Fox is ready to make a deal.
In an interview at a Goldman Sachs conference on Tuesday, Fox CEO Lachlan Murdoch outlined the company’s strategy in sports, news and entertainment but also suggested he’s open to making some deals.
When asked about his company’s outlook for the next few years, Murdoch added that it will continue to focus on news, sports and live content (“We’re not going to pivot to entertainment,” he said), but will also look for ways to expand.
“We intend to increasingly use our balance sheet for M&A going forward,” Murdoch said.
Fox has almost no debt and mountains of cash because its business is built around the Fox broadcast channel and Fox News, both of which generate subscription and advertising revenue from pay TV. Its big streaming bets are Tubi, a free streaming service, and Venu, a sports-only service currently in liquidation due to an injunction.
Murdoch argued that Venu would be “consumer friendly, sports fan friendly” and completely different to cable TV.
“It’s affordable and it really solves a lot of the problems that seem to be compounding or breaking the US sports rights environment,” he continued, noting that currently, to watch NFL games you need to get not only a pay-TV subscription but also a streaming service: “You now have to pay $114, essentially on five different devices, or five different subscriptions, to watch the same game that you paid $64 for three years ago. It’s crazy.”
He also argued that Venu has no intention of jeopardizing its traditional pay-TV business and that the company would lose money if pay-TV subscribers switched from cable to Venu.
“If you lose cable subscribers to Venu, you’re going to lose money on that deal because you’re going to lose Fox News subscribers. Venu has the local station retransmission built in, but you’re going to lose Fox News subscribers,” Murdoch said. “So we don’t want cable to replace Venu like for like. Venu only wants to target cord cutters who have already canceled cable or were never in the system in the first place.”
Murdoch also explained his company’s approach to rights, saying the company would not get involved in NBA competitions and had recently terminated its deal with WWE. He also spoke about a deal that never came to fruition: “We had some very smart bankers come to us and say we have a fantastic opportunity. We can buy back the regional sports networks for half of what we sold them for (to Disney). We stayed as far away from that deal as we could.”
He added that the company is focused on the sports betting market and intends to exercise its rights to acquire a significant stake in betting company Flutter (which owns FanDuel) before they expire in 2030.
“We’ve begun the process with state regulators,” Murdock said. “In order to fully monetize our option, even if we only have 18.6 percent, we need to be licensed as a gaming operator. So we’ve begun the process with state regulators to get approved for a gaming license.”