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News Corp. CEO: We Will Continue ‘Attack’ on $1 Rentals

10 Aug, 2011 By: Erik Gruenwedel

Global theatrical hit ‘Rio’ portends excellent home entertainment sales through the end of the year

20th Century Fox Studio is looking to extend its brand across evolving digital distribution platforms, including user-authentication in TV Everywhere, according to Chase Carey, president of the studio’s parent News Corp.

Speaking Aug. 10 to analysts regarding fourth-quarter fiscal results, Carey said Fox would engage Netflix and other subscription streaming services (Amazon Prime, Hulu Plus, etc.) in license rights provided there are “clear rules” about what is catalog and new release content.

“Our priority is to make sure we are thoughtful and do not allow a quick decision to make a buck to jeopardize the longer term value of our product,” Carey said, adding that Fox would continue to undermine $1-per-day disc rentals, including a continued embargo of new releases to kiosks.

“We will make sure that we are vigilante about attacking practices that undervalue our products, like $1 rentals, and building new platforms that fairly value our content,” he said.

The CEO said the recent decision to delay online access to repurposed broadcast content is intended to allow TV Everywhere authentication to evolve (albeit slowly) as a tool consumers use to get that midnight or the next-day repurposed TV program experience but not as a replacement to the original transmission.

That said, Carey admitted rollout of TV Everywhere has been painfully slow on both the distribution and consumer awareness fronts.

“There’s been a lot of talk and not as much action,” Carey said.

Finally, when asked about the status of a potential sale of Hulu, which News Corp. co-owns with Disney and Comcast, the executive said the bidding process was going according to plan without a concrete endgame yet.

“For us, it’s still a decision to see what it looks like at the end and if it makes sense to pursue that path or make does it make sense to continue an ownership position and have it continue to be driven by content owners,” Carey said.

Animated box office hit Rio contributed to 20th Century Fox Studios posting fourth-quarter (ended June 30) operating income of $210 million, up 53% from operating income of $137 million during the previous-year period.

Indeed, 20th Century Fox Home Entertainment said Rio would be the studio’s top-selling release of the year with unit sales already exceeding 2.5 million discs since its August 8 release — including 40% of those sales in Blu-ray Disc combo packs and premium DVD SKUs.

“We beat our projections in two days,” said News Corp. CEO Rupert Murdoch.

In the quarter, revenue jumped on top selling home entertainment releases included Black Swan and The Chronicles of Narnia: Voyage of the Dawn Treader, in addition to worldwide pay and free TV catalog product.

For the fiscal year, operating income dropped 31% ($422 million) to $927 million compared to operating income of more than $1.3 billion in the previous year — the largest in 20th Century Fox Studio’s history.

Specifically, the previous fiscal year benefitted from the blockbuster worldwide theatrical and home entertainment performances of Avatar (the all-time box office hit) and Ice Age: Dawn of the Dinosaurs, which together contributed more than half of last year’s segment operating profit.

Studio revenue for the quarter topped $2 billion, up 13.5% from revenue of nearly $1.8 billion last year. For

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