Fox CFO Touts Broad-Based Ad Market Strength
John Nallen at the UBS Global Media and Communications Conference in New York also speaks about the conglomerate's stake in Sky, growth in the India business, sports and the evolving pay TV business.
The TV advertising market is seeing broad-based strength, 21st Century Fox CFO John Nallen said Tuesday at the UBS Global Media and Communications Conference in New York.
Discussing current ad momentum, the exec said it was "quite strong" nationally and locally. Auto ads are among the key drivers of growth, along with retail. "It's a very healthy environment," said Nallen. The "pretty broad-based" strength has been going on for months, he said, adding that it was not simply driven by fantasy sports sites like some have suggested.
Asked about the boom in original programming, Nallen said it has clearly expanded, but emphasized that the company's production arm could benefit from that. He also argued that Fox isn't making any "truly speculative" shows.
Sports TV was also in focus during the session. Nallen said the outlook for sports networks Fox Sports 1 and Fox Sports 2 was strong. And as a big NFL partner, he said that Fox would look at the Thursday night games package when it comes up for negotiation.
"There will be a rebundle, a repacking of the bundle," Nallen suggested about the future of pay TV, while emphasizing that the biggest part of the company's business would remain in the pay TV bundle. In response to OTT services though, bundling will change "pretty dramatically" over time, he argued, adding that Fox's goal in that kind of environment was to try and be part of every bundle.
Asked about the upcoming FCC spectrum auction, Nallen said Fox could sell some of its spectrum if it doesn't hurt its TV stations.
Regarding Fox's 39 percent stake in pan-European pay TV giant Sky, Nallen reiterated that it is not the ideal final state, but left all options open on whether the company will eventually buy full control of Sky or sell its stake. He argued that the stock of Sky has more upside in it and said Fox's stock should benefit from that.
Overall, no acquisitions of scale are in the works, with the conglomerate focusing on internal execution and possible small tuck-in acquisitions, the CFO said.
Discussing Star India, Nallen said the TV business was one of the conglomerate's strongest growth drivers and lauded its continued strength and financial upside. He also touted the ad growth in India.
The company, led by executive chairmen Rupert Murdoch and Lachlan Murdoch and CEO James Murdoch, recently said that it would stop providing earnings targets and replace them with quantitative and qualitative guidance where possible.
Fox last year approached Time Warner about acquiring the company, led by CEO Jeff Bewkes, but Time Warner rejected the idea. Before the split of News Corp. into the Fox entertainment business and the News Corp publishing company, the conglomerate had offered to acquire full control of U.K. pay TV giant BSkyB, but withdrew the bid amid the phone-hacking scandal. Fox last year sold its pay TV platforms Sky Italia and Sky Deutschland to BSkyB, which is now pan-European pay TV company Sky, in which Fox owns a 39 percent stake.