Fox Corporation, which includes the Fox broadcasting network, Fox News, Fox Sports and the Fox Television Stations unit, will not launch a Fox-branded direct-to-consumer service, COO John Nallen said at the company’s investor day in New York on Thursday.
“Apart from FoxNation, we see no reason for a Fox-branded direct-to-consumer offering,” he said, adding there would not be a “substantial or profitable future for a Fox family” offering.
Co-chairman Rupert Murdoch kicked off the event, saying Fox Corp. was the start of “a new journey” whose prospect was “extraordinarily exciting” in a “rapidly changing media landscape.” Its focus is “great entertainment, storytelling, breaking news, challenging opinion and, of course, captivating sports,” he said.
In recent years focus was on “simplifying” the company’s structure. “We could see the shift coming in media and the danger to the industry.” Walt Disney’s $71.3 billion acquisition of large parts of 21st Century Fox “gave us a unique opportunity to create a distinctive, focused company” and start “a new growth story,” he added.
Chairman and CEO Lachlan Murdoch early in his appearance emphasized that “everybody is rowing in the same direction” at the company. “Fox Corporation is about returning to our roots,” he said. “We are lean, bold and ready to challenge others and lead in a rapidly evolving industry. Our balance sheet, our…cash flow and our strategic focus puts Fox at the apex of our peers in American media.”
He also highlighted that half of the revenue is from advertising and half from carriage fees.
The investor day, an official coming out of sorts for the company following the Disney deal, includes presentations by the company’s management team, led by Lachlan Murdoch, and is scheduled to wrap up by 1 p.m. ET.
With Disney’s investor day last month — where the Hollywood giant unveiled details of its upcoming Disney+ streaming service — a big hit with Wall Street, Fox is no doubt looking to wow analysts with a closer look underneath the hood of Fox, which includes the Fox broadcasting network, Fox News, Fox Sports and the Fox Television Stations unit.
One key topic of interest to Wall Street attendees is the outlook for carriage fees. The company in a recent regulatory filing disclosed that its cable networks affiliate fee revenue growth for the second half of the fiscal year, meaning January to June, would “meaningfully decelerate” from the double-digit percentage growth posted for the back half of 2018.
MoffettNathanson analyst Michael Nathanson said this seemed due to a year-ago boost from at least one new carriage deal. “While we wait for Fox’s investor day…for a better understanding on the future trajectory of affiliate fee growth, we firmly believe investors are missing the forest for trees if they focus only on the next few quarters of cable network affiliate fee growth,” he said in maintaining his buy rating and $50 price target on the stock. “Our thesis is based on the belief that the slimmed-down combination of Fox News and the Fox broadcasting network creates an unrivaled pair of must-have live sports and news that is set up for industry-leading [revenue] growth for years to come.”
Fox recently added former Speaker of the House Paul Ryan, longtime Rupert Murdoch ally and Formula 1 chairman and CEO Chase Carey and others to its board of directors.
Lachlan Murdoch recently stressed to employees that all of them are owners of the new company, with employees with a decade or less of service set to receive $1,000 in Fox stock, with those with 10 to 20 years getting $2,000 and those with more than 20 years getting $3,000.