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Tag: 21st Century Fox

  • Disney expected to announce 21 CF buyout tomorrow: media reports

    Disney expected to announce 21 CF buyout tomorrow: media reports

    MUMBAI: The Mouse House is closing in on the Fox.  Media reports have emerged that Disney’s bid to acquire the Murdoch-owned 21st Century Fox (21 CF Fox) group’s entertainment assets is near closure. The price being talked about is anywhere between $60 billion and $68 billion and an announcement is expected by tomorrow–Thursday, the media reports say.

    The deal being worked out will see Disney pocketing 20th Century Fox movie and television studios; 22 regional cable networks dedicated to sports; Fox’s stake in the Hulu streaming service; cable networks such as FX and National Geographic; and a stake in UK-based satellite TV major Sky and the Indian operations of its Asian jewel Star India, which is expected to have an EBITDA of $1 billion by 2020. Star India alone had been valued at between $14 billion in 2016 by local brokerage house Edelweiss.

    Since then, Star India has acquired the rights to the BCCI’s prized T-20 cricket league- the Indian Premier League (IPL)-for the next five years as well as expanded its bouquet of channels in regional languages and launched free-to-air channel Star Bharat along with a slew of other new initiatives. This apart, its OTT platform, Hotstar, has also scaled up in customer base, apart from making test launches in Canada and the US with local product and paid pricing.

    “The valuation has most likely moved further northward. We estimate it to be around $20 billion or more now,” says an investment analyst, refusing to be identified. Newspaper reports have, however, put a price of around $13.7 billion dollars on Fox Networks Group International cable channels – which includes Star India, channels in Brazil, Mexico and other Latin American nations, which probably means the Indian bouquets valuation could be in the $10 billion range.

    Acquiring Star India will give Disney the much needed scale in one of the more promising markets in the world. It acquired local niche broadcast-cum-film and TV production network UTV in 2012 and has a healthy licensing and merchandising business in India but it would surely like more. The Star India acquisition-when it goes through-will give Disney all that and plenty more.

    Industry observers have been a little puzzled by the sudden decision by the Murdochs to exit entertainment and just continue to control the relatively smaller and leaner Fox broadcast network, Fox News and Fox Sports.

    “The acquisition-if it does happen-will lead to seismic changes in the media and entertainment world globally,” says a media commentator. “It heralds an era wherein the only thing that is certain is the uncertainty that has become the hallmark of the entertainment economy. Today’s media giants can become tomorrow’s minnows, thanks to the changes in the way consumers are consuming entertainment and technological leaps. Apple, the telcos and the FANGs look set to become the leaders tomorrow.”

    Also Read:  Comment: The rise and rise of Uday Shankar

    James Murdoch could be next Disney CEO: FT

     

     

  • Comment: The rise and rise of Uday Shankar

    Comment: The rise and rise of Uday Shankar

    MUMBAI: From not having enough money to afford even a TV set in Delhi in 1991 when he was a newspaper reporter to heading Star India, one of the most admired Indian media and entertainment companies, for a decade to now being appointed as 21st Century Fox Asia president, it has been quite a journey for Uday Shankar. A well-deserved and rewarding one at that.

    Today, Shankar is one of the few professionals from India to get region-wide responsibility for a global media powerhouse. Executives such as Man Jit Singh, who heads Sony Pictures Home Entertainment globally, and Bedi A Singh, who was News Corp CFO for a long time, have preceded him but both are Indians who rose up the ranks in the US.

    Shankar has, however, earned his stripes growing the Star India business, which in the first quarter had an EBDITA of $100 million and is on course to hit $500 million in 2017-2018 (in the words of 21st Century Fox (21CF) chairman James Murdoch). The 2020 EBDITA target, as spelt out by 21CF, is twice that, and the Murdochs say it is well on course to be achieved.

    When he was handpicked by the then News Corp COO Peter Chernin to take over Star in October 2007 (some say on the advice of the then outgoing company head in India), Shankar knew very little about the entertainment business. All his experience had been in news–whether print or television. He had had stints with several print media publications (his first was The Times of India around 1990) as a political correspondent and last was as one of the founders of environment magazine Down To Earth before the TV news bug bit him.

    Shankar took to the TV medium with ferocity—doing stints at Zee TV’s news channel as a news producer, the Hindustan Times promoted Home TV (it shut down quickly), production house Sri Adhikari Brothers, Sahara TV, and then India Today group’s Aaj Tak and Headlines Today, two channels he helped stabilise and grow over the next six seven years. His talent for being a journalist who got things done did not go unnoticed and he was asked to lead Star News, a joint venture with Kolkata-based ABP group, after CEO Ravina Raj Kohli departed.

    It was at Star News that he blossomed as an executive—a TV exec to be precise—and caught the attention of Chernin and the Murdochs. The rest, as they say, is history.

    Today, under his leadership, the Star network has expanded into regional language channels and produces close to 17,000 hours of content each year in eight languages. The route it has taken to get there: acquisition of the South India-based Maa network, Asianet and via launch of channels such as the Bengali-language Star Jalsa.

    A journalist with little entertainment content creation experience when he was appointed, Shankar has steered Star into creating TV content that has been path breaking over the past 10 years, dealing with social issues, apart from helping position it as a network that produces classy shows but with a social purpose. So much so that Star India shows command an advertising premium even if the channel is not topping viewership ratings. Even on the affiliate revenues front, Shankar has played hardball.

    But one of the boldest moves taken by Star under him—some critics may choose to describe it as foolhardy—was to take on broadcast and telecom regulator TRAI late 2016 when Star India and its affiliate Vijay TV challenged in court the regulator’s jurisdiction over matters relating to copyrights, which effectively has stalled implementation of a new tariff and inter-connect regime announced by TRAI in October 2016. The case is still pending a final verdict in Madras High Court till the time of writing this piece.

    Amongst the early movers in the OTT space, Shankar has made Star invest big in customer acquisition and pushed its digital platform Hotstar CEO Ajit Mohan to go out and not only acquire new business, but also devise a distribution strategy that could be sliced and diced as per needs of the geographical markets. So, Hotstar’s distribution and subscription strategy for the US and Canada market, heavily subscription revenue-led, could be quite different from that pushed in India, where making available content practically free to subscriber initially is aimed at hooking the viewer before he’s seduced to the pay model.

    Though Shankar is not known to be a great fan of gambling—even during Diwali when in India playing cards with cash is considered auspicious or for good `shagun’—he gambled big on the Indian Premier League’s (IPL) global rights for five years. Star not only played smart, outbidding incumbent rights holder SPN India and some global digital players sniffing at commercially viable Indian cricket rights, but also raised the bar to clinch the hand with a bet of $ 2.55 billion. Raising the stakes flattened competition.

    Under Shankar, Star has also ploughed huge investments into creating and acquiring sports properties such as the Pro Kabaddi League, the BCCI national cricket domestic rights, the domestic soccer league ISL in collaboration with Reliance Industries, table tennis, badminton, and many others sports.

    The recent promotion of Shankar means he has won the confidence of the Murdochs and the boards of News Corp and 21CF to replicate in Asia what he has done in India, long referred to as a jewel in the crown of the Murdoch media empire. While 21CF has done well in markets such as Taiwan, Japan, Hong Kong, Singapore, Malaysia, and South Korea, scale has been something that’s been missing. Shankar is expected now start building that.

    By promoting him to head Asia, 21 CF has also ensured that if a deal with Disney does happen (media reports emanating from all parts of globe say the approx USD 60 billion deal could happen sooner rather than later), it will be—very well could be—Shankar who will be scripting the new Asian story. Currently, Disney has two Asian heads: one for south east and south Asia and the other for north Asia. With him being designated as the boss, the reporting lines too could change with Mahesh Samat reporting to Shankar.

    How has Shankar managed this rags-to-riches story in the cut-throat corporate world of global media? Shankar himself gives a hint. Casually leaning against the main exit to the executive floor at level 37 in the South Parel office of Star, housing the leadership team, while escorting out a couple of senior editors of Indiantelevision.com after an interview in September, he was asked what made him tick. The recorder was off and the interview had ended, but what he said was revealing.

    According to Shankar, though he considers he has miles yet to travel (wherein he’d continue reading thought-provoking books like Yuval Noah Harari’s Sapiens: A Brief History of Humankind), his satisfaction comes from the fact that he has managed to assemble a string of high-calibre professionals as heads of various Star businesses who at least specialise in or know better one thing extra about the business than the chief. “This gives me great satisfaction as I know the business is in safe hands,” he said with a poker face.

    In the end, one of his mentors, Siddhartha Ray (Delhiwallahs say he’s one of the few friend-philosopher-guides of Shankar), who also happens to be the first GM of Star TV in India in the early 1990s, aptly summed up the X factor: “What makes Uday so successful? He’s a quick learner, good man-manager and an adept environment manager.”

    At Indiantelevision.com, we would wish Uday Shankar more wind beneath his wings so that he can soar higher.

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    Uday Shankar becomes president of 21st Century Fox Asia

    Star’s Uday Shankar on distribution challenges, IPL, FTA vs. pay TV…and much more

  • Uday Shankar becomes president of 21st Century Fox, Asia

    Uday Shankar becomes president of 21st Century Fox, Asia

    Mumbai: Star India chairman and CEO Uday Shankar has been elevated to the position of president, 21st Century Fox (21CF), Asia, effective immediately.

    According to 21CF, in his new role, Shankar will lead the company’s video businesses across all of Asia, including Star India and Fox Networks Group, and work closely with 21CF leadership on key strategic initiatives in the region. He will continue to serve as chairman and CEO of Star India, a key driver of 21CF’s growth and one of India’s largest media and entertainment companies. Fox Networks Group Asia president Zubin Gandevia, who used to earlier report into 21st Century Fox president Peter Rice, will continue to oversee video brands across 14 markets and now report to Uday  under this realigned regional structure. 21CF’s film business in Asia will continue to report directly to 20th Century Fox Film chairman & CEO Stacey Snider.

    “Uday’s new role will enhance our strategic focus across all of Asia and enable us to further capture opportunities, building on the transformation Star India has driven in our most important growth market,” said Fox executive chairman Lachlan Murdoch and CEO James Murdoch in a joint statement.

    “Under Uday’s leadership, our India business has firmly established itself as a world-class asset with durable businesses across entertainment, sports, satellite distribution and OTT. His strategic vision has put 21CF at the forefront of content and distribution in one of the world’s fastest growing economies, and we are very fortunate to benefit from Uday’s expanded leadership at a global level,” they said.

  • Comment: Does Star stand to gain or lose by sharing IPL with DD?

    Comment: Does Star stand to gain or lose by sharing IPL with DD?

    MUMBAI: On a balmy September afternoon, while some reps from bidding companies blew smoke in the air (and the tensions, too, probably) at a five-star hotel in South Mumbai’s Colaba, some senior executives of Star India were lounging in a room in the same hotel-not as anxious as some of the smokers outside, a person familiar with the settings chirped. Soon, the Indian cricket board, BCCI, announced that Star had won the broadcast rights to the money-spinning IPl cricket tournament for five years for Rs 16,3475 million (Rs 16347.5 crore) or approximately $ 2.55 billion.  

    Cut to a fortnight or so earlier to New Delhi where the August summer was refusing to relent and the temperature fluctuated in a room in Supreme Court where the learned judges observed that India’s pubcaster Prasar Bharati cannot freely re-transmit TV signals of sports or cricketing events to other distribution platforms where the rights were held by a private broadcaster or a TV channel and was being shared with Doordarshan under a legislation of the country.

    In both the cases cited above the common factor was Star India (a subsidiary of Rupert Murdoch-controlled News Corp/21st Century Fox), probably the biggest broadcasting company in India in terms of revenues.

    Champagne should have been popped on both the occasions. Probably it was, but privately. And, the public reactions were cautious. Even in his interview to indiantelevision.com mid-September, Star India chairman and CEO Uday Shankar was cautiously optimistic about IPL win and India’s regulations relating to the media sector.

    Almost 70 days after winning the IPL rights — somewhere in between hectic consultations would have happened between Star India top leadership and company’s promoters — reports surfaced in media that Star India probably would have to share the IPL telecasts with pubcaster DD that will air the cricket matches on its terrestrial network and FTA DTH platform, DD FreeDish.

    What’s the gist of these reports in the media? IPL cricket matches would be telecast live on Star Sports channels and also a DD channel that would be available terrestrially and on DD FreeDish. This would be made possible — as and when the government formally issues a directive as both the law  and information & broadcasting ministries were being consulted — under a regulation called the Sports Broadcasting Signals (Mandatory Sharing with Prasar Bharati) Act, 2007. Some tweaks would have to be made and IPL categorized as a tournament of national importance at par with other sporting events like Olympics, Commonwealth Games and Wimbledon for the sharing to be mandated.

    Indiantelevision.com must admit, though, till the time of writing this piece everything’s in the realm of conjectures and possibilities. While Star and BCCI did not comment on emails on the issue sent to them by us, even the government sources quoted in the media as having articulated on the possible development were unnamed.

    It makes one thing clear: that nothing is clear as of now or set in stone. It’s also possible that as a trade-off for the Supreme Court directive barring  free re-transmission of shared TV signals of sporting events where rights were held by a private broadcaster, Star India could be mulling sharing IPL matches with DD — and also part of the advertising revenue.

    According to Financial Express newspaper, which quoted industry estimates, Sony Pictures Networks India (SPN), the official broadcaster (till 2017) of the T20 tournament since its inception, had crossed the Rs. 1,300 crore (Rs. 13,000 million)-mark in terms of ad revenue. The newspaper also stated that IPL’s season 10 garnered 1.25 billion impressions as per BARC data, gaining 24 per cent more viewership (compared to last year) on Sony channels.

    Writing a guest column in indiantelevision.com after Star won the IPL bid in September, senior business journalist and author of two books on IPL, Alam Srinivas, observed: “In 2009, when the IPL rights were renegotiated, Sony agreed to pay Rs 82,000 million for a nine-year period or Rs 9,111 million a year. At a simple inflation rate of 10 per cent, the figure will escalate to Rs 17,311 million over nine seasons. At a compounded rate of 10 per cent, the figure will be Rs 21,483 million. Star agreed to pay Rs 32,695 million per year, or a sizeable over 50 per cent higher than the 10 per cent compounded figure. This indicates that the IPL’s valuation has shot up, or at least the stakeholders think so.”

    Given this scenario, the following questions arise:

    Question No. 1: Is IPL that crucial (versus Test cricket, for example) to be designated as a sports of national importance to be shared with the pubcaster?

    Question No. 2: If that’s made possible, how will the technicalities of different TV feeds play out?

    Question No. 3: Will Star gain or lose financially having dished out $ 2.5 billion for a five -year rights?

    Question 4: Will sharing of the IPl matches with DD impede or affect Star’s usual high-octane marketing campaigns aimed at monetization of high-value events and will it set a precedent?

    The answers are not easy to frame as possible explanations are not forthcoming in the absence of any formal and official confirmations or denials.

    If we have to answer Q. 1, then prima facie, the answer would be ‘no’. IPL is a domestic cricket tournament having played out for 10 years with DD showing (officially) minimum interest. That IPL’s popularity has increased shouldn’t be reason for it to be shared with pubcaster, especially when the pubcaster has mostly shied away from airing Test cricket, which is a five-day affair over seven hours daily, and even when India featured in such matches.

    But then in an age of social media, when many games are played on the basis of perceptions, giving a huge swathe of Indian population easy and practically free access to IPL matches on DD could also mean scoring points with a big voting bank. After all, TV services or even entertainment are not categorized under essential services (like some utility services) that need not be subsidized by the government or access made free. Still in India, politics and sports have had a history of an intricate and, at times, incestuous interplay.

    Question 2 and 4 are easier to attempt. Simply because if Q1 and Q3 are sorted out — amicably — then these issues don’t matter much. TV feeds have been shared with DD and AIR by private broadcasters in the past on few occasions. What would be important is that DD adheres to the Supreme Court verdict and ensures that its free signals are not illegally carried by any unauthorized distribution platform(s) in the case of IPL matches.

     This brings us to Q.3 on which hinges Star’s fortunes despite being mandated by a regulation that can smack of strong-arm tactics by the government.

    However, it has to be admitted, again, that DD’s reach is tantalizing — at least theoretically. The FreeDish FTA DTH platform has an estimated 22 million subscribers, mostly in non-urban areas, while DD channels on the terrestrial network supposedly cover over 80 per cent of the approximate 1.26 billion Indian population.

    Given these numbers — clamour amongst private TV channels to be on the FTA DTH platform could be an indication — sharing of IPL matches with the pubcaster may not be such a big loss for Star.

    In an imagined world, Star could agree to share the IPl matches, forced under a regulation, but insist that it would retain the rights for marketing and ad sales of the matches  shown on DD channel too, sharing 25 per cent of the ad revenue— again as per stated law.

    This move could help Star not only increase the reach of IPL matches by at least 25 per cent, but also do some imaginative and aggressive ad sales with sponsors on digital and linear TV spaces. A marketing guru did admit in private that most FMCGs and big global spenders are now more looking at non-urban markets, which DD’s platform guarantees.

    In conclusion, we might say there are too many straws in the wind presently. A word of caution: this can set a precedent that may not always be healthy for the rightful rights owners. But then, as the boss, the government is always right, as the folklore goes.

    ALSO READ:  

    Guest Column: Star India’s IPL deal raises three crucial questions

    Star bids highest for BCCI’s IPL media & digital rights and is the winner

    IPL has come to the rightful home of cricket in India: Star’s Uday Shankar

    Star’s Uday Shankar on distribution challenges, IPL, FTA vs. pay TV, innovations, Made in India content…and much more

    With IPL rights, Uday Shankar gambles audaciously, must plan pragmatically

     

  • Double digit growth at Star India helps push Fox’s numbers up

    Double digit growth at Star India helps push Fox’s numbers up

    BENGALURU: 21st Century Fox reported that international affiliate revenue increased 11 percent driven by rate and subscriber growth at both FNG International and Star India for its cable network programming segment for the quarter ending 30 September 2017. The segment’s international advertising revenue increased 10 percent led by double digit growth at Star India and continued growth at FNG International says a 21st Century Fox release. International OIBDA (Operating Income Before Depreciation and Amortisation) contributions were similar to the prior year quarter as higher contributions at Star India were offset by lower contributions at FNG International where higher entertainment and sports programming costs more than offset the higher reported revenues.

    21st Century Fox reported total quarterly revenues of $7.002 billion, a $496 million, or 8 percent, increase from the $6.51 billion of revenues, reported in the prior year’s quarter. This increase reflects revenue growth reported across all operating segments, led by higher affiliate revenues at both the cable network programming and television segments and higher content revenues at the filmed entertainment segment.

    The company reported quarterly income from continuing operations attributable to 21st Century Fox stockholders of $839 million ($0.45 per share), as compared to $827 million ($0.44 per share) reported in the prior year quarter. Excluding the net income effects of impairment and restructuring charges, Other, net and adjustments to equity earnings of affiliates adjusted quarterly earnings per share from continuing operations attributable to 21st Century Fox stockholders was $0.49 compared to the adjusted result of $0.51 for the same quarter of the prior year.

    Commenting on the results, 21st Century Fox executive chairmen Rupert and Lachlan Murdoch said, “The company’s double-digit gains in affiliate revenues demonstrate our strength in the dynamic global market for distinctive video brands and content, across both established distributors and new entrants. We delivered top-line growth at all of our businesses, backed by stand-out storytelling, sports and news, as well as a product focus that will drive greater consumption and compelling opportunities for financial returns on our content investment. Our solid first quarter performance puts us on track to achieve our overall financial and operational objectives for this fiscal year.”

    Watch this space for more …

     

  • Sky buy: Fox disappointed at US secy’s statement, hopes for closure by 30 June

    Sky buy: Fox disappointed at US secy’s statement, hopes for closure by 30 June

    MUMBAI: 21st Century Fox (21CF) notes the statement by the Secretary of State for Digital, Culture, Media and Sport that she intends to refer the combination of 21st Century Fox and Sky plc to the Competition and Markets Authority (CMA) on the grounds of both media plurality and genuine commitment to broadcasting standards.

    21CF had written to the Secretary of State expressing disappointment that she had changed her mind and decided not to follow the advice of the independent and expert regulator Ofcom regarding broadcasting standards, but informing her that it did not intend to make further representations and encouraged her to make a prompt referral.

    “We now, therefore, look forward to engaging constructively with the CMA, as independent authority, and hope that the findings of this process will be respected by the Secretary of State,” 21CF stated.

    “Subject to any further delays in the decision-making process, we anticipate that the transaction will close by 30 June, 2018,” 21CF added.

    ALSO READ :

    Fox-Sky deal: UK to assess implications by 29 June

    Star India’s ent. prog costs & De-Mon impact 21st CF even as revenue beats expectations

    Fox Asia appoints Mike Rich as EVP, Dawes departs

  • Comment: With IPL rights Uday Shankar gambles audaciously, must plan pragmatically

    Comment: With IPL rights Uday Shankar gambles audaciously, must plan pragmatically

    The numbers were close to what we at indiantelevision.com were betting on. In conversations with senior executives from various companies, we had predicted that the telecast rights to the Board of Control for Cricket in India’s (BCCI)’s Indian Premier League (IPL) would fetch it around twice the price that Sony had earlier coughed up. And that too for a rights period which has been halved as compared to Sony’s time.

    Star India’s bid of Rs 16,347.50 crore ($2.56 billion) lived up to that expectation. Sony had last paid Rs 82,000 million ($1.6 billion then) for the rights. In rupee terms that’s close to twice what was earlier paid.

    Of course, the key execs in Star India – led by chairman & CEO Uday Shankar – have good reason to pop the bubbly. They bested a slew of broadcasters, telcos, OTT players and more experienced global sports rights owners to the IPL rights tape with an offer that may appear  mindboggling – nay mind numbing – to many an industry observer.

    Star India, however, got through by what many might say is a thin whisker. The combined highest individual bids for all the rights on offer including India, digital, ROW A,B,C,D, E totted up to Rs 15,8195 million, whereas the 21st Century Fox owned network’s global bid for all rights was Rs 16,3475 million — a difference of just Rs 5000 million. A seasoned industry observer like Kunal Dasgupta, former head of  Sony Entertainment in India, said Star hasn’t bid too high — if one takes into account the combined figure of bids of others.

    Star India led the individual bidding for only one territory – the UK. Elsewhere its rivals bid higher. So, if Star India had not safeguarded itself by putting in a global bid, it well may have been sitting on the losing side with telecast rights only for old Blighty.

    However, it is on the winning side now. And media watchers are questioning whether  Shankar and his team have  bitten off more than they can chew. The network is already anteing up Rs 430 million a match since 2012 for telecast and digital rights to all international cricket that India plays. Thankfully, the Rs 38,510 million deal ends mid-2018 when the IPL-Star era begins.

    But who knows the broadcaster might make its pitch for the same rights once again. If one goes by its hunger to create and own Indian sport, one can expect a spurt in prices for the rights to international cricket featuring India too. So much so that the Rs 550 million per IPL match it is now committed to pay out may look relatively cheap. As things stand today, India cricket rights are cheaper than theIPL’s— and that says a lot about a league that has been valued at a shade over $ 5 billion by an international company.

    That’s for another day. Clearly, new benchmarks have been set with the new IPL deal. For Shankar, it is a calculated gamble that may actually help him raise his stocks within the 21CF family. Star is clearly pulling out all the stops in India. As are his bosses Rupert, Lachlan and James Murdoch. Because it is something they have been used to doing. Up the stakes and keep a stranglehold on sport that viewers cannot do without. Monetising it effectively comes later; remember Kaun Banega Crorepati, the Indian version of Who Wants To Be A Millionaire.

    In 2015, the UK’s monolith satellite operator Sky (21st Century Fox owns 39.14  per cent of Sky and is seeking to own completely through its December 2016 offer of pounds sterling 11.7 billion) agreed to fork out £4.176bn to keep hold of the maximum possible number of English Premier League matches – 126 – in the new three-year cycle, almost double the £2.28bn it shelled out in 2013. That worked out almost £10.2 million (Rs 844 million per game). So doesn’t Rs 550 million look cheap?

    Sky had signed a cheque of just £191 million for rights to the EPL (60 matches a year) from 1992 to 1997 – a steal at £0.6 million per match.

    In  July 2017, the leading UK DTH player  raised the stakes even further by launching an English Premier League channel, which would air the 126 matches as part of an initiative to revamp its sports channels. Ten of its sports channels were available at £27.50 per month, whereas individual channels could be subscribed to at £18 a month.

    Will Star go for a similar spin-off play in India?

    Will it launch an exclusive IPL Star Sports channel with debates and coverage of what the various teams and team owners are doing?  And biopics around some of the main players in the teams? Can it start a talent hunt to zoom in on cricketers who could play in the IPL? Can it create special programmes, format shows around the IPL? Sure the creative ideas are many, and many of them could end up being money spinners as well as duds. A lot of this has not been attempted before and is new territory for all, but Star India knows how to enchant viewers with its programming. However, one expects a lot more from it then just bringing TV characters and actors from its top shows onto the field for some of the ceremonies – something it did when it was the India team sponsor.

    Or will the network go for a simpler idea— broad base its telecast across its TV channel network with regional language commentary? Will it work with the BCCI to bring in further entertainment or excitement into cricket?

    While some may question Uday Shankar and team’s thinking behind paying out such a fat purse, clearly there’s some arithmetic and growth strategy in place. Shankar admitted to that when at a post bidding press conference he hinted that the winning bid seemed the “right” figure keeping in view the competitiveness of the bidding by others. Star India has displayed what many considered derring-do when it took the path to develop very local Indian sports like kabaddi, not to mention badminton, table tennis, football and other sports in India. But it has had the last laugh; especially with kabaddi that has found traction and is emerging as a money-spinner.

    With the world as his playground and the rights to digital and television globally at his disposal, expect Shankar and co to do magic. In one market the Star India team could sell the rights to a telco for the live feed, in the same market,  it could sell it to a VOD player for a delayed telecast and also sell it to a broadcaster there for pay TV or run a pay TV channel. In the UK, it has got a ready buyer in the Sky Sports cricket channel, which it launched along with  EPL Sports.

    The IPL teams have got representation from several cricket and emerging cricket playing countries; so the interest is bound to be there. And, if it is limited, Star and local partners will work to whip up the excitement.

    Otherwise, it could use the fun and action on the IPL cricket field to seduce subscribers in various countries to opt for its VOD and streaming service Hotstar. It has just about begun its global journey for Hotstar with its launch in Canada and the US a couple of days ago.

    The VOD platform has been blanked out in all other nations apart from these two and India. Viewers in these markets are used to paying – even if it is only a monthly fee of $9.99 to $13.99. In Indian rupees that is a lot of money: around Rs 650 to Rs 800. If Star manages to lure in even five million paid subscribers, at those levels it will generate an average of a whopping Rs 100,00 million annually per three month IPL season. Over a five year period it can expect its total subscription pie to grow to Rs 65,000 million in digital revenues from just Hotstar. Of course, one has to calculate expenses and operational costs. But then it will also rope in ad revenue too for the service.

    It is in India where it will seek to really exploit the IPL magic. Television advertising and subscription revenues,  premium VOD revenues for both live and delayed feeds – as well as ad  commercial sales  revenues on the free basic Hotstar service. Or, it could license the live digital feed to a social media network or a telco. Remember Facebook, Airtel and Reliance Jio bid in excess of Rs 30,000 million for the India digital rights alone. If any of them bite when Star makes them an offer, it would secure the broadcaster’s India’s revenue to some extent at least. Star well might keep the free delayed feed in house and stream it on Hotstar or sell even that to another player. The opportunities are mind-boggling.

    Of course, the big money monster is clearly going to be TV in India for the next five years, and even 10 or more, possibly. And that’s where Star India will go in for the kill.  The Indian cable TV ecosystem is evolving. However, cable TV operators and DTH players have been wary of raising subscription rates as well paying more for the content to broadcast partners.
    Though, through cricket, Star may look at building a walled garden — something that competitors have hinted at — the success or failure of it could only be gauged by a future time. As they say, hindsight is a great teacher.

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  • Star India’s ent. prog costs & De-Mon impact 21st CF even as revenue beats expectations

    MUMBAI: Even in the absence of Fox News’ star Bill O’Reilly, 21st Century Fox earnings for the year and quarter ended 30 June, 2017, have beaten expectations, narrowly missing revenues, however.

    International affiliate revenue increased seven per cent driven by strong local currency growth at both FNG International channels and STAR, partially offset by a four per cent adverse impact from the strengthened U.S. dollar. International advertising revenue decreased three per cent due to the effect of the Indian government demonetisation initiatives on the general advertising market, a lower volume of cricket matches broadcast in the current year at STAR and the negative impact of foreign exchange, partially offset by local currency growth at FNG International. Annual OIBDA at the international cable channels increased four per cent reflecting higher affiliate revenues at both FNG International and STAR and lower sports programming costs at STAR due to lower volume of cricket matches broadcast in the current year.

    The increase in expenses was primarily due to higher domestic sports programming costs driven by higher professional team rights costs at the regional sports networks (“RSNs”) and increased MLB and National Association for Stock Car Auto Racing (“NASCAR”) rights costs at FS1, higher programming and marketing costs at FX Networks and National Geographic and higher entertainment programming costs at Fox Networks Group International (“FNG International”) and STAR India (“STAR”).

    The Company continued the expansion of its video offerings by introducing non-linear packages in Europe, Asia and Latin America under the labels FOX+ and FOX Premium, all tailored for specific markets and offering consumers more choice, and re-launching its domestic suite of authenticated entertainment apps through a unified FOX NOW app, and through further penetration and engagement of its Hotstar platform in India, where watch time has increased over the prior year by 300 per cent.

    The Company reported annual income from continuing operations attributable to 21st Century Fox stockholders of $3.00 billion ($1.61 per share), compared with $2.76 billion ($1.42 per share) in the prior year. Excluding the net income effects of Impairment and restructuring charges, Other, net and adjustments to Equity losses of affiliates1, adjusted annual earnings per share from continuing operations attributable to 21st Century Fox stockholders2 was $1.93, a 12 per cent increase compared to the adjusted year-ago result of $1.73.

    The Company reported annual revenues of $28.50 billion, an increase of $1.17 billion, or four per cent, from the $27.33 billion of revenues reported in the prior year. This revenue growth reflects higher affiliate and advertising revenues at both the Cable Network Programming and Television segments partially offset by lower theatrical and home entertainment revenues at the Filmed Entertainment segment.

    Full Year Highlights

    The Company continued to grow its cable channel and television businesses through eight per cent growth in affiliate revenues and 5 per cent advertising gains while positioning these businesses for the future through the inclusion in the core bundles of new digital MVPD entrants.

    The very successful broadcasts of Super Bowl LI and the Major League Baseball (“MLB”) World Series, which delivered the most watched baseball game in a quarter century, grew Fox Sports broadcast viewership by approximately 25 per cent over the prior year driving a 20 per cent increase in television segment contributions.

    Fox News Channel was the most watched basic cable network over the last twelve months during which it achieved its highest-rated quarter ever in 24-hour viewership.

    The Company strengthened its core domestic cable brands with the successful first seasons of Taboo, Legion, and Feud on FX and the global event series Mars and Genius on National Geographic.

    The Company continued the expansion of its video offerings by introducing non-linear packages in Europe, Asia and Latin America under the labels FOX+ and FOX Premium, all tailored for specific markets and offering consumers more choice, and re-launching its domestic suite of authenticated entertainment apps through a unified FOX NOW app, and through further penetration and engagement of its Hotstar platform in India, where watch time has increased over the prior year by 300 per cent.

    The box office successes of Logan, an extension of the X-Men franchise, and Hidden Figures underscore the range and quality of what the Company’s studio brings to its audiences.

    Twentieth Century Fox Television production studio produced the number one show on five different networks, including Empire on FOX, American Horror Story: Roanoke on FX, Modern Family on ABC, This Is Us on NBC, and American Dad on TBS.

    Fox Television Stations sold broadcast spectrum in the Federal Communications Commission’s completed reverse auction for which the Company received approximately $350 million in proceeds in July 2017.

    The Company reached an agreement with Sky plc (“Sky”) on the terms of an offer to acquire the Sky shares which the Company does not already own, which the Company believes will result in enhanced capabilities of the combined company, underpinned by a more geographically diverse and stable revenue base, and an improved balance between subscription, affiliate fee, advertising and content revenues. The acquisition of Sky remains subject to certain customary closing conditions, including approval by the UK Secretary of State for Digital, Culture, Media and Sport and the requisite approval of Sky shareholders unaffiliated with the Company.

    Commenting on the results, executive chairmen Rupert and Lachlan Murdoch said: “We delivered strong financial and operational momentum in fiscal 2017 driven by an acceleration in affiliate revenue growth which fueled fourth quarter cable segment OIBDA growth of 19 per cent. The investment we have made in our video brands, and in programming that truly differentiates, is proving to be the right strategy. It is driving the value of our brand portfolio across both established and emerging distribution platforms and reflects our deep commitment to creative excellence across all of our entertainment production businesses. In addition, the outstanding performance of our live news and sports programming drove advertising growth for the year and continues to set our business apart. What we achieved in 2017 sets us up well for this year and beyond.”

    Full Year Company Results

    Full year income from continuing operations before income tax expense of $4.69 billion increased $535 million from the $4.15 billion reported in the prior year. Full year total segment operating income before depreciation and amortization (“OIBDA”)3 of $7.17 billion, was $576 million, or 9 per cent, higher than the amount reported in the prior year. The OIBDA growth was driven by higher contributions from the Company’s Cable Network Programming and Television segments partially offset by lower contributions from the Filmed Entertainment segment. The adverse impact of foreign exchange rates impacted annual OIBDA growth by $105 million, or 2 per cent in total.

    Fourth Quarter Company Results

    The Company reported quarterly income from continuing operations attributable to 21st Century Fox stockholders of $501 million ($0.27 per share), as compared to $567 million ($0.30 per share) reported in the prior year quarter. Excluding the net income effects of Impairment and restructuring charges, Other, net and adjustments to Equity earnings (losses) of affiliates4 adjusted quarterly earnings per share from continuing operations attributable to 21st Century Fox stockholders was $0.36 as compared to $0.45 reported in the same quarter of the prior year. The prior year quarter adjusted earnings per share included a tax benefit of $0.07 per share from the receipt of a favorable tax ruling.

    The Company reported total quarterly revenues of $6.75 billion, a $102 million, or 2 per cent, increase from the $6.65 billion of revenues reported in the prior year quarter. This revenue growth reflects higher affiliate and advertising revenue at the Cable Network Programming segment partially offset by lower content revenues at the Filmed Entertainment segment and lower advertising revenues at the Television segment.

    Quarterly income from continuing operations before income tax (expense) benefit of $815 million increased $269 million from the $546 million reported in the prior year quarter. Quarterly total segment OIBDA of $1.45 billion was consistent with the amount reported in the prior year quarter. Higher contributions from the Company’s Cable Network Programming segment were offset by lower contributions from the Filmed Entertainment and Television segments.

    CABLE NETWORK PROGRAMMING

    Full Year Segment Results

    Cable Network Programming annual segment OIBDA increased nine per cent to $5.60 billion, driven by a 7 per cent revenue increase led by continued growth in both affiliate and advertising revenues partially offset by a 7 per cent increase in expenses.

    Domestic affiliate revenue increased 8 per cent reflecting continued contractual rate increases, led by Fox News, FS1 and FX Networks. Domestic advertising revenue grew 6 per cent over the prior year led by higher ratings and pricing at Fox News and higher postseason baseball ratings at FS1. Domestic OIBDA contributions increased 10 per cent over the prior year led by higher contributions from Fox News, FS1 and FX Networks.

    Fourth Quarter Segment Results

    Cable Network Programming quarterly segment OIBDA increased 19 per cent to $1.44 billion, driven by 10 per cent higher revenue from strong affiliate, content and advertising growth, partially offset by a 7 per cent increase in expenses. The increase in expenses was primarily due to the broadcast of the International Cricket Council (“ICC”) Champions Trophy in the current quarter and higher programming and marketing costs at National Geographic.

    Domestic affiliate revenue increased 10 per cent reflecting higher pricing across all of our domestic cable brands, led by Fox News, RSNs, FX Networks and FS1. Domestic advertising revenue increased 6 per cent over the prior year period as the impact of higher ratings at Fox News and increases at National Geographic were partially offset by the absence of the prior year quarter broadcast of the Copa America soccer tournament at FS1 as well as a lower number of National Basketball Association and National Hockey League playoff games broadcast on the RSNs compared to the prior year quarter. Domestic OIBDA contributions increased 22 per cent over the prior year quarter led by higher contributions from Fox News, the RSNs and FS1.

    International affiliate revenue increased nine per cent driven by higher rates and subscribers. International advertising revenue increased 9 per cent from high double digit advertising increases at STAR, led by the current quarter broadcast of the ICC Champions Trophy. Quarterly OIBDA at the international cable channels increased 6 per cent from the prior year quarter primarily reflecting higher contributions from FNG International partially offset by lower contributions from STAR.

    TELEVISION

    Full Year Segment Results

    The Television segment generated annual OIBDA of $894 million, a $150 million, or 20 per cent, increase over the $744 million reported in the prior year. Annual segment revenues were 11 per cent higher than the prior year due primarily to strong sports advertising revenue growth led by the broadcast of Super Bowl LI, the MLB World Series, which benefited from strong ratings and two additional games versus last year, and the inclusion of one additional National Football League divisional playoff game. Higher local political advertising spending at the television stations and continued growth of retransmission consent revenues also contributed to the segment revenue growth. These revenue increases were partially offset by lower network entertainment advertising revenues reflecting lower general entertainment ratings.

    Fourth Quarter Segment Results

    Television reported quarterly segment OIBDA of $137 million, a $7 million decrease compared to the prior year quarter. Quarterly segment revenues declined as lower national and local advertising revenues from lower general entertainment ratings were partially offset by higher retransmission consent revenues. Total segment expenses were 3 per cent lower than the prior year quarter due to lower entertainment programming costs.

    FILMED ENTERTAINMENT

    Full Year Segment Results

    Full year Filmed Entertainment segment OIBDA of $1.05 billion decreased $34 million from the prior year primarily due to a 4 per cent adverse impact from foreign exchange rate fluctuations. Higher revenue from the television studio was more than offset by lower revenue at the film studio. The television studio’s revenue increased due to higher subscription video-on-demand licensing led by Homeland and The People v. O.J. Simpson: American Crime Story. The film studio’s revenue decline was attributable to difficult theatrical and home entertainment revenue comparisons to the prior year slate which included Deadpool and The Martian.

    Fourth Quarter Segment Results

    Filmed Entertainment generated a quarterly segment OIBDA loss of $22 million, a $186 million decrease from the $164 million contribution reported in the same period a year ago. The OIBDA decrease in the current quarter was principally driven by lower revenues at both the film and television studios. Quarterly segment revenues decreased $235 million to $1.80 billion, primarily reflecting lower home entertainment revenues due to the strong performance of Deadpool in the prior year quarter and lower pay and free television revenues due to the timing of feature film availabilities and fewer deliveries of returning television series.

    Full Year Results

    Annual equity losses of affiliates were $41 million as compared to $34 million of equity losses of affiliates in the prior year. The $7 million increase in losses primarily reflects higher equity losses from Hulu and lower equity earnings from Sky partially offset by lower equity losses from Endemol Shine Group.

    Fourth Quarter Results

    Quarterly equity earnings of affiliates were $16 million as compared to $72 million of equity losses of affiliates reported in the same period a year ago. The $88 million improvement in equity results primarily reflects lower equity losses reported at Endemol Shine Group and higher equity earnings reported at Sky.

    OTHER ITEMS

    Dividends

    The Company has declared a dividend of $0.18 per Class A and Class B share. This dividend is payable on October 18, 2017 with a record date for determining dividend entitlements of September 13, 2017.

    Pending Acquisition of the Remaining Shares of Sky

    The Company’s pending acquisition of the public shares of Sky has been cleared on public interest and plurality grounds in all of the markets in which Sky operates except the UK, including Austria, Germany, Italy and the Republic of Ireland. The acquisition has also received unconditional clearance by all competent competition authorities. The transaction is subject to certain other customary closing conditions and the requisite approval of Sky shareholders unaffiliated with the Company. In the event that the UK Secretary of State for Digital, Culture, Media and Sport makes a final decision to refer to the Competition and Markets Authority for a phase two review, the transaction is expected to close by June 30, 2018.

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  • 21st Century Fox says it expects Sky buy to be completed by June ’18

    MUMBAI: 21st Century Fox (21CF) has stated that it is going to continue to work constructively with the UK authorities as it goes ahead with the regulatory process for it to take over UK’s Sky. It made this announcement in a statement issued yesterday.  

    Media observers have been saying that its pounds sterling 11.7 billion acquisition of the television, broadband and telecom services provider received a setback when British Secretary of State for Culture, Media and Sport Karen Bradley said she was inclined to encourage a second phase investigation by the UK’s Competition & Markets Authority (CMA) in respect of the media plurality ground.  However, 21CF and other interested parties have till 14 July to make their representations to her stated intentions before she finally decides to send it to the CMA.

    21CF has said in the statement that “in the event that the Secretary of State makes a final decision to refer to the CMA, we would expect that the review would take at least 24 weeks. In such an event, the transaction is expected to close by 30 June, 2018.”

    The Murdoch owned media conglomerate has further stated  that is “pleased that she (Bradley) is minded not to refer the proposed transaction to the CMA in respect of the commitment to broadcasting standards.”

    However it explained that it was  disappointed that Bradley did not accept Ofcom’s recommendation stated in its report that “….the proposed undertakings offered by Fox to maintain the editorial independence of Sky News mitigate the media plurality concerns.”

    It additionally added  that it “is pleased that Ofcom recognizes that Sky, under full 21CF ownership, would remain a fit and proper holder of broadcast licenses.”

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    Fox’ Sky buy: Representations to proposed merger invited by 14 July

  • Fox’ Sky buy: Representations to proposed merger invited by 14 July

    MUMBAI: Representations have been invited seeking views in relation to the UK Secretary of State’s minded-to decision not to refer the proposed merger between 21st Century Fox, Inc. and Sky plc on the grounds of genuine commitment to broadcasting standards. The deadline for responses is 17:00 on Friday 14 July.

    On 16 March the Secretary of State announced that she had intervened in the merger in relation to two public interest grounds; plurality of media ownership and commitment to broadcasting standards. This triggered an action for Ofcom to report to the Secretary of State on the media public interest grounds specified, and for the Competition and Markets Authority (CMA) to report on jurisdiction. These reports were submitted to the Secretary of State on 20 June.

    Ofcom, in preparing its report, invited comment on the two public interest grounds. This took place between 16 – 30 March and a summary of the responses received was included in its report to the Secretary of State. On 29 June the Secretary of State set out her minded to decision on whether or not to refer the Sky / Fox merger for a fuller, Phase 2 investigation by the Competition and Markets Authority.

    In relation to plurality of media ownership, as guided by the report from Ofcom, the Secretary of State indicated that she is minded-to refer for a fuller investigation and has invited further representations from the parties to the merger. On the question of genuine commitment to broadcasting standards, and again as guided by the recommendation set out in Ofcom’s report, the Secretary of State has indicated that she is minded-not-to refer to a Phase 2 investigation.

    Invitation for representations: This invitation for representations seeks views in relation to the Secretary of State’s minded-to decision not to refer on the grounds of genuine commitment to broadcasting standards. Officials would welcome new or substantive evidence on the question of commitment to broadcasting standards and on Ofcom’s assessment of these matters.

    What is a genuine commitment to broadcasting standards?
    The intention behind this consideration is whether a person carrying on or in control of a media enterprise post-merger is able demonstrate a genuine commitment to the content standards objectives that apply to all UK broadcasters.

    In other words are they likely to comply with the spirit as well as the letter of the broadcasting standards set down in the Communications Act 2003. These standards are set out in Ofcom’s invitation to comment document and are as follows:

    The objectives set out in section 319 of the Communications Act 2003 are:

    (a) that persons under the age of eighteen are protected;

    (b) that material likely to encourage or to incite the commission of crime or to lead to disorder is not included in television and radio services;

    (c) that news included in television and radio services is presented with due impartiality and that the impartiality requirements of section 320 are complied with;

    (d) that news included in television and radio services is reported with due accuracy;

    (e) that the proper degree of responsibility is exercised with respect to the content of programmes which are religious programmes;

    (f) that generally accepted standards are applied to the contents of television and radio services so as to provide adequate protection for members of the public from the inclusion in such services of offensive and harmful material;

    (fa) that the product placement requirements referred to in section 321(3A) are met in relation to programmes included in a television programme service (other than advertisements);

    (g) that advertising that contravenes the prohibition on political advertising set out in section 321(2) is not included in television or radio services;

    (h) that the inclusion of advertising which may be misleading, harmful or offensive in television and radio services is prevented;

    (i) that the international obligations of the United Kingdom with respect to advertising included in television and radio services are complied with;

    (j) that the unsuitable sponsorship of programmes included in television and radio services is prevented;

    (k) that there is no undue discrimination between advertisers who seek to have advertisements included in television and radio services; and

    (l) that there is no use of techniques which exploit the possibility of conveying a message to viewers or listeners, or of otherwise influencing their minds, without their being aware, or fully aware, of what has occurred.

    The commitment to broadcasting standards considerations is important for media plurality and this recognises the importance all broadcasters embedding these requirements in their corporate policies and editorial codes.