Fox Corp. executive chairman and CEO Lachlan Murdoch said the company is on a path toward generating an additional $1 billion in affiliate fees by 2022, based on strong renewals for its broadcast and cable network properties so far and in the future.
Fox saw its affiliate fees rise by about 7% in fiscal Q2. Fox had said earlier that it expected to add another $1 billion to its affiliate coffers through retransmission consent and cable carriage fees, primarily because of its focus on live news, sports and events.
"I can say that our announced expectation that we will do $1 billion of additional affiliate revenue by calendar 2022, we are absolutely still expecting to hit that number,” Murdoch said on the company's earnings call. “That is factoring in subscriber declines. I think we’re doing a terrific job in driving these affiliate fees.”
Related: Affiliate Fees Drive Fox Fiscal Q2
2022 also is the year that Fox’s broadcast rights with the National Football League expire, and Murdoch said the network is already in early negotiations to renew its deal with the league.
“We feel we are in a good place to work with them as our most important partner to renew our rights going forward,” Murdoch said. “But it is early days in the conversation.”
Chief financial officer Steve Tomsic added that Fox already has done several affiliate fee and retrans deals, adding that the strength of its channels -- Fox News is a perennial ratings winner as is its Fox broadcast network -- has led to multi-year carriage deals with strong pricing and full distribution.
He added that while virtual MVPDs have added to the mix, they haven’t had a huge impact yet on the overall affiliate fee picture. Nallen said that pricing has been a little better with vMVPDs, but “we continue to expect that we will get progressive increases in cable affiliate growth going into this second half of our fiscal year.”
But Fox also has had a strong virtual presence. Murdoch said that 11.7 million people watched last week’s Super Bowl via streaming, and 70% of those people watched on a Fox-owned platform. He pointed to its streaming news service Fox Nation, launched in 2018, where 80% of the people that sign up for the free trial of the service convert to paying subscribers.
Asked if he would consider taking his networks direct-to-consumer, like other programmers have recently, Murdoch was more cautious.
“It’s something we are always looking at, but we always have an eye on not damaging the current business model where we generate a tremendous and growing amount of revenue from our cable subscribers,” Murdoch said. “We have the capability to go direct-to-consumer, we took the technology that we built with us when we separated from Disney, we are running direct-to-consumer businesses with Fox Sports in Pay-Per-View with Fox Nation in a different manner. We’re happy where we are now, and we’ll see what the future brings.”
