Television

Lachlan Murdoch opens up about Fox & Star TV’s billion-dollar EBITDA target

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MUMBAI: The billion-dollar EBITDA target for Star India is not just talk. 21st Century Fox executive chairman Lachlan Murdoch stated this firmly at the Goldman Sachs  Communacopia 2017 conference mid-last week.

Labeling the billion-dollar target as Fox’s second highest priority at present, while speaking with Goldman Sachs analyst Drew Borst, Murdoch further waxed eloquent calling Star TV the group’s “greatest growth asset."

“We are on track to hit the billion-dollar EBITDA mark by 2020, which we have flagged for a few years  now,” he said, explaining that Star’s successful  IPL bid of $2.55 billion would not have happened if there was any doubt.

“We strongly believe in…and we would have not bid for it at that price without being absolutely confident that we can hit out 2020 target. There are a lot of assumptions within that in terms of how we will monetise the IPL and also the growth that we have already seen in the Indian advertising market,”  he emphasised.

The acquisition of the 61 per cent of satellite TV powerhouse Sky in the UK for $15 billion has been accorded the highest priority status for the group, Lachlan  revealed at the investor confab.

He highlighted that the group believes the transaction is on course to get completed by mid-2018. That’s taking into consideration Britain’s culture and media secretary Karen Bradley’s decision to refer the acquisition to the Competition & Markets Authority (CMA) on both, plurality and broadcast standards.

“We are disappointed that it has taken us six months to come to this point of view to refer to the CMA,” he said. “Especially as the regulator Ofcom has agreed that we can get through on the plurality arguments with certain concessions that we have made. Also there’s no grounds…and the secretary in her own words said that the Ofcom, her regulator, was unequivocal in saying there were no grounds on broadcast standards. Having said that, as we are likely to be referred, we would like to be referred as early as possible.”

In fact, almost as if taking heed of what Lachlan was saying Bradley did refer the Sky bid to the competition watchdog – a process that is likely to take 24 weeks – just as the week was coming to a close. The Murdochs have said that they will work closely with the CMA  to expedite its go-ahead.

Lachlan further stated that Fox will continue its focus on its five core television brands – National Geographic, FX, Fox Sports, Fox News and Star television in Asia. “Our entire content and  distribution strategy is built around these brands , strengthening them and the shows that are associated with them in a way to make consumers engage deeply with them across multiple platforms,” he explained.

The older of Rupert Murdoch’s two sons was categorical in stating that the industry is being forced to go directly to the consumer.  “I don’t think  there will be any major media company on this planet which will not go direct to the consumer with a product launched in the short to medium term. ”

He, however, cautioned that care should be taken to not damage the current profitable ecosystem in the process of building a direct connect with viewers. Hence, the group has been investing hundreds of million of dollars into its core  five  brands in content and programming.

“Every one of them is on every new digital multichannel video programming distribution (MVPD) platform that exists out there,” he said. “We have to have must-watch-entertainment and sports associated with valuable brands,” he added.

He stated that, even in the US, the industry is only at the very beginning of the over-the-top (OTT) distribution to the world.

“The models that are evolving…there would not be a single successful model,” he elaborated. “Our channels are fully distributed over the entire cable and satellite TV universe. We have our own authenticated apps where we put our brands in our own ecosystem on an app  - which Comcast and AT&T Direct TV customers can get. Then, you have the new DMVPD and SVoD services. Plus, you have a direct to consumer for a bouquet of channels. There will be tremendous competition amongst all these, which is good for the consumer, and he will win out. All you have to do is produce great content, and you will do well out of it.”

Murdoch clarified that Fox’s fundamental belief is that the consumer should be able to access its shows anywhere and everywhere; that exclusive content deals are something it rarely signs, if at all.

“We believe that the exclusivity of content to a platform is detrimental to the consumer experience as well as to the content-owner.  We have been moving over to a model that is non-exclusive,” said Lachlan. “I would like to have our content on as many platforms as possible. We have noticed that in every single case of digital MVPDs we have earned in multiples of what we earn per subscription in the traditional distribution world. Also, the DMVPD allows us to significantly upsell our advertising because of the consumption data we get.”

He added that Fox varies its model depending on the market. “In some markets there are low broadband speeds, so we take the route that suits that market and we are happy that we have several models in different markets.”

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