Fox's Chase Carey Talks 'Empire,' Network Momentum, Consolidation
At an industry conference in San Francisco, the executive also discusses the pay TV bundle and over-the-top services.
Rupert Murdoch's 21st Century Fox feels "very comfortable" with the businesses it currently owns, president and COO Chase Carey told an investor conference on Wednesday.
During his appearance, he also discussed Fox network ratings and such hit shows as Empire and Gotham, new digital TV services and other industry trends.
Asked about industry consolidation at the Morgan Stanley Conference in San Francisco during a session that was webcast, he said: "For us, we always want to be opportunistic, but ... we have got what we need to be successful."
He added: "By and large, we got the assets we need."
Smaller acquisitions that add assets with upside that fit are possible, he said, citing a recent deal for a regional network in India. If Fox strikes any bigger deals, they are likely to be "more opportunistic," he said in an indirect reference to the bid last summer for Time Warner.
Carey added that "in the broader industry," things will be different though. "You will see consolidation from both sides," content and distribution, he said. Such deals will often likely be "driven by weaker players" that need to combine with each other or sell to a bigger player, he argued.
A recent media story saying that Fox had talked to Discovery Communications about buying it was "simply not true," Carey reiterated. From last summer's bid for Time Warner, "we have moved on," he added. Opportunistic M&A at that scale was less likely, he signaled.
The Fox broadcast network likely has "more upside than downside" at this stage, Carey told the conference. He had recently said on the company's earnings call: "We've turned the corner with a new network management team." On Wednesday, he added that the new bosses have brought "fresh energy" to the network. He lauded Empire and Gotham as shows that help stabilize the network. "The focus going forward is really to build momentum in the network. Profits will follow momentum," Carey said.
Asked about Empire's and Gotham's ratings success going into the upfront, he said: "The value of hits is exponentially growing." That is why sports is "the ultimate hit," he said. Carey also lauded FX's content quality that he said makes it a premium network in a basic cable network spot.
Carey on Wednesday also was asked about changing consumer behavior in the digital age and what it means for the company. He said digital changes open up new ways for consumers to access content, making it an exciting time for the company and providing possible upside. "Mediocre content will get lost," Carey echoed past comments. "Hit content at scale," which Fox believes it has, "gives you unique opportunities to shape" the evolving digital market, he added.
He said that has made the company focus on five big franchise brands, namely Fox, FX, Fox News, Fox Sports and National Geographic, focus on owning its own content and concentrate on locking up key rights in sports and the like.
Asked about the pay TV bundle, Carey said "the resilience of that bundle" continues to give it and the overall pay TV business model viability. "A la carte channels would have a different price," Carey said, meaning most consumers will still most likely choose a bundle, at least over the near-term. Earlier in the week, CBS Corp. CEO Leslie Moonves at the conference touted smaller pay TV bundles.
Over-the-top services will become bigger over time and provide new opportunities, he added. Will Fox launch OTT services like CBS, HBO and NBC? Carey said there are "great opportunities," but again signaled no rush, saying the company will first decide on ideas and then communicate them. "We have to be" in that space, but ensure not to cannibalize solid existing businesses, Carey said.
Carey also said the company has acquired or retained assets that will help it take advantage of digital opportunities. He cited online video joint venture Hulu and the recent acquisition of advertising firm tru[X] as examples. More engaging advertising offers will be key in the digital world, he said later in the session, as 16 minutes of ads in a programming hour won't fly in the digital world, Carey said.
While he acknowledged recent advertising weakness, Carey also said that "TV is still a vital part of ad budgets."