The new Fox will be a hub for sports and entertainment


The future of Rupert Murdoch’s Fox is live television.

Last week, Fox purchased the broadcast rights to “WWE SmackDown” for five years. He struck another five-year deal for NFL games on Thursday night earlier this year.

Both franchises are among the most popular on television. While the terms of each deal have not been publicly disclosed, The Hollywood Reporter reported their combined value at around $ 4 billion.

The offers show how much Fox (FOXA) is willing to bet on sports and entertainment programming as he prepares for life in a leaner business. Disney (SAY) has agreed to buy most of 21st Century Fox, including the iconic movie studio, for more than $ 71 billion. Comcast (CCZ) could counter, which would push the sale value even higher.

Related: Disney Gets Antitrust Approval to Buy Most of Fox

The new Fox – the part of the business that is not for sale – will be defined by television. Murdoch owns Fox News, Fox Sports and the Fox Broadcast Network, a combination that research firm MoffettNathanson has valued at $ 23 billion.

Fox declined to comment for this story. But analysts say the decisions to dub live TV and sign major sports and entertainment deals make sense. Fox is taking action that capitalizes on an audience it is already good to attract, said Brandon Ross, analyst at BTIG Research.

“The most important asset in their portfolio going forward is Fox News,” he said, adding that “Fox’s main viewer” probably lives in a red state and / or enjoys live sports. “I think the reason they made the deal with WWE is because it fits those two things.”

Related: Why WWE Is A Media Juggernaut

Fox’s investments are also a sign of how quickly the media industry is changing. The scripted dramas and comedies that used to be television’s bread and butter are no longer a safe bet now that Netflix (NFLX) and Amazon (AMZN) are competing in the same space.

These companies have a solid on-demand streaming model – watch a show when you want, where you want it – that has shaken up traditional date-based television. Apple (AAPL) is also expected to enter the race soon.

Related: Oprah Closes Deal With Apple As New Hollywood Content Wars Intensify

But live TV is different, especially sports. Netflix and Amazon have partly attracted the network audience by offering their own scripted programming: think “House of Cards”. They can’t just start broadcasting the NFL every Sunday.

That’s what makes the sport so valuable to a historic company like Fox, said Jay Rosenstein, former CBS Sports executive and current assistant professor at New York University’s Tisch Center for Sports Management.

“There has been a certainty about sports programming that does not exist with scripted or unscripted programs,” he added. “With sport, you have a known amount.”

Scott Rosner, Academic Director of Columbia University’s Sports Management Program, agreed. He added that over 90% of sports programs are watched live rather than recorded.

“What that means is that you stick around as a spectator,” Rosner said. “You are much more likely to watch the advertising that is placed in front of you. ”

Live television is not immune to challenges. NFL television audiences, for example, fell 10% during the regular season last year. Some attributed the decline to injuries that left star players on the sidelines, as well as a high-profile row between the league and President Donald Trump over the national anthem protests.

But that kind of drop isn’t enough to deter networks or advertisers right now, Ross said. Football remains by far the most watched program on television.

The bigger concern is how much of a threat big tech companies are going to pose in the future.

“Nobody knows when this is all going to go,” Rosner said. “There’s a lot of experimentation. A lot of first dates between properties.”

Amazon, for example, renewed an agreement to broadcast “Thursday Night Football” This year. Facebook has locked down exclusive rights to broadcast certain Major League Baseball games this season.

Related: Facebook To Exclusively Stream 25 MLB Games

These companies have already started to compete with traditional broadcasters in some areas as well. Facebook bid strongly last year for the rights to broadcast cricket in India, but lost to a Fox affiliate called Star India. (Fox is selling this division and the rights to cricket as part of its larger deal with Disney.)

“I think all mainstream media has to be afraid of the size of the checkbook and the engagement that all of these tech companies now have on a global scale,” Ross said.

Many of the most coveted contracts, especially those in football and basketball, will be renewed over the next few years. And when they do, sports leagues will no doubt welcome any new competition.

“If you have someone who doesn’t own your property, they’ll be very anxious to get it – and those who own will be very anxious to keep it,” said Rosenstein. “The NFL and the other leagues are very good at pitting them against each other. ”

CNNMoney (New York) First published on July 5, 2018: 6:21 a.m. ET


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