Lachlan Murdoch Sees Pay-TV Driving Value Of Fox Sports “For A Long Time To Come”

Fox CEO Lachlan Murdoch said linear television is still the best way to protect the company’s sports programming, which, at the moment, “derives the most value from being behind a paywall, behind the traditional cable and satellite pay-TV universe.”

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While the number of linear subscribers continues to decline across the industry, “We think that pay-TV ecosystem continues to be of tremendous value for our business and really drives the value of Fox Sports and that content, and will for a long time to come,” Murdoch said. Speaking with Wall Street analysts on a post-earnings conference call, the exec fielded a question about ESPN, which may be looking for strategic partners, as per Disney CEO Bob Iger and plans to roll out a full-scale version of ESPN in streaming over the next couple of years. Iger also said in an interview last month that linear TV in general may not be core to Disney’s business.

Murdoch acknowledged that Fox Sports “is fundamentally very similar to ESPN’s, so we face the same strategic priorities as they do and are probably looking at similar paths forward as we go forward with our portfolio.” So, “As consumer demands and tastes change, we will endeavor to put our content and our brands in front of consumers in which whatever manner makes the most sense for them — provided it remains behind a paywall and we get full value for those rights and those brands.”

But, he insisted, it’s not an either/or proposition. “We don’t envision a moment when you leave pay-TV and quickly transition to a direct-to-consumer universe. We think you will enter a phase where both are important.”

The cost of sports rights are through the roof but it’s the biggest driver of ratings and advertising in an otherwise soft linear television market. Murdoch said that protecting key sports franchises for “the pay-TV environment” and its affiliates helps the company ensure “industry-leading” pricing in both pay-TV and free. “And that pricing will certainly continue to ameliorate or balance any reduction in subscriber erosion.”

“That’s where we feel we are with our affiliates, and I think we are in a pretty good place with them.”

Fox stock jumped almost 6% in early trading despite a broader market downturn after the company beat Wall Street’s earnings forecasts.

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