Politics

RUPERT MURDOCH TELLS FBN HE WOULD “IDEALLY” LIKE TO COMBINE NEWS CORP AND THE REMAINING ASSETS OF 21ST CENTURY FOX

In an interview presented on FOX Business Network’s (FBN)  Mornings with Maria (weekdays, 6a-9a/ET), 21ST Century Fox Executive Chairman Rupert Murdoch discusses the latest developments surrounding the deal for Disney to acquire assets of 21st Century Fox with anchor Maria Bartiromo.

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**MANDATORY CREDIT: FOX BUSINESS NETWORK’S MORNINGS WITH MARIA BARTIROMO**

 

On whether he would consider combining News Corp and the remaining assets at Fox:

“I don’t know, I mean ideally yes, but I think that’s years away. We’ll have to think about that.”

 

On why the Disney / 21st Century Fox deal was completed:

“Well you know there’s a lot of change coming. People watch television differently, not news or business, but entertainment they watch very differently. We’re seeing that with the emergence of new companies. Silicon Valley has nearly spent tens and tens of billions on entertainment programming, so it makes sense to bulk up the entertainment side so that we’ve got a company that can go direct to consumer in a sort of big way.”

 

On why $52.4 billion, $66 billion including debt, was the right price for 21st Century Fox assets:

“Actually it’s a little bit better than that – $28 on yesterday’s price is just $29, so it’s pretty good and then we think the value of Fox Business and Fox News, and Fox Sports, and Fox broadcasts adds you know another $20-odd billion it’s at least leaving out the debt side, at least 25, at least $75 billion or $76 billion of value to our shareholders.”

 

On whether the 21st Century Fox & Sky deal will close before the 21st Century Fox & Disney deal:

“We’re hoping to, we expect to in the next six months, and that’s when will go in – that will increase the debt, increase the debt that goes to Disney. If it doesn’t close, then they just take what we have and I imagine they will decide to go ahead and make their own bid for the rest of it.”

 

On the leadership of the assets:
“The leadership is solid with Bob Iger. I made it a condition of the deal that he would stay on…So we didn’t want some running it we didn’t know.”

 

On how he sees the television industry changing in the next five years:

“There’s only must-see Fox News or must-see Fox Business. But that’s in real-time, entertainment is more and more non-linear we see that in the way people watch the broadcast networks, there’s no loyalty to them, there’s loyalty to individual programs and you know you get a certain rating, you put on a certain time, at the end of the week that will have doubled, at the end of the month that probably redoubled again, so it’s very hard to monetize that with advertising.”

 

On the remaining assets that 21st Century Fox is keeping:

“Well it’s going to have a cash flow- the new Fox which does not include The Wall Street Journal, that’s News Corporation, all our newspapers are News Corporation that’s a separate $10 billion company- this is what came out of 21st Century Fox. The new Fox will have Fox News, Fox Business, Fox Broadcasting, Fox Sports, but the point is it will have a cash flow of at least $2 billion a year after everything. So, you know we can see expanding that and taking other opportunities and building another great company there.”

 

On whether he decided to keep the news assets he because they are live and happening in real-time:

“Yeah that’s it exactly and they watch sport, they watch sport in real time.”

 

On technology companies like Amazon bidding on sport assets and Netflix having a budget north of $7 billion next year:

“But neither of those are in sports. The one that’s coming for sports is Facebook, they unsuccessfully bid just for the digital rights of half the Indian cricket for $600 billion, so that was a warning shot you know and they’ve announced that they were going to spend billions on sports rights so we don’t know which country they’ll go after or what they’ll do.”

 

On the future of the newspaper industry:

“Well digital has hollowed out the newspaper advertising completely. There’s not a newspaper in the world that hasn’t lost about 70 percent of its advertising. So you’ve got cover price rises you get digital subscriptions for papers like the Wall Street Journal that are just life and death.”

On how the advertising backdrop will change in the coming years:

“Well, I’m less and less worried about cutting the cord, it is going at a rate, but we have things like YouTube Live which Fox News, Fox Business is on in a package with $35 and about 50 channels. And then we have Hulu, the Hulu extra, whatever we call it, with probably another 50 channels for $39, you got DirectNow or DirectGo, now over a million subscribers, these three services alone are growing very fast. And they’re almost replacing the cord cutters, at the speed of the new cord cutters. And I think they will catch that.”

 

On whether these entertainment assets will be of lower value down the road considering changes in consumer habits:

“No I think, look, some yes, some no. I think as far as news and sports, it will always be preeminent and strong. I think with going direct to consumer, if you’re big enough and strong enough, and you’re growable, with Disney will now become, and the big thing about this gives Disney a huge footprint across Europe and India which they don’t have now. So I would be very optimistic about the future of Disney.”

 

On growth in Europe and India:
“Sky has grown very well, but in Britain and Germany, and Italy you’ve got good businesses, it’s all one company and now they go over the top into other countries like Spain. In India of course it’s even earlier, it’s a vast country, where there are I don’t know seven or eight or nine other languages. We have an interest in a satellite company there with over 12.5 million customers. All in all, India this year, from nothing a few years ago, will make half a million dollars, and we’re very confident within three years, that will grow to a billion dollars.  And that will all be at Disney’s account.

 

On the competitive landscape from companies like Amazon, Google, and Apple, when it comes to entertainment assets :
“Well they’re huge companies because not much cost of capital, if you look at them. I don’t know how far Amazon wants to go, it’s building their basic, because of their Prime and leadership there. I think Facebook coming in, and Apple, and Netflix are all, they’ll be big players. When Disney and Fox pull their programs back or stop selling anything to Netflix, it will be interesting how that effects that them.”

 

On the new name of the new company:

“It will be Fox. We may have to call it the New Fox.”