Rupert Murdoch is banking on Americans’ love of live sports and breaking news for a new, slimmed down version of his Fox TV business after selling the company’s film studios and international operations to Walt Disney Co (DIS.N).
Reuters report the 86-year-old media mogul’s play is based on the fact that sports and news still attract viewers watching in real time - and the advertisers that want to reach them - even as more people watch their favorite shows on demand after they air or online, skipping commercials completely.
“Are we retreating? Absolutely not,” Murdoch told investors on Thursday. “We are pivoting at a pivotal moment.”
Disney’s $52.4 billion purchase of Twenty-First Century Fox’s (FOXA.O) film, television and international businesses, announced earlier on Thursday, leaves Fox with a smaller but more focused set of assets, based on Fox News Channel - the U.S. No. 1 news cable network - and its broadcasts of sports such as National Football League and Major League Baseball.
The new Fox will be about a third of the size of what it is now, with about $10 billion in annual revenue, company executives said. If investors value the new company with the same or a greater multiple as the current Fox, it would suggest a market value of at least $20 billion.
Its smaller size may mean it has less leverage when negotiating with cable and satellite companies to carry its content or bidding for sports rights to air on its network.
Nevertheless, Murdoch challenged investors to trust him, saying he faced similar doubts when he launched Fox News 21 years ago and Fox Sports 1 in 2013.
“Content and news relevant to you will always be valuable,” Murdoch said.
Murdoch is also banking on Fox News Channel continuing its success as the top-rated cable news network, despite the fact that the median age of Fox News’ viewers is over 65, according to Nielsen. The median age of rival MSNBC’s viewers is also over 65, while CNN’s is 59.
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