Home Production studio What would the Fox TV network be without its own production studio?

What would the Fox TV network be without its own production studio?

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21st Century Fox’s decision to sell its TV and film production units in a $52.4 billion deal with Walt Disney Co. means Fox will be the only broadcast network without a studio to supply its scripted shows .

This has current and former Fox executives and their competitors wondering what the network — and whether it can have long-term viability — will look like in the next Murdoch-owned entity, dubbed “new Fox.” The remaining assets include 28 local television stations as well as cable channels Fox Sports 1, Fox News Channel, Fox Business Network and Big Ten Network.

Company insiders have heard that the broadcast network will become more reliant on sporting events, news programming and unscripted reality series. Such programming is widely watched live at the time of its broadcast, which means that viewers are more likely to see the advertisements.

“The new Fox will build on Fox’s powerful live news and sports businesses, as well as the strength of our broadcast network,” 21st Century Fox Executive Chairman Rupert Murdoch said in his statement. announcing the deal with Disney.

During an investor call Thursday, 21st Century Fox co-chairman Lachlan Murdoch called the Fox news “a homecoming.”

But a broadcast network built solely on those genres has not been tested, suggesting the Murdochs could strike a deal with a scripted program provider.

“Some people think there’s another shoe to drop,” said Preston Beckman, a media consultant who worked at Fox from 2000 to 2015.

Beckman and other TV executives say they can consider Fox partnering with a studio, such as Sony or Lionsgate, that doesn’t have a TV network to show its programs. Fox could also buy a studio or strike a deal with Disney to continue airing scripted programming on the network.

Separating the Fox network and the studio challenges the role broadcast networks have played within large media conglomerates in recent years. In an increasingly fragmented landscape, their prime-time lineups largely serve as marketing arms to launch the sitcoms and dramas that become revenue-generating assets on other media platforms.

The role has evolved out of necessity as prime-time ratings have eroded over the years to the point that the cost of first-run programming can no longer be supported solely by the advertising revenue generated by the programs .

The networks’ parent companies make money when series are sold to international broadcasters and online outlets such as Netflix, Amazon and Hulu. These dollars supplemented what they earned from sales to local television stations and cable networks.

Even with reduced ratings – Fox averaged around 3.5 million viewers during the 2017-18 TV season – all broadcast networks still reach nearly 100% nationwide and remain the most effective in giving mass exposure to a TV program.

But in the current state of the new Fox company, the network would have to allow sitcoms and dramas from outside studios. Unless he negotiates an equity stake in the programs he puts on his primetime schedule, he won’t see any financial benefit beyond what he gets from their first airings.

“It’s kind of like what’s old is new,” said Bill Hague, executive vice president of television consultancy Frank N. Magid Associates. “That’s what networks were like before these integrated media companies took over.”

A 1970 FCC rule largely barred the traditional Big Three broadcast networks — ABC, CBS and NBC — from owning their scripted programs to prevent them from excluding independent producers from their prime-time lineups. . After this rule was abolished in 1993, the three networks eventually merged with companies that owned production studios (Fox was part of 20th Century Fox when it launched in 1986).

In many cases since, senior network programming executives have also overseen their companies’ television production studios, as is the case with Fox Television co-presidents Dana Walden and Gary Newman.

The networks lobbied for the ownership rule to change in the early 1990s, as the competitive landscape had changed dramatically as more cable channel choices were introduced into viewers’ homes. Over time, revenue generated from program ownership is the difference between prime time profits and losses.

Murdoch said in an interview Thursday on Fox Business Network that scripted shows are increasingly being watched online and on-demand, which makes it “very difficult to monetize that with advertising.”

A Fox executive who was not authorized to discuss the issue publicly said the Murdoch family may be in the market to buy more local TV stations.

Local stations are still a high-margin business, especially with the subscription fees they receive from the cable and satellite companies that carry them. While the cord-cut cut some of that revenue, new money is coming from direct-to-consumer multi-channel video programming distributors like Hulu, Sling and YouTube TV, all of which now pay to carry Fox stations and affiliates.

Even without scripted programming, Fox’s stations and affiliates will be able to charge subscription fees because of its rights to Sunday games of the National Football League. While football ratings are down overall, advertising demand remains strong in local markets where matches far exceed all other broadcasts.

Many events that Fox owns the rights to on Fox Sports 1, such as Major League Baseball, college football, the Soccer World Cup and NASCAR, are likely to get more prime-time exposure on the network. of dissemination.

“As long as they have their NFL package and their baseball, they’re fine,” Beckman said.

The stations also have local news, another service not duplicated by streaming services.

But in the long run, an addiction to sports programming means Fox has less control over its destiny. Fox has its NFL package through 2022. When the broadcast rights return, the network is sure to face fierce competition from tech companies like Google and Amazon, who are expected to seek exclusive rights to stream the games online. line.

One area that is expected to remain unchanged is the hugely lucrative Fox News channel, which will end 2017 as the most-watched cable network for the second year in a row. Rupert Murdoch has become more deeply involved in the press operation since chief executive Roger Ailes left in disgrace in July 2016 amid a sexual harassment scandal.

Murdoch is said to spend four days a week at Fox News headquarters in Midtown Manhattan and was involved in programming and coverage decisions – giving him influence over President Trump, a big viewer of the channel.

“Rupert is a journalist through and through,” said a former Fox TV executive who spoke on condition of anonymity. “When I was working there, nothing made him happier than sitting behind his desk and writing the headlines for his papers.”

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Twitter: @SteveBataglio

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UPDATES:

4:05 p.m.: This article has been updated with commentary from Rupert Murdoch at Fox Business Network.

This article was originally published at 8:10 a.m.