March 2, 2017 — Thank you, and good afternoon everyone.
Thanks particularly to Claire and David for inviting me. I’m grateful to be included and thank you all for being here.
Actually, I’ve been looking forward to this – it’s a great opportunity to talk with you all about the challenges and opportunities that our industries are confronted with, and also to share some thoughts on what 21st Century Fox is focused on, and to have a dialogue about the business, and the context for media and telecoms more generally.
First a little bit about our Company and the values it is built on…
William Fox founded the Fox Film Corporation in 1915 – and he was a real pioneer. A leader in film exhibition as well as distribution, he brought an independent mindedness to the business, and a zeal for innovation. The acquisition of the Movietone patents in around 1925 ushered in a revolution in storytelling – and the creation of the first widely distributed audio-visual news service ever, Fox Movietone News.
After the stock market crash of 1929, Fox fell on hard times, but the merger with 20th Century Film Corporation, and the creation of then 20th Century Fox, in 1935, secured the company’s future, and its commitment to great storytelling never wavered.
A new revolution occurred when News Corp — and here’s where my family, and our shareholders, get involved — acquired the business in the mid-nineteen eighties. The creation of the Fox Broadcast Network, an effort nobody thought was necessary or a very good idea, but turned out to be both of those things, was just the beginning of a transformation into a global creative disruptor that stands apart from many of our competitors we like to think. We moved from Fox Broadcasting to here, in the UK, with the founding of Sky Television, which likewise nobody thought was very clever, and we bet the farm on it anyway. After the merger with BSB it was still a huge challenge, and the investments in digital TV in the late nineties, and the subsequent doubling down on our creative output and the broadband platform, proved to be good bets, but not without their costs. In the meantime, we had acquired Star TV in Asia, which until 2001 remained a huge drain on our resources. All of these things – this desire to create choice and serve customers and viewers better, come from the same place. And I would argue that there has been no other firm so committed, in deeds, to increasing plurality across the markets we operate in.
Indeed, it’s the reason we go there.
Perhaps because of our roots in Australia and then the UK, this restlessness and comfort with roaming remains pretty unique. We have always taken a different view of what it means to be a global business, and every day we make choices about where to invest, where we can create experiences that matter to customers, and where we can create long-term value for our shareholders. I learned a lot when I was in Asia, trying to turn around our then-struggling investment in Star TV. We had to make hard choices, about where and where not to invest. It became clear to me that being everywhere wasn’t everything, but being deep in the places that could really make a difference, was crucial. Our business today in India is a market leader, and is a testament to the team and to those choices we made years ago.
Our long-term investment horizon has paid dividends, and I haven’t even touched on the Sky Italia or Sky Deutschland stories, which had also been projects that many thought were bound to fail, but succeeded because we never overestimated our customers’ satisfaction with the status quo.
The next chapter of all of this, the separation from News Corp, and the creation of 21st Century Fox, is only in its infancy. And while we are a business animated by the values and culture of a 100-year old creative franchise, the zeal and curiosity of a founder-entrepreneur of unparalleled vision, and our universal commitment to our customers and the great storytelling they deserve, we are also a new company, only three years old, eager to help define what this business of ideas looks like in the next 100 years.
There’s no question that this period we are in now is the most exciting and extraordinary period of transformation for our industry.
Over the medium term, and approaching quickly, all video entertainment and news will be consumed over IP streaming networks. That means that what we create is released into an unprecedented competitive environment, in which the customer can choose at any minute and on any device from all the things that have ever been made. We are in an era of ultimate plurality, where choices, sources, and access are multiplied, even from where we were only five years ago.
So first and foremost we need to be making better things all the time.
Better stories, better products, better experiences for our customers. We’re immensely proud of the creative achievements of the business, and of the momentum that we have at each of our brands.
Our business has been an expression of the technological advances shaping our industry – from silent movies to talkies, from feature film exhibition to broadcast television and from broadcast to multi-channel cable and satellite TV. And the underlying technological advances today – ubiquitous high-speed connectivity, a continued proliferation of end-user connected displays, and the potential for unfettered access to creative assets in the cloud for customers globally – presents an opportunity for accelerated growth for new and existing video creators and platforms. We think this is only just the beginning, and the combination of strengths required to operate a high-volume, high-quality content business and a vast international video platform is precisely the combination of strengths that we’re developing.
In short, if content is indeed king, then using it to build platforms that are an expression of these current underlying trends, presents the most promising opportunity for this industry in decades.
But you can’t achieve any of that without one necessary condition – a commitment to creative excellence. You saw some of what we do in the video at the top.
From Legion, Fargo, Atlanta, Baskets, Archer, and the Americans at FX to 24, Prison Break, and Empire at Fox – Genius, Mars, and the Story of God at National Geographic — Gomorrah, Fortitude, and The Young Pope at Sky – and Malleswari, Dil Hai, and Neeli at Star – He Named Me Malala, Hidden Figures, Kingsmen, Jackie, Deadpool, at Fox Film — creatively our investment is showing on the screen – and it’s an investment that we intend to grow.
And we take an approach that is deliberately diverse – not simply chasing blockbusters. There remains an enduring opportunity for a diverse output of television and films, and our output reflects that belief.
This year, we’ll produce almost 500 original series – over 20 thousand hours of entertainment programs.
The UK figures heavily in that.
Together 21st Century Fox and Sky invested around £700 million last year in original production in the UK alone – we intend to continue at least that level of investment while building on Sky’s already outstanding original content pipeline.
From our investment in Shine Group, we created the creative powerhouse that is Endemol Shine, one of the UK’s largest production groups. It is also one of the country’s leading producers of scripted programming with shows such as Black Mirror, Broadchurch and Humans, which are sold and watched and loved in more than 100 countries. Globally, Endemol Shine is among the world’s most prolific production groups, with 700 productions in 66 countries.
The UK’s creative economy stands tall on the world stage. The films and television stamped “Made in the UK” have global resonance – shorthand for storytelling that is smart, that is often a touch off-center, but always on point.
But past performance is no guarantee of future results. Every day we see new entrants armed with fresh capital and a predisposition for disruption.
And yet, it is this country’s balanced creative economy, with strong public service output, a vibrant commercial sector, and a diverse and independent tradition of impartial news that adds up to an environment for innovation and growth that we believe outpunches many larger markets.
And Sky, of course, is an important part of this rapidly evolving sector.
And because the UK creative economy has such potential we believe it is the best place to be proposing a nearly £12 billion investment – which will be a significant driver of the UK creative industry’s long-term success in a global market.
Sky today is everything a great creative company should be: it is imbued with a culture that nurtures ingenuity and innovation; it has reach, it has room to grow, and it has worked diligently to become one of Europe’s great, trusted brands powered by a distinctive creative outlook.
When I joined Sky, in 2003, there was a special opportunity to innovate. For me, having been born in the UK, it was an opportunity to create a new home back home, and to create a new business out of a successful, but decelerating company. Nurturing, challenging, and adding to a team of people who were passionate about investing deeply in the UK, we achieved a new velocity for the business, with a big ambition for our customers. We invested more in programming, we invested more in technology, and we created new services, like Sky Broadband, that were game changers for our customers. We continued to invest in news, and I’m particularly proud of Sky News journalistic standards, and its track record of innovation within the best British tradition of television news provision, while reaching new markets with Sky News Arabiya and expanded distribution around the world. Under Jeremy Darroch’s leadership as CEO, the company has reached new heights and is today a world leader, not just a local champion, in an intensely competitive sector.
At 21CF, we often speak about simplifying our business, focusing on core brands and creative output that matters, and taking the many steps required to get there. In December, with the announcement of our intention to acquire the balance of Sky and wholly consolidate the business, again, into the group, we took a major leap, at least as far as intent, in a long process that started a number of years ago.
We have shed non-core assets, consolidated joint-ventures, invested in our core operations, created new capability sets within the group, and simplified our management structure. All of this has been part of executing a core re-alignment of the company around the future of video.
Clearly the future of video is bright and there is real opportunity for those companies and those countries that choose to move decisively to capitalize on the economic and social benefits this industry can create. The United Kingdom has clearly heard that call – from the Prime Minister’s inclusion of the creative industry as a core pillar of Britain’s industrial strategy, to the recent actions of London’s Mayor to make this city one of the world’s premier destinations for film production even more so than it is today.
Looking to the future, we’re confident the enhanced scale and capabilities of the combined company will be a powerful driver of the creative industry’s vibrancy in Britain, plus in Italy, and in Germany, and in the global market, and a provider of better experiences for customers everywhere.
And to do this at scale, which this combination enables, ensures that the Sky business can continue to compete within a competitive set that now includes some of the largest companies in the world, but none of whom have the local depth of investment and commitment to the UK and to Europe.
But I’m mindful of what large companies mean – to their communities, to their customers, and to their shareholders….and it’s important to advance – in the interest of all stakeholders, an agenda that can benefit the greatest number. When we launched the Bigger Picture initiative at Sky, we articulated an aspiration for us to be better – for companies to be better, and to behave in the way that we imagined we would want to and be expected to in the future. This wasn’t a question of corporate penance through CSR, but rather an idea that the investment and enterprise that a firm can actually make, would actually be – in and of itself – more than simply a driver of profit.
Our energy initiatives, pioneered at Sky and also pushed forward at 21st Century Fox, have made us a better company, and better for our communities. Our work with the Ghetto Film School at 21CF is beginning to build an inclusive pipeline of young storytelling talent, at a high degree of proficiency, at a time when we badly need diverse voices. And what Jeremy and Andrew and the team at Sky are doing with Sky Arts and with the Oceans Rescue, to name just two projects, are all part of this same belief system – this idea that companies should embrace what their customers and people care about, and that by doing so, it makes them stronger.
Nothing exemplifies this idea of being better, better — this notion of seeing the bigger picture — than National Geographic Partners, a company we formed last year with the National Geographic Society to combine the commercial enterprise of the Society with our pre-existing joint-venture television channel. In doing so, we created a global multi-media business, spanning digital, print, travel, licensing, and video, which is able to invest at scale in mission-driven content, at the same time as contributing over a quarter of its profit directly to the Society’s work in science, education, conservation, and exploration. This is on top of providing an endowment of close to $1 billion to ensure the Society’s enduring impact in the future.
And stories do matter. From Sky Italia’s TG24, which stood alone for over a decade as the only independent TV news in the country, to Satyamev Jayate in India, which has put a spotlight on some of that nation’s most entrenched taboos, from female infanticide to official corruption.
Or in the United States, where tens of millions of Americans experienced their first black president on 24, or challenged their preconceptions about same sex couples through Modern Family. And millions around the world explored both the war on terror and mental illness watching Homeland.
We work every day at 21CF to make a place where a diverse range of creators can do the best work of their lives. And we’re proud of our track record backing their bold visions.
We’re trying to build a business of ideas that can thrive in a new and vastly competitive environment, and to do it in a way that for the next hundred years will help define what an enterprise committed to creativity, to innovation, and to its customers, can achieve.