Yesterday, 21st Century Fox announced that it intends to spin off to shareholders a portfolio of its highly rated news, sports and broadcast businesses to create a new “Fox,” which will include Fox News Channel; Fox Business Network; FOX Broadcasting Company; FOX Sports; Fox Television Stations Group; and sports cable networks FS1, FS2, FOX Deportes and Big Ten Network (BTN). Separately, 21CF announced that it has entered into an agreement to combine the rest of its businesses with Disney, including all the company’s film and television studios, cable entertainment networks, and international television businesses.
After the announcements, 21CF hosted a conference call featuring Executive Chairman Rupert Murdoch, Executive Chairman Lachlan Murdoch, CEO James Murdoch and CFO John Nallen. The call was an opportunity to explain the decision, look forward to the strengths of the new “Fox” and respond to analysts’ questions.
Here are 13 key quotes from Rupert, Lachlan and James:
On the journey to today: “Today is a momentous occasion for me, our investors and thousands of colleagues who have joined us over the years in building and nurturing what has become 21st Century Fox. I have a special appreciation of the team at 21st Century Fox, and I’m grateful for their hard work, their creativity and their dedication to Fox. Our journey started decades ago, with a single newspaper in Adelaide, Australia. Through the efforts and energy of many, we have grown to be one of the most dynamic media companies in the world.” – Rupert
On the opportunity ahead: “The world of media has obviously been undergoing rapid change. New technologies, competitors and shifting consumer preferences have redrawn the whole media map. As a result of the transformative transactions proposed today, we are paving the way for the new ‘Fox’ and a transformed Disney to chart a course across a broad frontier of opportunity.” – Rupert
On what this means for Disney: “At Fox, we have long admired what Disney has built. Like Fox, Disney boasts content assets that engage audiences around the world. The parks and resorts businesses of Disney is a leader, as is their Consumer Products business, forming a broad array of touch points with the consumers. The scope of new Disney’s combined storytelling, customer interactions, consolidated Hulu ownership, and the international direct-to-consumer businesses at Sky and Star will yield a customer-driven company poised for success in the future.” – Rupert
On the possibilities for the new “Fox”: “This will be a growth company, centered on live news and sports brands and the strength of the Fox Network. Those of you who know me know I am a news man with a competitive spirit. When we launched Fox News, the consensus was that America had no appetite for another cable news network. Well, they were wrong. When we launched the Fox Broadcast network, we were written off by the conventional wisdom and told there was no need for a fourth major network. The same story holds true of Fox Sports 1. The new ‘Fox’ is going to have an important lesson I’ve learned in my career in media, namely content and news relevant to viewers will always be valuable. So there’s no wonder we’re excited for the possibilities of the new ‘Fox.’” – Rupert
On the strong starting position for the new “Fox”: “Housing our new sports and broadcast franchises, this company is already a leader many times over. Fox News is a longtime leading cable news network and, more recently, the No. 1 cable network and probably the strongest brand in all of television. Fox Business is now the most-watched business news channel. Fans look to FOX and FOX Sports as the long-term home of important sports leagues like the NFL, the MLB and NASCAR, and college conferences like the Big Ten. And the Fox Broadcast network and stations group are present in tens of millions of homes across the country, providing Americans with live local news and sports.” – Rupert
On the colleagues who made it possible: “I would like to say that this transaction would never have been possible without the incredible work of our 22,000 employees and creative partners. It is, frankly, a huge recognition of their talent and of their accomplishments that we are able to transform this company into these two new entities, the merged business with Disney and the new ‘Fox.’ I would like to thank each and every one of our colleagues for their work. Everyone should be very proud of what they have created.” – Lachlan
On the reasoning behind the transaction: “The logic behind the transaction is really simple. The assets we are merging into Disney will bring that company new creative opportunities, established intellectual properties and global reach. Fox Film and Fox Searchlight, with a combined 27 Golden Globes nominations this year; our incredible TV studio with hits on five separate networks; the inspiring National Geographic partnership and the inventive originality of FX; our local sports networks; and our thriving international channels and platforms, like Hulu and Sky and the burgeoning Star. Managed correctly, these assets should flourish under Disney ownership and drive shareholder return into the future. There is no doubt that the combined business will be a clear leader in entertainment content across all corners of the world.” – Lachlan
On returning to roots: “But while the merged business is about scale, the New Fox is about returning to our roots as a lean, aggressive challenger brand, focused at the beginning on must-watch news and live sports. The business is positioned to explore potentially disruptive distribution and monetization strategies. This strategic strength, when coupled with its strong balance sheet, robust cash flow profile and entrepreneurial DNA, makes the potential for new ‘Fox’ extraordinarily exciting. Over the next few months, we will be working through the leadership and management structure of the new ‘Fox,’ something we will announce close to the closing. In the meantime, our motivation and focus from now until then is in getting the best outcome for our shareholders, for our creative partners and for our employees, many of whom have found this to be a very difficult time. Sometimes, the right decisions are the hardest ones, and this is no exception. In the end, the combined Disney and Fox assets and the creation of new ‘Fox’ will best position our businesses to thrive over the coming years.” – Lachlan
On the digital strategy for new “Fox”: “The digital strategy for the new ‘Fox’ is really the same as the digital strategy for the old Fox. And we’ve been pretty open for some time in saying that we believe that all of our content and channels will ultimately have a direct-to-consumer distribution element, as well as a traditional distribution combined. And that’s very much the same here. So we would expect that the new ‘Fox’ channels have a direct-to-consumer platform as part of the deal. And moving forward [we expect] to take all that technology that we’ve been developing and we’ve talked to you about, that we’ve been developing over the 12 months, over into the new ‘Fox’ to enable that.” – Lachlan
On a game-changing decision: “So first of all, my father, the team he’s built, all of us, we’ve always been interested in game-changers, and we’re a business of change and of challenge and have never been complacent. In this transaction, this creation of two new ventures for our shareholders is a game-changer like no other.” – James
On a continued commitment: “We committed some years ago to simplifying our operating model and our portfolio. I want to be clear with you that this integrated transaction reinforces that. This is all about reinvesting in brands, in storytelling and in our capabilities. These investments are demonstrated in the birth of the Fox Network and Fox News and the extraordinarily important mission-driven work of National Geographic Partners and in our unparalleled investment in media in the world’s largest democracy, India. This commitment is also witnessed in our decades-long project to provide choice and innovation to customers of Sky across our European markets, and in our genuine zeal for investing in and developing the most challenging and innovative storytellers in the U.S. This transaction amplifies and enhances everything that we’ve been up to and accelerates our mission as a plurality and competition machine everywhere we operate.” – James
On unlocking the opportunity: “The new ‘Fox,’ with a unique focus on live and a brand that matters for consumers across the United States, is set to be the premier American television brand for decades to come. Unlocking this opportunity is truly special. And as John mentioned from a financial perspective, we expect new ‘Fox’ to have industry-leading growth and very robust free cash flow generation with an attractive dividend and significant financial flexibility going forward.” – James
On the proposed acquisition of Sky: “I need to mention one more thing for the avoidance of doubt. We’re totally committed to closing the proposed transaction to acquire the balance of Sky shares that we do not already own. We expect that transaction to pass regulatory muster before the end of this financial year, as we’ve said in the past.” – James