Elisabeth Murdoch’s Next Frontier

In returning to the media colossus that controls the U.S.’s No. 2 broadcast network and one of the most successful cable entertainment outlets, 42-year-old Elisabeth Murdoch—whose company Shine was acquired last week by order of the colossus’ chairman, her father—has set a place for herself at the table with the likes of über-producers Mark Burnett and Thom Beers. Indeed, Rupert Murdoch’s daughter, who grew up in New York but has lived in London most of her adult life, is now poised to be one of the most powerful people in the U.S. television business.

It took almost $700 million for Rupert Murdoch to achieve his goal of bringing his daughter back into the fold. Now that she’s there, Elisabeth Murdoch has the financial and business muscle of News Corp. behind her—and a father who wants to keep his daughter happy—in case she decides to ramp up the acquisition spree that has made Shine the emerging power that it is. And she has the opportunity to take real power at News Corp. That is, if she wants it.

Observers expect that the latest incarnation of Shine will continue to exploit its established European business, while looking to make further inroads into Asian markets. Yet as the global entertainment capital—pop culture is arguably our biggest export—the U.S. may well be the jewel in the crown. Fiercely ambitious and with a keen eye for talent, Elisabeth Murdoch surely wants to make her mark here.

“She’s an insider’s outsider,” said one studio suit. “She’s not nearly as familiar a figure as are the L.A. guys, who you run into 100 times a year. But at the same time, she’s a Murdoch. If she wants something bad enough, she’s going to get it.”

In a sense, the act of accepting a voting position on News Corp.’s board of directors necessarily turns her gaze to the new world and its massive television market. Part of this is a purely practical matter: Thanks to British media law, Shine will need to turn away from Murdoch’s adopted home and the familiar fold of BBC and Channel 4, its traditional outlets, and look to the U.S. for opportunities to grow bigger and bolder. (The major broadcasters are required to invest 25 percent of their programming budgets with independent studios and, since the sale, Shine is no longer independent.)

Of course, Elisabeth Murdoch and Shine had been extending their reach into the U.S. well before the News Corp. deal. Thanks in large part to its $125 million acquisition of Ben Silverman’s Reveille Productions in February 2008, Shine is now one of the fastest-growing production shops in the U.K., and probably in the world. Indeed, Reveille—launched by Silverman in 2002, with the backing of Barry Diller—remains Shine’s major division.

The studio has generated a roster of hits that includes scripted series (The Office, Ugly Betty, The Tudors), as well as reality shows, the most enduring of which is NBC’s The Biggest Loser.

There’s no underestimating the impact the Reveille pickup has had on Shine’s distribution efforts. And now, with the company having already exported a host of shows to European and Asian markets, this new deal opens a direct pipeline between Shine’s Camden Town offices and the States.

Coming to America

While the official word from News Corp. arrived in the form of an almost comically terse press release—Murdoch père merely noted that the Shine team “has built a significant production company in major markets in very few years”—network executives, perhaps playing down the implicit and obvious power and advantages of their new colleague, suggest there won’t be an immediate surge of Shine-developed fare popping up on Fox.

“They already have Gordon Ramsay coming back for MasterChef and they’re working on a comedy pilot,” said one broadcast exec. “So they already have a foot in the door. I wouldn’t expect to see anything on [Fox’s 2011-12] upfront slate that hasn’t already been announced.”

Prospects for Shine productions on Fox-owned cable nets may be limited as well. “Her unscripted stuff isn’t a great fit for FX, which has really gone all-in on drama and comedy and movies,” a studio insider said. “If Fox hadn’t already pulled the plug on that dud reality channel, she could have spun off her own stand-alone network. But who knows. . .maybe they just launch a new channel. Stranger things have happened.”

One cable programmer noted that a number of Shine’s U.K. offerings were focused on the supernatural, and American television may have already reached a saturation point when it comes to the spooky and macabre. “We’ve seen the track record of some of this stuff on broadcast, and it’s not very impressive,” the programmer said.

Still, since snatching up Reveille, Shine’s stock in trade has been in the formats-and-replication business: Find a hit, send it out to be copied. The Biggest Loser, for example, has expanded to countries like Germany, Brunei, Sweden and Romania. While the show retains its core DNA and goal, it’s easily adapted to local menus and folkways.

News Corp. deputy chairman, president and chief operating officer Chase Carey emphasized the importance of the formats business, although he stopped short of offering guidance on Shine’s U.S. game plan. “We have every confidence that Shine will be an important part of the expansion strategy for our worldwide TV operations,” Carey said.

Big Business

While Elisabeth Murdoch’s big deal rather clearly makes her The Biggest Winner—estimates put her personal payout at some $300 million—some Wall Street observers warned that Rupert’s generous offer may have a stifling effect on News Corp. shares.

“We can’t help but think that News Corp.’s acquisition of a Murdoch family-owned company will be seen by some as more evidence that the company is not as shareholder friendly as its peers,” said Nomura Securities analyst Michael Nathanson. “This deal will likely return News Corp. to the penalty box and restrain its multiple expansion for the near future.”

Nathanson went on to speculate that the coziness of the deal could undermine the strength of the company’s broadcast and cable portfolio.

“News Corp. could be shunned by some institutional investors who see more shareholder friendly actions and clear capital return strategies at other media companies,” he said.

Or not. While Class A shares of News Corp. fell nearly 5.5 percent last Tuesday to $16.74, they rebounded strongly at the end of the week. In mid-afternoon trading last Friday, shares were moving at $18.42 a pop.

Incidentally, the Shine pact marks the second time Elisabeth has done a nice bit of business with her mogul father. Back in 1994, she and her first husband snapped up a pair of NBC affiliates with a $35 million loan secured by Rupert. Eighteen months later, the couple flipped the stations for a tidy $12 million profit.

Family Affair

For all the talk of her return to News Corp. after a decade—she left BSkyB in 2000, after a very public feud with then-boss Sam Chisholm—Elisabeth Murdoch made no mention last week of her decision to rejoin the family business. In a brief statement, she said simply that the deal would enable Shine “to maintain our aspiration to be best in class across all our sectors, preparing and equipping us for future growth.”

Her father and business partner was equally noncommittal, saying only that he looked forward to Shine “becoming an important part of our varied and large content creation activities.”

In the occasional unguarded moment, Murdoch in the past has been more candid about his daughter’s ambitions, once speculating that Elisabeth would one day sell her company in order to buy enough News Corp. shares to “give [brother] James trouble.”