News Corp. prexy cites need to address off-balance sheet assets

News Corp.’s Chase Carey, seasoned vet though he is, says he had to gulp at the latest price tag attached to football rights.

In a fragmented media world, the NFL’s “value in the marketplace is extremely unique,” Carey told the UBS Global Media and Communications confab Wednesday. “Obviously, there are costs associated with it that always make you swallow hard. Sports is a double-edged sword, and the NFL is the ultimate double- edge sword.”

The costs of sports rights has been a theme of the conference as cable networks need to push the higher prices through to operators and ultimately to consumers. Fox, NBC and CBS are reportedly close to an eight-year extension of their deals with the NFL at fee increases of more than 60%. Fox pays an estimated $720 million annually under its current NFL pact.

Asked about the advertising climate, the News Corp. prexy said the fourth quarter market is a bit softer than the third and, excluding political, flat year-on-year. But he called it “a good market” with Fox getting premiums in scatter over upfront. And things seems to be looking up. The company “is starting to see a little bit beyond the calendar year, and actually sees signs of fresh money past January 1.”

“Idol will be priority one for the second half of the season,” he said.

On the hot topic of Web streaming, Carey talked more about News Corp.’s partly owned service Hulu then he did about Netflix, which has dominated conference chatter.

News Corp.’s “number one issue” is building the right strategy and the right business model in the digital space, he said. Hulu, which was up for sale for months and then pulled off the block, will be the centerpiece. Disney, Comcast’s NBCUniversal and Providence Equity are Hulu’s owners alongside News Corp.

“Partnerships are a bit of a bear to manage. But on the other hand, the audience, the brand and reach Hulu has is something people dream of,” he said.

“We have good relationships with our partners. It’s just, by definition, partnerships can be a little cumbersome,” he said. He said he thinks the service’s prominence in the digital space and its strategic opportunities “dwarfed” what prospective buyers were willing to pay.

Netflix founder and CEO Reed Hastings on Tuesday said he sees Time Warner’s HBO Go as his biggest rival because other services don’t invest nearly as much in acquiring programming.

Hulu, and News Corp. will find their own model, Carey said.

Carey wasn’t asked about nor did he address the phone-hacking scandal that rocked News Corp.’s News of the World subsid this summer and continues to make headlines in the U.K. and obscure the future of one-time heir apparent James Murdoch.

But he did bring up BSkyB, and News Corp.’s thwarted plans to buy up the chunk of it the conglom doesn’t already own. A $12 billion deal for the U.K. satcaster was scrapped at the height of the scandal.

Including BSkyB, Carey said, News Corp’s got $15 billion in off- balance sheet assets, something that “is a real issue for us.” News Corp. controls BSkyB but doesn’t own it outright.

“We are not getting anything, (not) a fraction of a credit, for that $15 billion. I think it is one of the things we need to continue to figure out…You want to head to places you either own, or monetize assets. We are…not an asset holding company,” he said.

That implies that ultimately News Corp. could sell BSkyB or make another run at buying it up, as well as tidy up its house elsewhere.

Carey said specifically he doesn’t want to put a time frame on anything. “But directionally we are going to do that and have to be better at communicating that,” he said.

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