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Fox CEO: Company’s Entering Fiscal 2020 with ‘Great Momentum’

The new Fox Corp. that was recently created in the wake of Disney buying the 20th Century Fox film and television studios is firing on all cylinders as it starts its new fiscal year, with continued strength in its cable news and Fox Entertainment businesses, as well as promising results with new initiatives that include the Fox Nation subscription streaming news service, according to Lachlan Murdoch, its CEO and chairman.

“From an operational standpoint, we’re entering fiscal 2020 with great momentum,” he said Aug. 8 on an earnings call for the company’s fourth quarter and fiscal year (ended June 30).

“While we are ending a fiscal year, we’re also just starting our growth trajectory and are hitting key milestones at a good pace,” he told analysts, adding the company recently “concluded a very successful advertising upfront,” is “making good progress on our distribution renewals, and [have] a compelling content lineup across our linear and digital channels, all of which positions as well as we can commence our first full fiscal year.”

The Fox News channel “dominates the cable news landscape, marking 17 consecutive years as the number one cable news network and maintaining its position as the number one cable network in both primetime and total” viewership this past year, he said.

Meanwhile, “from the NFL to ‘The Simpsons,’” the company’s Fox TV broadcast network remains “one of the top four channels across the country week in and week out and such a strategic asset for Fox,” helped by its wide “programming breadth,” he said.

Although “the power of sports is undeniable, we are not looking to turn Fox into a pure-play sports channel,” he promised, pointing out there are “a few of those already” and that’s “why we are investing in entertainment originality” at the network. “To that end, we are pursuing a strategy to expand our portfolio of own content, to generate long term asset value for Fox,” but the company is “being strategic and judicious, building smartly, and deliberately around our strengths,” he said.

As part of that strategy, Fox is “pursuing a new program co-production model that gives us an equity interest in nearly all new shows aired on the network” and also “enhancing our internal content creation capabilities” with the recent launch of Sidecar, a division of Fox Entertainment targeting new content for Fox Network and third-party platforms, he told analysts.

As part of that same strategy, Fox also announced Aug. 6 that it was buying Bento Box Entertainment, the animation company that produces the long-time Fox series “Bob’s Burgers” as well as the new Fox series “Duncanville” and “The Great North,” he said. The purchase of Bento Box provides Fox “access to the next generation of animators and the ability to originate owned IP to drive long-term value for the company,” he told analysts.

The company is also expanding its direct-to-consumer (D2C) news capabilities with Fox Nation, he noted. It was “still early days,” having just launched in November, and “we haven’t really spent any external marketing dollars on it,” he said. But he added: “The assumption that we will spend an appropriate amount of external marketing is within” the investment strategy that Fox CFO Steve Tomsic discussed earlier in the earnings call, Murdoch said, adding “that will begin in the fall.”

The “pleasing thing” about Fox Nation so far is that the “conversion rate” from consumers trying the service “to paid subscribers is extraordinarily high and, if we can maintain that conversion rate while widening the funnel of trialists in the fall, it will be an extremely successful business,” Murdoch said.

Meanwhile, the company is “on track to launch” Fox Bet, the new U.S. media and sports wagering partnership between Fox Sports and The Stars Group, ahead of the upcoming National Football League (NFL) season, he said.

Discussing Fox Bet at the recent Needham & Company’s Emerging Technology Conference in New York, Tomsic said two products are planned for this fall under the Fox Bet umbrella: One a nationwide free-to-play game awarding cash prizes to players who correctly predict the outcome of sports events and the second, named Fox Bet, that will give consumers in states with regulated betting the ability to place real money wagers on the outcomes of several sports events in accordance with state laws and regulations.

The U.S. Supreme Court recently ruled that each state can decide whether it wants to legalize sports gambling.

In another new initiative, Fox announced Aug. 4 that it entered into a definitive merger agreement to acquire 67% of Credible Labs, a D2C personal finance marketplace in the U.S. “Through this prudent and disciplined investment, we will access an adjacency to our enormous national and local news audiences, and tap into a high growth market,” Murdoch told analysts. “Just like our investment in the Stars Group for our Fox Bet offering through Fox Sports, The Credible marketplace is comfortably adjacent to, and enhances our core Fox digital properties, specifically those of Fox News Media and our local television stations,” he said, adding that, after the Credible deal is approved, “you will see us activate the Credible marketplace across FoxBusiness.com, which we’ll be refreshing later this year, and across the fast growing digital footprint of our Fox TV stations.”

Fox expects to “activate the marketplace across our wider digital network” over time, he said.

Of the lawsuit that Fox, ABC, CBS and NBC recently filed against Locast, he referred to the free streaming app as a “rogue streaming service violating the copyright laws for commercial gain, nothing more.” The Locast claim that it’s a non-profit company “not operating for any direct or indirect commercial advantage is absurd,” he said, adding Locast “operates for the clear commercial benefit of the corporations that support it” and “we’re confident in the merit of our claim against Locast.” The Locast “theft is, of course a validation of the irreplaceable value of our brands, and the content that they carry,” he added.

Fox reported Q4 revenue grew 5% from a year ago to $2.5 billion, but profit attributable to Fox shareholders decreased to $454 million (73 cents a share) from $471 million (76 cents a share).