Posts Tagged ‘20th Century Fox’


Murdoch’s bold new plan: News Corp announces split of Entertainment and Publishing

Monday, July 2nd, 2012

News Corp announced on Thursday that their board unanimously agreed on a plan to split its company’s entertainment division (which includes Fox News, 20th Century Fox, and Fox Networks) from the publishing division (which includes The Wall Street Journal, Harper Collins publishing, and The New York Post), reports The Economist. This comes as music to the ears of News Corp’s investors, who for years blamed the publishing arm for weighing down the entertainment division. (The entertainment division is responsible for 75 percent of the company’s profits.) Splitting the company in two is the “ultimate dream” of investors, says Michael Nathanson of Nomura, a stockbroker. News of the split sent News Corp’s stock up 10 percent.

This announcement and Rupert Murdoch’s “never say die” commitment to his beleaguered publishing arm come as little surprise to those of us who have followed the News Corp over the years. In a Thursday morning memo announcing the split to the News Corps employees, Murdoch made it very clear Family Guyto everyone that his long love affair with publishing is far from over, and even spoke optimistically about his portfolio of newspapers and publishing companies. “Our publishing businesses are greatly undervalued by the skeptics. Through this transformation we will unleash their real potential, and be able to better articulate the true value they hold for shareholders,” stated Murdoch.   

You have to admire the bold vision Murdoch unleashed for his new publishing entity, especially in the wake of the News of the World hacking scandal in the UK, and at a time when two of his newspapers – The New York Post and The London Times – are losing money, comments PaidContent.org. Even though newspapers may be on life support, they are still emitting a slight pulse. In The Economist article linked to earlier in this blog post, Jeff Logsdon of BMO Capital Markets added, “The newspaper business may not be growing, but it generates enough cash flow to sustain itself.”

Murdoch points to new global markets and platforms as major reasons for this publishing arms rejuvenation, with plans to accelerate growth into Australia and Latin America and citing the fact there are over 75 million tablets worldwide ready to receive information. “Our publishing company will deliver on the promise of a well-informed society as we aggressively grow our business across borders and new global platforms,” Murdoch is quoted as saying in this Wall Street Journal article.

While many remain a bit skeptical when it comes to publishing, especially newspapers, my colleague Johna Burke confirms in a recent Fresh Ideas post, Mobile Aids Growth of Traditional Media. She writes, “[…]unless you are seeing your coverage from ALL types of media, you won’t have an accurate representation of how your messages are playing out and influencing ALL of your audiences. […] a digital focus alone, that doesn’t include traditional media, is blindingly misleading and can be equated to looking at the Grand Canyon through a straw. Sure, it’s pretty, but you miss more than you see!” 

So, in 2012 one thing remains clear: content remains king and nobody knows that better than Mr. Murdoch.

Battles Rage Over Content, as Netflix Changes the Game in the Web TV and Streaming Video Space Once Again

Tuesday, December 7th, 2010

ba-netflix0811_f_SFCG1281474279With the help of Wikipedia, I learned the different types of battles that are fought. If you’ve been following what is going on in the latest turf wars between the cable providers (Time Warner Cable, Comcast), online providers (Netflix, Hulu) and media Companies (Fox, CBS) – you’d see very different strategies deployed by each side. All have one common goal in mind…control the distribution of entertainment to consumers, and all seems fair in this war. 

A “battle of attrition” aims to inflict losses on an enemy that are less sustainable compared to one’s own losses.

According to this New York Times, Netflix recently made a bold move by launching a new “streaming only” service, offering unlimited streaming movies and TV shows for a mere $7.99 a month. Also, in addition to Netflix paying the Post Office a whopping $500 million dollars a year in postage to mail out their signature red envelopes filled with disks, they will now pay studios another hefty sum for rights to their movies by recently completing a combined deal with Paramount, MGM and Lionsgate for one billion dollars. This does not include deals Netflix made earlier in the year with other major studios, such as Sony, Warner Brothers, Universal and 20th Century Fox.

So why are cable providers like Time Warner Cable and Comcast getting hot under the collar? Let’s take a closer look:

Netflix currently pays Starz, a pay TV channel, about 15 cents a month for each subscriber (which allows their customers to watch streaming movies from Sony and Disney), pennies compared to the $4 to $5 a month that cable and satellite owners pay for access to Starz, according to Rich Greenfield, an analyst at BTIG Research.

These types of deals, which allow consumers to access a larger catalogue of movies and bypass their local cable provider by accessing them online, couldn’t come at a worse time for companies like Time Warner Cable and Comcast. Cable providers already reported a net loss of 119,000 customers in the third quarter of 2010, the largest decline in 30 years.

A “battle of envelopment” involves an attack on one or both flanks.

Comcast is fighting back on two fronts by slapping Level 3 Communications, a provider of internet backbone services, which handles Netflix content, with “additional traffic fees.” Incidentally, Comcast, who’s acquisition of NBC is imminent, already competes directly with Netflix through their new acquisition of Hulu (Comcast owns 32 percent stake in Hulu). The rate hike could easily be seen as a way for Comcast to milk their competition, however, they can make the argument that Netflix’s massive volume is overtaxing their system and therefore should pay more. A recent study by Sandvine, a broadband equipment maker, showed that Netflix’s 16 million customers accounted for more than 20 percent of all Internet download traffic in North America during peak evening hours)

A “battle of encounter” is a meeting engagement where the opposing sides collide in the field without either having prepared their attack or defense.

If all of this wasn’t enough to make cable executives nervous, Netflix followed up their unlimited streaming offer by announcing a deal with newly formed film studio, FilmDistrict. As highlighted in this New York Observer article, the part of this deal that could prove to be a game changer is that it doesn’t include the standard “pay TV window” wherein new releases go to the cable industry first, then premier on Netlifx a few months later. 

According to The New York Post, Netflix is also in talks with studios about gaining access to “current episodes” of primetime TV shows and is willing to pay between $70,000 and $100,000 per episode. This is a first since Netflix has always offered only TV shows from past seasons.

Through all of this, media companies have been in constant negotiations with all of the “content distributors” – cable providers (Time Warner Cable and Comcast) and online providers (Netflix) – with behemoths like Google, Sony and Apple waiting in the wings as all three plan to compete in the game of online streaming distribution. Google, however, has already met heavy resistance from the networks. ABC, CBS, and NBC who all said they would not allow Google TV to stream full episodes of their shows. This should make for some interesting future negotiations between the two sides. But I wouldn’t be surprised if the networks suddenly changed their mind if Google TV’s relatively new service begins to take off.

A “battle of annihilation” is one in which the defeated party is destroyed in the field.

So what about the consumer, the eyeballs everyone’s vying for in all of this? I for one couldn’t be happier with all of the choices I suddenly have to watch movies or TV shows. The Internet is once again threatening the “middleman,” or, as I like to think of it, just another case of the Internet once again replacing one of the “brokers” of the world. We’ve seen it happen to some extent with real estate, stock trading … and now entertainment.  For 30 years cable providers have been the “brokers” for entertainment, bringing media and consumers together. It appears, for the moment at least, another “broker” is in jeopardy of once again being replaced by the Internet.

So what are your thoughts? Who do you think will win the on-going battle? Are you happy with the choices you have to access entertainment content? Please share your thoughts with me and the readers of BurrellesLuce Fresh Ideas.