Here’s the agreement that the 21st Century Fox COO said last month that he had tentatively reached with CEO Rupert Murdoch. The terms, formalized today, will keep Chase Carey at the company through June 30, 2016 — although he can terminate on December 31, 2015 if he gives the company six months notice. If he leaves then he must provide “non-exclusive consulting services” subject to a non-compete provision to the end of June 2016, the company says in an SEC filing. His previous contract, from 2010, was set to expire at the end of this month. Just about everything else in Carey’s employment terms remains unchanged; he made $27M in the fiscal year that ended in the middle of 2013. Today’s announcement should please Wall Street: Carey’s popular among investors and has become Fox’s public face as Murdoch has withdrawn from many corporate events, including its quarterly update call with analysts.
Some became concerned about Carey’s fate in late March when Fox announced that James Murdoch had been promoted to co-COO, while another of Rupert’s sons, Lachlan, was named Non-Executive Co-Chairman. Fox Networks Group now reports directly to James. He also has “direct responsibility for the strategic and operational development” of Fox’s pay TV interests in Europe and Asia, reporting to Carey.
UPDATE: Below the original post is a copy of Rupert Murdoch’s memo to staff at 21st Century Fox regarding today’s appointments. In it, he notes that the evolution of the company’s leadership, “underscores the considerable planning that both the Company and the Board have undertaken to ensure a vibrant future for 21st Century Fox and its shareholders.”
PREVIOUS: In what looks like a clear sign that Rupert Murdoch is putting his succession plans in order, News Corp and 21st Century Fox made big announcements early Wednesday morning outlining changes to their boards and executive structure — and each involving Murdoch’s sons. Lachlan Murdoch has been named Non-Executive Co-Chairman of News Corp and has been given the same title at 21st Century Fox, the media and entertainment company. Also at 21st Century Fox, James Murdoch has been elevated to Co-Chief Operating Officer. Further, Fox Networks Group Chairman and CEO Peter Rice, who has close ties to the Murdoch family, has extended his contract for an unspecified term. “Under Peter Rice’s leadership Fox Networks Group has continued to push creative boundaries across the company, and has grown tremendously with successful channel launches including Fox Sports 1 and FXX, an increased international footprint and enhanced sports offerings across the world,” James Murdoch said.
The … Read More »
The 21st Century Fox COO acknowledges that with disappointments including the failure of The X Factor the “results are not what we want.” Still, Chase Carey told the Deutsche Bank Annual Media, Internet & Telecom Conference this morning that he likes the momentum in program development pointing to shows including 24, Hieroglyph, and Gracepoint “We have to execute in finding the shows. But I feel pretty good.” While Fox steadies itself, revenues from retransmission consent deals with pay TV distributors “will be an underpinning for profitability for the broadcast business, and that’s a stream that’s growing.” The company also expects increases in the rates cable and satellite companies pay for its pay TV channels. “We’re still not getting fair value, but you can’t get there in one fell swoop.” He adds that Fox execs “like this ecosystem….We know there’s a lot of upside left.” And with additional opportunities to sell programming to online services “the wind is at content’s back…it’s in the sweet spot today and digitization will keep it in the sweet spot.”
On other matters in the news: Carey says Fox is still figuring out how to deal with companies including Dish Network, Sony and Verizon that are angling to offer pay TV channels via the Web. “It’s early stages. I don’t know if it’s 2014, but it’s short term” before a service launches. Fox plans to “… Read More »
Fox hopes to “create some precedents” with its digital plans for The Simpsons later this year when the long-running animated series will become “the face” of FXX, COO Chase Carey told analysts this morning in a call to discuss fiscal Q2 earnings. No specifics yet — but the exec says that it’s one of the reasons why Fox decided to keep the re-run rights instead of licensing to someone else. “There are times when our distribution businesses have a unique ability to take advantage of a set of rights. And The Simpsons is a perfect example.” The show will “help brand…and help drive” FXX, Carey adds, but Fox isn’t “turning it into The Simpsons Channel.” Would a similar strategy also make sense for, say, FX’s The Americans? Not necessarily, Carey says. “When you get to a one-size-fits-all [strategy], I don’t think that’s the way to go….What we’re not going to do is undersell the content” when others “see values that exceed what it’s worth to us.” Read More »
The 21st Century Fox COO has a lot at stake in preserving the pay TV bundle, and scoffs at consumers’ continuing interest in a la carte pricing. “It is a farce,” he told the UBS Global Media and Communications Conference. “People may want different bundles, but a la carte isn’t the answer…The bundle is still a great proposition for the consumer, when you compare it to the world of $5 lattes and cell phone bills.” Chase Carey concedes that pay TV networks and distributors have been too slow to offer content on the Internet. “TV Everywhere is the right path but has been poorly executed….We have to be part of the solution, not just sitting here, picking and complaining.” That will have to include developing business models for digital. “We haven’t scratched the surface.” He’s glad, though, that his company, Disney and Comcast decided not to sell Hulu. “Once we became convinced we had a shared vision for the opportunity, we moved naturally to a place …where we put the capital commitments behind it.” Read More »
Sounds like the 21st Century Fox COO either hasn’t read, or was unpersuaded by, Anita Elberse’s new book Blockbusters. The Harvard Business School professor is generating a lot of buzz in media circles with her argument that entertainment companies — including movie studios — incur less risk when they bet on a few big-budget extravaganzas than they do when they spread cash across many smaller productions. But Chase Carey had a different take today at an earnings call with analysts when he was asked whether the industrywide growth in spending on tentpole films is a mere fad or a fundamental shift in studio strategies. “The minute you start believing that there are formulas for what kinds of films to make you’re putting yourself in a corner,” he says. “You look for great films. Some will be on the high end, some on the low, and some in the middle.”
Related: Fox: Programming Investments Contributed To Earnings Miss
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After ankling many of his European board seats in the wake of the phone-hacking scandal at News Corp’s UK press arm, James Murdoch has been elected Chairman of the supervisory board of Sky Deutschland. The exec, and son of Rupert, had originally been appointed as a member of Sky Deutschland’s board last April as News Corp began to raise his profile. The German pay-TV group is 54.8% owned by 21st Century Fox, of which Murdoch is Deputy Chief Operating Officer, Chairman and CEO, International. Via the board chairmanship that begins tomorrow, Murdoch is replacing 21st Century Fox President and COO Chase Carey who had been chairman since July 2010. Carey will remain a member of the board. “Mr. Murdoch has built a track record of bringing innovation to the global television business and choice to customers across Europe and Asia,” Sky Deutschland said today.
21st Century Fox, the media and entertainment company created out of the split of News Corp, filed a definitive proxy statement with the SEC today, revealing some interesting figures. Among them is the news that chairman and CEO Rupert Murdoch earned about $1.1M less in fiscal 2013 than the previous year. (The year ended on June 30 and News Corp officially split on June 28, so the figures rep his pay under the company’s former iteration.) His full fiscal 2013 compensation was $28,913,040. The previous year it was just over $30M and for 2011 it was $33.3M. (Separately, Forbes reported yesterday that Murdoch has purchased a 13-acre winery and mansion in Bel Air. Property records show that he paid $28.8M, so basically a year’s takings.) According to the SEC filing, Murdoch had 2013 stock awards of $5.2M, an increase from the $3.5M he got in 2012. His incentive plan compensation was $12.5M; changes in his pension value were worth $2.85M; and “all other compensation” equaled about $300,000. Chase Carey, deputy chairman, president and COO, had an earnings rise to $27M from 2012′s $24.7M. Scion James Murdoch, who is now deputy COO and chairman and CEO of international, also saw a pay bump to just over $17M, up from the $16.8M he made last year but less than the $17.9M he … Read More »
21st Century Fox execs had better pray that CBS crushes Time Warner Cable in their now week-long program carriage contract dispute. If CBS can’t win a fat increase in the fee that TWC pays to carry the network-owned stations, Showtime, and other channels, then Fox’s day-long effort Thursday to rally Wall Street’s support for its stock could look like a waste of time. Fox’s business plan is based on its faith that pay TV providers — and perhaps their customers — will keep paying rising amounts for a bundle of channels. “People will give up food and a roof over their head before they give up television,” Fox COO Chase Carey told analysts and investors. Fox will take advantage of that addiction by creating new pay TV channels, raising prices for existing ones, and demanding higher payments for its Fox broadcast stations. Read More »
21st Century Fox‘ COO came out swinging against those who say that companies like his — built on the bundled channel pay TV model — are headed for a fall. Chase Carey told analysts today that it’s a “fantasy” to think that a la carte pricing will replace the packages that require subscribers to pay for channels they don’t watch. Nor does he worry about consumer cord cutting. “People will give up food and a roof over their head before they give up television,” he says adding that there’s “no evidence” that lots of pay TV subscribers are beginning to bolt. It’s legitimate to wonder whether young people will never subscribe when they leave their parents’ nests, but that “will play out over the next 10 plus years, not the next three.” He says that there will be some changes, though, as pay TV costs rise. “Weaker channels will and should get squeezed.” Meanwhile distributors should try to build new revenue streams for example from TV Everywhere initiatives. He’s also unfazed by rising sports costs. “It’s the most important content on television, period….It is the content that binds a community.” He defended the rise in costs for regional sports networks, which pay TV distributors say pressures them to raise consumer prices. Carey says that his company’s rates are up less than $1 per subscriber per month. It’s “hard to believe it’s breaking … Read More »
Holding on to Hulu and moving forward was all about relationships said Chase Carey today. “I think it is really a case where we’ve always known the importance of these digital platforms and the opportunity specifically in Hulu. I think the real question is partnerships are complicated and can we get the right strategy that we both believe we can execute to be successful,” said the 21st Century Fox COO Tuesday about working with co-owners Disney and Comcast. Carey was speaking on a conference call Tuesday after the company released its Q4 results. He was joined by Deputy COO James Murdoch and CFO John Nallen. “As we went through this process we really found that of all the constituencies coalesced around a vision of how to really build this and how it can be something exciting for content owners and something exciting for the digital marketplace,” he added. After weeks of speculation that Hulu would be sold, 21st Century Fox, Disney and Comcast announced on July 12 that they would keep the company and supply $750 million to push it’s growth.
Related:Fox Shares Rise As Fiscal Q4 Earnings Beat Expectations
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It isn’t the kind of thing a network exec wants to admit the week before broadcasters open the upfront ad sales season. But the News Corp COO, in a quarterly call with analysts, couldn’t avoid the fact that this season’s ratings declines show “it’s not been a great year for the broadcast business overall from a creative perspective.” Carey says it’s time for networks to “discard a few habits and rules and take some shots. Hopefully next week will be the beginning of that process.” While he didn’t offer specifics, he says one possibility is to “be a bit more targeted [in programming] and invest deeper—take fewer bets and bet deeper.” Carey acknowledged that as digital video becomes more popular “there’s no question there’ll be more and more choices and people will find those choices.” But the exec says he still has faith in broadcasting — as long as it can collect revenues from subscriptions as well as ad sales. He declined to offer more insight into his recent threat to make Fox a pay TV service if the courts jeopardize the dual revenue stream model. Some analysts say that could happen if justices agree that streaming service Aereo can distribute local over-the-air signals without paying broadcasters. “If that dual revenue stream is not available, there are other paths we can pursue,” Carey says. He adds that the “most exciting” opportunity for Hulu is to focus on boosting subscriptions. Broadcasters can add “original and other unique product” and “take advantage of its leadership position in the digital space.” Read More »
BREAKING…This would be a nuclear option for News Corp, which owns 27 TV stations and serves dozens of affiliates. But the company COO’s threat to take Fox off the public airwaves — made today at the NAB annual confab in Las Vegas — suggests how deeply concerned broadcast moguls are about the possibility that they might lose their legal battle against Aereo, and how much that could undermine their ability to extract retransmission consent fees from cable and satellite providers. Aereo uses tiny antennas to capture broadcasters’ over-the-air signals which it then streams to local subscribers. It does so without TV stations’ permission, and without paying them a dime. Broadcasters say that violates their copyrights. But last week a U.S. Appeals Court rejected the industry’s plea to shutter Aereo during the trial over that claim. What’s more, it seemed to favor Aereo’s counterargument that it simply rents antennas, enabling customers to watch transmissions already available to them for free.
If Aereo prevails — and cable and satellite companies decide that they, too, can retransmit broadcast signals for free — then Carey says “We have no choice but to develop business solutions that ensure we continue to remain in the driver’s seat of our own destiny. One option could be converting the Fox broadcast network to a pay channel, which we would do in collaboration with both our content partners and affiliates.” News Corp-owned stations collected about $308M in retransmission consent fees last year, SNL Kagan estimates. That’s up 20% vs 2011 and accounted for about 19% of their total revenues. Read More »
News Corp’s COO assured investors this morning that the introduction later today of the Fox Sports 1 cable network is a smart long term strategy, even though it will result in losses for the next few years. The company will convert its Speed channel into a national, general sports channel and has to make a “manageable investment” while it tries to ”ramp up the rate” that cable and satellite companies pay for the existing service, Carey told the Deutsche Bank Media, Internet and Telecom conference. Pay TV distributors currently shell out about 22 cents per subscriber each month for Speed — and $5.54 for ESPN — research firm SNL Kagan estimates. In the end, Carey says the upgraded sports channel could become “a multibillion dollar franchise.” The service will be “a natural fit” since sports “has been a huge part of the growth of Fox for 15 years….It’s a place where we can bring expertise, synergies and for us is part of growing and adding a new dimension to our business.” Although sports rights are expensive, Fox can “navigate that” and capitalize on programming that’s “ever more valuable and more unique in a world that’s fragmented.” The “key” to the effort, he says, is to “not try to beat ESPN.” It will take advantage of … Read More »
I don’t usually feel sorry for News Corp execs. But I came close to doing so this evening as COO Chase Carey on a conference call with analysts was forced to pretty much confirm the widely reported, although still officially unannounced, news that Fox plans to create one or two national sports networks. “I guess you could call it the world’s worst kept secret,” he said. CEO Rupert Murdoch wasn’t there to help. (He stopped appearing on the quarterly calls in mid-2011 when the company was barraged by questions about the UK hacking scandal.) Carey says that “sports is a huge arena that has room in it” for new services. “We can build businesses that capitalize on the other assets we own and we do think sports is an opportunity there.” He doesn’t believe that the failure of News Corp’s regional sports networks to land the Los Angeles Lakers and Dodgers will hurt. The amount that the Dodgers wanted, before deciding to launch a team-owned channel, “was too rich for our blood.” Even so, “we’ve got enough assets so we can have a vibrant Southern California business.” He declined to go into detail about the sports the company might offer on Fox Sports 1 or Fox Sports 2 — the expected names for the services. “If we launch a channel it’ll be a channel that excites … Read More »
Simon Cowell’s talent contest failed to generate the ratings that Fox needed, and execs expected. “We went into the competition round [hoping] to get fresh energy,” COO Chase Carey told analysts in a conference call. ”And it was a disappointment for us. It didn’t occur.” That’s one reason why “we didn’t have a great fall…Clearly that was disappointing for us.” Fox execs wanted to regroup after a “choppy October” with the run up to the election, the World Series, and Hurricane Sandy. “We hoped to relaunch Mob Doctor and other shows,” Carey says. “We thought we could bring them back to a better place. That didn’t occur.” Now “we need to have shows break out.” He isn’t pointing any fingers. “Sometimes you’re going to have a tough three months….But we feel like we’ve got a really good team.” Can American Idol, which returned last month, turn things around? “Idol is in early stages, very much a work in progress,” he says.
The COO’s comment at the Goldman Sachs Annual Communicopia Conference should enable American Idol’s producers to breathe a little easier. Chase Carey publicly warned the show last February that it needed “fresh energy” as it slogged through a season that ended its eight-year reign at the top of the prime time ratings list. News Corp said last month that a drop in ad sales at Fox for the quarter that ended in June was “primarily driven by lower American Idol ratings.” But Carey’s upbeat after Jennifer Lopez and Steven Tyler were replaced at the judges’ table by Mariah Carey (no relation), Keith Urban, and Nicki Minaj — with Randy Jackson the sole holdover. “We’re very excited,” the exec told investors. As for rejuvenating the show’s energy, “I think we’ve done it, and we’re excited where Idol’s going to go.”