Proposed deal with Disney, diversity of voices, empowering customers, leading by example
During his session at Recode’s 2018 Code Conference in Rancho Palos Verdes, California, 21st Century Fox CEO James Murdoch sat down with Recode’s senior editor of media Peter Kafka to talk about a wide range of topics. During their conversation on Tuesday, May 29, James had the opportunity to talk about his main focus these days, the proposed merger of certain 21CF assets with Disney, 21CF’s diversity of voices and more.
“I’m really focused on trying to land the plane. I think when you have a big transaction like this, it’s not entirely straightforward. There’s quite a lot of work to do,” James said when Peter asked about his future plans.
James noted that regulatory work for the proposed creation of new “Fox” and merger of certain assets with Disney is well underway with a number of months to go. “Right now, I’m 100 percent focused just on getting this thing done and doing what’s right for the business, for my colleagues and for all our shareholders.”
The proposed deal
“I think the right choice here was to create a firm in a merged Disney-Fox – which is the transaction that we have before us and that we’ve agreed to – that can be really competitive going forward in an industry that’s changed a lot,” James said when the conversation turned specifically to the proposed deal. “It’s an industry that’s changed a lot. It’s an industry that continues to thrive on scale.”
When Peter later asked about potential competing bids for 21CF’s assets, James said: “We have an agreement with Disney which we find very attractive for our shareholders. It’s an all-stock agreement. We think the prospects for the new firm are very strong, and we think from a regulatory perspective, and we thought as well in December from a regulatory perspective, that you have a higher certainly of close. When you weigh up all of those factors, that’s really what we thought was the right thing to do.”
“Buyer vs. seller”
When Peter brought up 21CF’s previous endeavors to grow its business through acquisitions, he asked about the shift to big media companies now opting to sell its assets. James responded by saying it’s not about being a “buyer” or “seller.”
“I think it’s not so much ‘Are you selling? Are you buying?’ It’s a question of what kind of firms are going to be the most competitive in this area going forward.”
James highlighted 21CF’s strong organic growth and presence in India, Latin America and Europe, as well as the strength of its creative TV and film businesses in the U.S. “We made a lot of the right bets in terms of focusing on big brands that matter in an environment where you were going to have much, much more pressure on the cable bundle,” he said. “You wanted to make sure that you were somewhere where it really mattered to customers that you were included there.”
Merging some of these businesses with another firm may be an opportunity to accelerate their growth, James added. “Whether you’re a buyer or a seller, the point is the combination of these firms is something that we think is very attractive. That’s really what’s driving our thinking.”
21CF CEO James Murdoch at the 2018 Code Conference (photo credit: Asa Mathat for Vox Media)
Direct access to the consumer
James also discussed 21CF’s position as one of the biggest direct-to-consumer firms in the world. He underscored three shining examples:
- Hotstar, a mobile video app in India, which boasts 145 million monthly uniques interacting with the platform up to 2 billion minutes a day
- Sky has 23 million households interacting with its over-the-top business Sky Go and streaming service Now TV
- Hulu (jointly owned by 21CF, Disney, Comcast and Time Warner) now has 20 million subscribers, a portion of which pays extra for the ad-free plan
He credited Netflix with delivering a user experience for customers that has raised the bar for competitors. “What’s really great about seeing Netflix succeed is that the user experience has become front and center for people.”
On Hulu, customers can either pay $7.99 for access to its streaming library with limited ads or pay $11.99 per month for access without ads. This choice empowers the customer and allows them to value their own time and priorities, according to James.
Stepping back to take stock of advertising in scripted entertainment, James noted that the ad business is tricky. “When you invest an enormous amount in telling these stories as well as we can, and kind of achieving the suspension of disbelief, and you really have the customer or the viewer enjoying what they’re seeing, and you interrupt them to communicate something about Kit Kats, or beer, or something like that, it’s just not a good experience. So I think we have to do much, much more investing in making it better.”
Leading by example
Peter asked James about Disney canceling “Roseanne” on ABC because of the star’s offensive tweet. James noted the sometimes-delicate relationship between independent voices and what a brand stands for.
“You have to make the right call, right?” James said. “I mean, it’s not really about just keeping that audience going. It’s about what’s the right thing to do, what’s the right thing for your company, for the brand, for your customers, but also for your colleagues inside the business, and do you believe in things, or do you not?”
Nevertheless, a diversity of voices is necessary. “While I’m not going to agree with everything that goes on every single channel that we own…I’m also very proud of the diversity that we foster from National Geographic to FX to Fox News to the ‘Deadpool’ movie last week. They’re great,” James said.
He pointed to what FX Networks is doing to promote increased diversity in its output and storytellers, as well as 21CF’s long-standing partnership with Ghetto Film School to give young people from historically underserved communities a chance to become filmmakers as two examples of the company’s efforts to ensure a sustainable push for diversity.
Peter followed up by recounting that James and his wife donated $1 million to the Anti-Defamation League last August and encouraged friends to do the same in response to the events in Charlottesville, Virginia. James said he received a lot of positive feedback from colleagues internally and the need to remember the significance of these events.
“Our Holocaust survivors are dwindling as time goes on,” he said. “It’s super important to record their stories and to make sure we’re talking about their stories all the time and reminding people what happens when this stuff gets out of hand and what did happen to a major population. So I just felt it was important to reach out to people and encourage them to do the same. It was more solicitation and trying to lead by example. I hope that everyone does more of it.”
The decision to cut Fox News’ ties with Bill O’Reilly, who had the channel’s No. 1 show at the time, was also an instance of leading by example. “I think when you lead like that, people get the message pretty clearly,” James said.
He also talked about what 21CF is doing to ensure that it protects its colleagues and others from abuse. “Little things like changing our policies around where you can have certain kinds of meetings and how many people have to be there – you hate to have to micromanage that, but if you can guarantee that you’re not going have casting meetings in hotels with only one person in it, then you’re probably going to eliminate the opportunity for abuse across a pretty broad swath. That’s our goal.”