All systems go for News

Chernin: 'Very strong across all sectors'

News Corp.'s businesses are performing strongly across the board despite concerns about a possible U.S. recession, president and COO Peter Chernin said Wednesday at the annual Citi Global Entertainment, Media & Telecommunications Conference in Phoenix.

"We see absolutely no signs (of a slowdown) within our businesses," he said, adding that News Corp.'s performance is "very, very strong across all sectors," with local TV advertising momentum in the current quarter better than in the fourth quarter.

He said the TV scatter market is "strong" for his firm and its peers, and the tight race for the Democratic nomination for president should boost political spending ahead of Super Tuesday on Feb. 5. Chernin said peers like CBS should be among the beneficiaries.

With the return of "American Idol" on Tuesday, Chernin predicted that his company's Fox network will take the 18-49 ratings lead for the current TV season in the next two to three weeks. "And we will win the season by a larger margin this year," he vowed.

While he previously said that the writers strike will benefit Fox, which traditionally sees an early-year boost from "Idol," Chernin on Wednesday acknowledged the "significant impact" on Los Angeles entertainment industry support staff and "innocent people" serving the industry. He warned about pushing U.S. consumers further away from TV viewing and to new digital alternatives.

But while he is "anxious" to reach a labor agreement, Chernin said a solution also must be financially viable for entertainment companies.

Chernin also signaled that News Corp. could eventually increase a stake of about 14.5% in German pay TV firm Premiere that it unveiled this week if the company manages to boost average revenue per user to levels seen in other countries.

Meanwhile, Liberty Media CEO Greg Maffei told the Citi conference Wednesday that he hopes a long-planned swap with News Corp. that would give Liberty control over satellite TV giant DirecTV will get regulatory approval in the coming weeks.

He said the deal has been held up by the Department of Justice because Liberty chairman John Malone owns about 5% of Liberty Global, which owns a small cable system in Puerto Rico and for which he also serves as chairman. Because DirecTV also is a key content distributor in Puerto Rico, regulators are concerned about a concentration of market power, Maffei said.

However, Liberty has suggested that Malone and his entities could be submitted to only limited information flow to avoid any pricing moves that could put competitor EchoStar Communications at a disadvantage, he said. Maffei also signaled that a harsher ruling could force the company to divest one or the other Puerto Rico business.

Also at the Citi investor conference Wednesday, Blockbuster CEO James Keyes said his firm's video rental trends could see some benefits from the writers strike, store closings by competitors and high gasoline prices. He said the strike provides the chance for increased rentals of TV show DVDs, which Blockbuster offers.

Keyes also mentioned several new initiatives the company is exploring. For one, he said Blockbuster is working on a flash-memory product and testing other technologies that could allow movies to be viewed more easily on portable devices.

Keyes also said his team is testing rental kiosks, but more as a transition offer until digital distribution of content reaches the broader masses.

Finally, Blockbuster is experimenting with new store formats that lower and move shelves and improve the merchandise and "the flow" of the locations, the CEO said.

In his following appearance, TiVo president and CEO Tom Rogers said a recent alliance with NBC Universal that includes interactive advertising for fast-forwarding consumers will be a first big step by a content powerhouse to help cut back the level of commercial skipping that has angered entertainment companies.
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