Murdoch: Profitability Worries for Fox, Conan Deal

While Fox has held some preliminary conversations with Conan O’Brien about a possible late-night talk show for next season, the network is still debating whether the idea makes economic sense, according to Rupert Murdoch, CEO of News Corp.
 
Murdoch commented on the situation yesterday during a session with analysts and reporters after News Corp., which owns Fox, reported results for its fiscal second quarter ended Dec. 31.
 
The company reported a 10 percent gain in revenue to $8.7 billion, with improved results across most units, including broadcast, cable and film.
 
Company executives said they were pleased with how the TV ad market has rebounded, but shied away from long-term projections, stressing that it was too early to comment on how the spring upfront market might shape up.

But they did say that the Fox network was currently getting ad rates 15 percent higher than last year’s upfront, while its cable nets are getting about 20 percent more. Local TV stations are pacing about 18 percent ahead of a year ago in terms of pricing, they said.
 
As to Conan, Murdoch said there are “different opinions” inside the company about whether to proceed. He said that the programmers would have to make the case that a Conan-hosted show would likely make a profit before it gets green-lighted.
 
And while Murdoch confirmed some conversations had taken place, he also stressed there have been “no real negotiations”—yet.
 
News Corp. officials said they were more optimistic about their broadcast business model now that they have completed two new retransmission consent agreements with major cable operators, including a deal struck last month with Time Warner Cable.
 
“It puts us on a course to generate the profits that we should” achieve with Fox, given its performance in the marketplace, said chief operating officer Chase Carey. “It puts us in a competitive place” with other content providers, such as cable nets that have dual revenue streams, he said.
 
Carey said it take would three to four years to complete retransmission deals with most of the major cable and satellite companies. Fox is holding separate talks with its local affiliates about sharing in the retransmission fees the affiliates generate as well, said Carey.
 
And Murdoch stressed that the company would press aggressively to achieve pay models on a number of platforms including tablets, e-readers, and, as he as said before, most (if not all) of the company’s Web sites. “Without content all the new devices would be lifeless, unloved and unsold,” he said.
 
Broadcast TV revenue for the quarter was up 9 percent to $1.2 billion, while cable network revenues, rose about 20 percent to $1.8 billion. Film revenue improved 26 percent to $1.9 billion, which doesn’t include sales from the box office smash Avatar, which opened in late December.

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