Fox is more than happy to be outside of the streaming wars and focused instead on its advertising-based video-on-demand platform and its live offerings.
“We’ve been very happily on the sidelines watching this sort of bloodbath, which is going on in the SVOD market,” Fox CEO Lachlan Murdoch said Wednesday. “And what that’s meant is we haven’t had to spend billions of dollars propping up an SVOD service, but we also haven’t felt the need to artificially put sports into an SVOD service to keep subscription levels up.”
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Speaking at the MoffettNathanson’s Media and Communications summit, Murdoch touted the company’s advertising-based platform, Tubi, as well as the continued growth of Fox News and Fox Nation. Fox was able to put itself in this position by selling off large portions of 21st Century Fox to Disney in 2019. And now, Murdoch said, Fox is focused on “live news, live sports” and entertainment, but “in a focused way.”
As Netflix and Disney announced plans to expand their streaming offerings to include different pay tiers — with some plans available free to consumers and featuring advertising — Murdoch doubled down on the company’s upfronts tagline of “Only Fox.” Creating the different tiers is “a confusing and frustrating proposition” for consumers and advertisers, he said.
Adding that AVOD is “definitely a better business than SVOD,” Murdoch said he feels its position will only strengthen among consumers going forward.
“Particularly going into a potentially recessionary period or certainly high inflation period, free is a tremendous proposition,” Murdoch said.
Still, Murdoch was quick to position Tubi as “incremental” to the company’s marketing and advertising strategy, compared to national and local advertising on its other channels, even as it is projected to be more than $1 billion over the next few years.
On the scripted entertainment side, Fox reported a $30 million write-down in its most recent earnings report, which Murdoch said was related to COVID-19 delays in production and subsequently needing to shift the broadcast schedule. The industry is still working under protocols developed at the beginning of the pandemic, which Murdoch said he hopes can evolve to meet the current state of COVID-19.
“We’re still operating under them now and it does cause tremendous disruptions in production schedules when someone gets sick,” he said.
In order to balance costs, the company plans to continue to offer a mix of scripted entertainment and unscripted entertainment, an effort that Murdoch said will be bolstered by its acquisitions of TMZ and TV movie producer MarVista Entertainment.
On the cable side, Fox News is now garnering broadcast ratings, Murdoch said, which he argues puts it competition with broadcast networks, rather than shows such as CNN or MSNBC.
“We’re so far ahead of them in the market that our competitive set is the broadcast networks,” Murdoch said.
He argued this means Fox should receive broadcast rights fees in terms of subscription and distribution, as well as broadcast level advertising CPMs.