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.
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 …
Rupert Murdoch was the one taking the bows last week when News Corp announced its intention to split into two entities: one housing its vibrant entertainment assets and another with its older publishing ones. But COO Chase Carey is getting much of the glory in the eyes of shareholders, even though he’ll keep the No. 2 job at the entertainment unit where Murdoch will be CEO and chairman; Murdoch also will be chairman of the publishing company, with a CEO to be named later. News Corp shares have jumped 12% in the week since the news first broke. That’s at least partly due to the perception that the arrangement will shift power from Murdoch to Carey. “In a perfect world we would have liked to see Chase Carey in the CEO role and Rupert move up to the chairman role,” a senior fund manager at Invesco — News Corp’s third-biggest investor — says today in the UK paper The Telegraph. Kevin Holt adds that “Chase Carey’s involvement in this company is very important to our ownership.”
Time Warner CEO Jeff Bewkes and News Corp COO Chase Carey took the message to The Cable Show this morning, urging attendees to jump on the Internet video bandwagon — even if it means relaxing their grip on the relationship with their customers. “We’ve just got to do it faster,” Bewkes says about TV Everywhere, the service that enables subscribers to watch TV shows on mobile devices. Carey agreed that “it should go faster,” adding that “we get too hung up on protecting the rules of the past.” That was a subtle swipe at pay TV distributors who covet their gatekeeper role. Many fear that they could lose control once subscribers begin to use an iPad or other device to access shows directly from programmers — without a need for the operator’s set top box or on-screen guide. ”We’ve got to find a way to make all of these experiences easier to use and more accessible,” Carey says. “That requires us to work together.” Bewkes agreed. “Let consumers use the interfaces they want,” he says. “You’ll still have your subscriber relationship. We can’t develop the best, world-class interfaces at the scale that a distribution company has. Silicon Valley, the Internet industry, is a global industry and that’s what they do. We should harness that….Don’t try to hold that back. Consumers won’t allow it.”
News Corp is fighting to disprove fresh charges that a video software and content security provider it has controlled, NDS, illegally helped to undermine Rupert Murdoch’s business rivals. News Corp COO Chase Carey said tonight that a BBC1 show that revived the allegations in a report on Monday “presented manipulated and mischaracterized emails to produce unfair and baseless accusations.” NDS chief Abe Peled demanded a retraction saying that the investigation that ran on the program Panorama showed “flagrant disregard to the BBC’s broadcasting code, misleading viewers and inciting widespread misreporting.” The allegations come at a sensitive time: They feed into the investigations into phone hacking and bribery at News Corp’s UK tabloids. Also, this month Cisco agreed to pay $4B for NDS. News Corp currently owns 49% of the firm.
News Corp COO Chase Carey threw down the gauntlet to Idol‘s producers today, telling investors that the show’s ratings are “disappointing” and that the franchise “can and should provide fresh energy.” The show is “a glass half full,” he told the Deutsche Bank Media & Telecom Conference. It’s still big, but grappling with new competitors including NBC’s The Voice and Fox’s The X Factor. But Carey doesn’t seem to think that lets Idol off the hook: News Corp has factored into its financial guidance the fact that “the ratings aren’t where we hoped for them to be.”
For the most part, Carey was characteristically upbeat about News Corp’s prospects, especially in cable networks. He likes the fact that about half of Fox News’ pay TV distribution carriage contracts are due to be renewed in 2012 — an election year. Although he wouldn’t say how much additional revenue he expects to see in those deals, ”there’s a lot of growth left,” he says. He adds that “one of the great things” about the unit is that its costs are
Freelancer Cari Lynn is contributing to Deadline’s coverage.
Add the News Corp COO to the list of Big Media execs who believe that they were simply misunderstood in the debate that led Congress to put aside the Hollywood supported anti-piracy bills. “Clearly this got turned upside down, the whole issue,” he said at a conference sponsored by All Things D. Despite the claims of opponents, including those in the tech industry, the proposals empowering the government to block overseas Web pirates “isn’t about censorship…If they did it in the U.S., they’d be shut down. So they moved it offshore. You should still be able to shut them down.” He seemed to take a subtle dig at the MPAA for not making the industry’s case more effectively as opponents turned the issue into a populist crusade. ”If you look at what went on, you’d say that was not a process to replicate,” Carey says. The creative community didn’t ”anticipate the viral aspect and message getting twisted.”
You wouldn’t know that the Hulu auction was a failure based on the way News Corp COO Chase Carey describes the owners’ plans. They decided to hang on to the digital video service because its value to them “dwarfed some of the values that were being put on it” by bidders including Dish Network and Google. Keeping Hulu reflects “a judgment that this digital space is incredibly important and is going to be, over the next five years and beyond, the most important field we have to navigate.” As a result, he told the UBS Annual Global Media and Communications Conference, “we’ll do what’s necessary to make it grow.” But that doesn’t necessarily mean adding movies to the package to make it more competitive with Netflix. ”Me-toos aren’t a great place to be in this business,” Carey says. “We want to look at it with a fresh eye.”
Investors strangely seemed uninterested in the News Of The World hacking scandal. But one of the consequences — News Corp’s decision to abandon its effort to buy BSkyB — was a concern. Carey says that it’s “one of the things we have to figure out” because he says the company gets ”a fraction of credit” it believes it deserves for its 39% stake in the UK media company. News Corp must ”do a better job communicating value.” Still, he didn’t leave investors empty-handed: Carey says that News Corp’s recently launched round of share repurchases is “certainly not a one-time thing. It’s an important part of our capital allocation,” he said, adding that News Corp shares are ”woefully undervalued.”
UPDATE, 2:35 PM: The comment about James came from News Corp president Chase Carey, filling in for Rupert Murdoch, who wasn’t on the quarterly conference call with analysts and reporters. Despite growing concerns about James’ role in the News Of The World hacking scandal, the deputy COO “has done a good job and we are not contemplating any changes,” Carey said. He added, in response to a question, that the company is taking “seriously” the strong opposition that several shareholders expressed at the recent annual meeting to many members of the News Corp board — which includes three members of the Murdoch family. “The board will, and is, discussing those votes,” he says. “The board continues to evolve. …. That being said, we’re proud of the board.”
In other matters, Carey says that “we’re not buying the (Los Angeles) Dodgers,” but didn’t elaborate. Sports costs are not a big concern for the company for now because “outside of Los Angeles, most of our contracts are long term,” he says. He’s also unfazed by the NBA strike, saying that “it’s not a significant financial event for us” although “we’d like to see them settle it.” Carey denied that Fox is offering make-goods ads for lower-than-expected initial ratings for The X Factor: ”We have the No. 1 show and make real money from it,” he says. “It came out a bit below where we targeted … but is building momentum.” Not much detail about the collapse of the auction for Hulu. Carey says that it ”has been a positive for us in terms of creating value” despite its “complicated ownership structure.” Carey also didn’t provide much insight into the new programming deal with DirecTV, although he says it’s “fair for both of us.”
News Corp COO Chase Carey: “Nothing We’ve Seen” To Support Allegations That 9/11 Family Phones Were Hacked
News Corp COO Chase Carey bobbed and weaved today when audience members at the Goldman Sachs Commmunicopia Conference asked questions that touched on the company’s hacking and police bribery scandals. “The media noise has been surreal around it,” he says. “The truth will come out. The issues will work their way out.” He did note that there’s “nothing we’ve seen” to support the allegation — which the Justice Department is investigating — that News of the World may have hacked phones of families of 9/11 victims. Carey wouldn’t rule out the possibility that News Corp might renew its effort to buy the 61% of BSkyB that it doesn’t already own. “We’ll continue to be a shareholder. … We have a lot of flexibility if and when something arises.” He added that he’s “not going to get into speculating” about whether UK officials might force News Corp to give up its current shares in the satellite power. As for the newspaper publishing business — which a lot of investors would like to see News Corp dump – Carey says the company should “take a fresh look at it.” But that could involve expanding operations such as Dow Jones and The Wall Street Journal. “There are things beyond (putting them on iPads) that we can do.”