21st Century Fox co-COO James Murdoch addressed the MIPCOM audience in a keynote speech that touched on the challenges facing the content and production business.
He first addressed the recent Shine/Endemol/Core Media merger that will create a massive global media company: “We felt the opportunity to create something that was the global leader in terms of scale was something we couldn’t pass up and for everyone in both companies we want to create something that is a larger platform, a larger canvass if you will, where we can do incredible work.”
The business will benefit from a combination of scale, breadth and diversity, he said. The combined companies have about 600 different formats. “It’s important to keep a certain amount of decision making highly empowered around a subset of things. You can’t over-synergize,” he stated, adding that the companies will still operate with some autonomy.
On the Sky mergers of the brands from Italy, Germany and UK into a larger Sky Europe, “they are stronger together than apart.”
“Even though the marketplaces are different in many ways including business rules and customer takes, that the combined entity will be a faster and better innovator. We think that deploying technology be it OTT services to new customer platforms, there is an opportunity to accelerate the business, and also the businesses will get much more into developing their on programming.”
“Europe in particular is a great opportunity for these sort of studio businesses to really do more,” he said.
He acknowledged the MySpace disaster of a few years ago as a “total writeoff,” but that the company culture is to continue to take risk in new technologies, and that company will not be paralyzed by that mistake and become risk averse.
“We are taking a bunch of risks right now,” he said, citing the companies investments in FX and FXX. “We’re investing an enormous amount right now in original programming and that’s delaying some profit for us,” he said, though they are performing well.
Acquiring The Simpsons library of 550 episodes and making it wholly available online is a model that has not been tried before, and is another financial risk for the company. “We don’t know how customers are going to react.”
Protecting the value of copyrights will become more important part of the business and ultimately transform programming. “There’s an incredible shift going on where you are really shifting value from downstream margin to upstream creators” who make the content that differentiates the brands from one another.
He also predicted that the windowing model of rights that the television business has been built upon will change or become obsolete, but these changes will have to include the content makers in the discussions. “The necessity of windowing isn’t really there,” he said. “Windows have already started to contract though there are new windows emerging, and eventually we’ll have more comprehensive multi-window consultation, you’ll have more platforms earlier.”
“All the way up the chain you have partners, profit participants, creators, showrunners etc., who all need to be part of that decision of how you ultimately get paid,” he said.