company's Nov. 2 fiscal call, Murdoch said all of Fox’s online TV contracts include a fair amount of flexibility for its brands in regards to household penetration and packaging, among other factors. Platform pricing to consumers, Murdoch believes, is better left up to the individual distributors.

“We are monetizing our content in exactly the same way … we are with traditional multichannel video program distributors. So, we’re not out of pocket, regardless of how they package [our channels].”

When asked whether Hulu represented enough of a direct-to-consumer approach, Murdoch said the user experience represented a “dimension of competition,” that is important in today’s pay-TV ecosystem.

Indeed, the executive said Hulu and proprietary authenticated apps (such as TV Everywhere) accounted for almost 20% of Fox’s primetime viewing.

“We think that’s a really encouraging start,” Murdoch said, adding that direct-to-consumer platforms not mandate independent pricing. Instead, he said the platforms enable for innovations such as targeted ads toward specific viewers.

“Having that closer relationship with customers or working with partners like [online TV] and Hulu, where we can innovate in terms of advertising and reduced [ad] loads, we have much more capability — [which] we think the real positive for the business is.”

 


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