With an audience of colleagues at businesses around the world, from Los Angeles to New York to Mumbai to Buenos Aires to the U.K. to Hong Kong, 21st Century Fox Executive Chairman Lachlan Murdoch and CEO James Murdoch recently hosted a company All Hands meeting. By way of a live webcast feed from the historic Zanuck Theatre on the Fox lot in L.A., they used the hour on Friday, Oct. 7, as an opportunity to talk about the direction of 21CF, the company’s culture, diversity, the biggest threat to the company, and more.
The current direction and state of 21CF
Lachlan kicked things off by discussing 21CF’s commitment to the creative process and storytelling. “Without storytelling we are nothing,” Lachlan said. “It is fundamental to who we are. It is basic to us. We are not a theme park company, where characters are conceived by toy manufacturers. Nor are we a tech company masquerading as creative, where algorithms tell you what to watch. We start every day with just a story, pure and simple, and that is why we will to continue to be the place where the best creative talent wants to work. And we need to do everything we can to maintain an environment where we can do our very best work.”
“[FX Networks and FX Productions CEO] John Landgraf has had to expand his office cabinets to fit in all the Emmys,” Lachlan quipped.
“Ultimate Plurality – the idea that everything is available to anyone everywhere – has manifested in huge demand for storytelling,” James said in his opening remarks. “Demand is at an all-time high, people spend more time consuming video than they do eating or sleeping. That means the value of what we make is growing, not declining. Each and every time a new distribution opportunity arises – from VHS to DVDs to cable TV to satellite and IP TV – we’ve been able to embrace it and grow. Now is no different, if we are fearless in our approach, and we are committed to delivering for customers in the way that they want, not in the way that our old business rules dictate.”
In this era of the empowered consumer and growing delivery of content via the internet, success will require “commitment and grit and a lot of teamwork; collaboration instead of turf battles; a zeal for change rather than a fear of it; and a mode of continual improvement rather than complacency – that’s when we’re at our best, and we need to make sure we are constantly striving for that culture and those behaviors,” James said.
Global perspective and strategy
After their opening remarks, Lachlan and James answered questions from colleagues around the world. The first was about 21CF’s international strategy.
James noted that the company has had a long history of looking for opportunities to serve audiences across the globe but that its decisions to enter markets is discerning. “It’s about finding real opportunities and finding places where customers are underserved and doing something unique in our business of ideas that really enriches them and tells great stories.”
Lachlan added that 21CF doesn’t “bifurcate and think there’s a domestic business and an international business,” and that the company sees its investment in India with STAR in the same light as its investments in Hollywood.
The value of sports rights
When asked about the increasingly competitive and expensive sports rights market, James touted the huge value of sports. “The uniqueness of being able to bring together an audience around something that people are so tribally passionate about in their favorite team or a big global event or the like, that’s a very special thing. And in a fragmenting universe, it’s very, very powerful to be able to pull those audiences together.”
He also noted 21CF’s disciplined approach to the market, making sure to steer clear of simply trying to have everything.
The core (not skinny) bundle
The present environment of cord cutting, slimmer cable packages and consuming programming over the internet is an opportunity. “When you sit back and you think about it and you look at where we’re going to go and what over-the-top distribution can give us – it can give us more data,” Lachlan said. “It can give us a direct relationship with our consumers, a direct relationship in a way that we’ve never had before. And you begin to realize that in an over-the-top world, our business will be stronger than ever; our business model will be better than ever.”
21CF is midstream in its process to take advantage of the shifting environment, as seen in its continued investment in its core brands, including FOX Broadcasting, FX Networks, National Geographic, FOX Sports and STAR India.
“When people start to choose between their over-the-top packages, we don’t believe in a skinny bundle,” Lachlan said. “We believe in a core bundle, and the core brands, like the ones we have, will be absolutely critical to be in those core bundles.”
Diversity in the company and its output
“We’re enormously proud of the progress that we make in terms of having an inclusive and diverse workforce,” James said in response to a question about diversity in the company’s leadership ranks, noting that women comprise much of the creative leadership across 21CF’s businesses. “And I think it’s really important and makes our company stronger. It makes our output better and it makes the whole company better.”
Nevertheless, he said the company can always do better for the sake of its colleagues and for the sake of its customers, who can enjoy content that’s more authentic.
Thinking creatively about advertising
James touted 21CF’s strong advertising business and its progress in advertising in a more fragmented, time-shifting environment. “But we need to move quickly and we need to be really, really comfortable trying to innovate, comfortable iterating faster, and building [measurement] platforms underneath this streaming business so that we can deliver that user experience to customers and deliver more value in that audience for advertisers as well.”
He also emphasized the importance of thinking beyond advertising technology and streaming. The recent AT&T integration in “Pitch” and the Pepsi integration in “Empire” as examples of thinking creatively about advertising and sponsorship and finding solutions that don’t “degrade the user experience or the story in any way. It actually makes it more authentic.”
The biggest threat to 21CF
The company’s biggest threat is complacency, according to Lachlan. “If we try to manage our future as opposed to lead in our future, that’s our biggest risk. We’ll go backwards fast.”
He added that the company must take lead by taking risks and being bold.
“We don’t want to think like an incumbent, protecting ourselves. We need to think like an underdog that’s punching and fighting and continuing to grow.”
Social responsibility and ‘making things better’
When asked about 21CF’s social responsibility activities, Lachlan noted the importance of giving back to the communities the company is in. He pointed to James’ recent honor at the Ghetto Film School as an example.
“We shouldn’t be thinking about a business that is a commercial enterprise that makes money and then does penance,” James said. “We need to think about a business – and this is our great privilege to be in a media company and a business of ideas – a business that actually in the prosecution of its mission is making things better.”
Appetite for M&A
“I think our general preference is to invest in the business and invest organically and grow things,” James said when responding to a question about 21CF’s plans for M&A in the near future. “I think we’re pretty judicious about that and we’re laser focused on trying to make 21CF and this business as great as it can be without necessarily going into speculation about M&A.”
“I think the reason most companies, or many companies, make an acquisition or do a merger or something like that is when they run out of growth opportunities internally,” Lachlan added. “And I think that that’s not where we are today.”
Favorite part of the job
“I think it’s important to laugh out loud every day at work, at least once,” James said in response to a question about what he and Lachlan love about leading 21CF. “And I find the comradeship, the fun, the sense of enthusiasm for the business and the work just hugely infectious. And the more I can share that with you and you can share with me and my brother, that’s really, really important. Because I think we have to have that sense of fun and that sense of adventure in the business every day.”
“Well, I love working with you,” Lachlan said to James, whom he called a “great leader.”
“This company is at an incredible stage in its history,” Lachlan said. “There’s so much opportunity in front of us, and the fact that we come to work every day and we really start with just a story. We’re not a manufacturing company. We have to come, we have to create something from within ourselves. And that’s a great experience and something I personally find, and I hope all of you personally find, extremely fulfilling.”