Going OTT is an ‘option’ for Fox, says Murdoch

Direct-to-consumer streaming is an “option” for 21st Century Fox in the US market, and the company has the expertise to launch such an offering, according to CEO James Murdoch.

Speaking to analysts after Fox announced its latest quarterly figures. Murdoch said that Fox was focused primarily on developing its authenticated streaming service in partnership with pay TV providers for now.

However, he said, it remains “an option for us in the future” to develop “independently priced access to that suite of apps”.

Murdoch said that while Fox had not yet decided to go down that route, such an approach is “one that we feel we have the capability and the wherewithal and experience in terms of managing direct-to-consumer and subscriber businesses to tackle”.

Murdoch said that Fox had successfully developed a direct-to-consumer OTT proposition in India with its Hotstar platform. “Whether or not there’s a future for us in, for example, the way that CBS has taken some steps in the US is a decision that we can take at a later date,” he said.

Murdoch said that for now Fox was “very focused” on the authenticated partnership model, including developing services for “new digital MVPD partners” such as Sling Media, DirectTV Now, Hulu’s new platform and Google’s forthcoming service.

In his opening remarks on the call, he said that Fox would launch a “major overhaul” of its streaming apps “within the next few months”.

Murdoch’s comments came as 21st posted Q2 revenues of US$7.68 billion, up 4%, and operating income before depreciation and amortization of US$1.99 billion, up 15%.

Addressing Fox’s planned acquisition of the 61% of Sky that it doesn’t already own, Murdoch said that the deal represented a “major step” in “a long process that started a number of years ago” to realign Fox “around the future of video”. He said that “the combination of strengths required to operate a high-volume content business and a vast international video platform business is precisely the combination of strengths that we’re developing”. Murdoch said that using the company’s core strength in content to build a platform that reflected the long-term trends of high-speed connectivity, proliferation of end-user display devices and the opportunity to access content in the cloud “presents one of the most promising opportunities for our company in decades”.

Fox co-executive chairman Lachlan Murdoch said that the deal would “deliver more balanced revenue streams and geographic spread” and simplify the group’s “structure and operating model” as well as being “significantly accretive to our earnings per share and our free cash-flow”.