Peter Rice James Murdoch Future of

When Kevin Reilly announced his intention to step down as Fox’s entertainment chairman, the knee-jerk response from people across the biz, myself included, was “so who is it?”

Usually, exec transitions at that level come when the network or studio already have have a top candidate lined up to step in, even if a little time elapses between announcements. Witness the handoff in March at Disney between Anne Sweeney and Ben Sherwood.

In this case, the indications are that 21st Century Fox brass see the vacancy as an opportunity to reconsider the optimum structure for Fox Broadcasting Co. within the company’s vast TV operations.

Fox Networks Group CEO Peter Rice (pictured left) and his boss, 21st Century Fox co-COO James Murdoch (pictured right), may well have a short list of candidates they’re considering for the job of programming chief. But in the past 24 hours it’s become clear that there is a bigger discussion under way about the overall strategy for running the network.

That alone says a lot about the state of the broadcast network biz. Almost everyone acknowledges that the business needs reinvention, and in fact that process has been happening, in fits and starts, for nearly a decade. But the decision on how to handle the void left by Reilly – who did his part to shake up the status quo in the past year — will signal where Fox sees the brightest potential at a time when the core business of delivering primetime entertainment fare is becoming more diffuse and more on-demand in ways that are particularly challenging to old-guard linear networks.

Under Rupert Murdoch’s guidance way back in the mid-1980s, the erstwhile News Corp. is the company that more than any other set the industry on the path to where it is today, dominated by big congloms with vertically integrated film and TV production and distribution assets. A generation later, it will be interesting to see where Murdoch, Murdoch and Rice see Fox Broadcasting Co. fitting in the broader scheme of 21st Century Fox and all its tentacles.

Should Fox be more deeply integrated into the cable networks group? That scenario that would make FX Networks chief John Landgraf a logical choice to take on high-level oversight of Fox programming and marketing.

Or should Fox be more closely aligned with the 20th Century Fox TV studio, its most vital content engine? That scenario (which Fox tried from 1999-2003 under Sandy Grushow) would undoubtedly lead to 20th TV CEO Dana Walden taking on programming responsibility for the network.

Both of those options are plausible, but it’s telling that in both cases there’s a real question about whether the execs in question, Landgraf and Walden, would covet such an expansion of duties — and aggravation — given the success both enjoy in their present roles. Fox is definitely in rebuilding mode after a season that saw “American Idol” collapse, “The X Factor” become an ex-factor and its most recent buzzworthy additions, “New Girl” and “The Following,” lose a lot of steam.

It could come down to the decision as to whether Fox is most lucrative as a network play — a cable-esque approach to focusing on carriage fees (or retrans coin for the O&Os and affils) and top ad dollars for the programming of the network in its totality — or whether Fox should be operated as a vessel for launching shows that pay off in syndication, digital licensing and international sales. The answer may well be to focus on innovating at the network in a way that serves both ends.

Figuring out these changes will take time and thoughtful consideration of candidates internal and external, not to mention working out corporate turf issues depending on the choice. So as the dust settles on Reilly’s resignation announcement, which caught most people on the Fox lot by surprise Thursday, the only certainty is that the decision will say a lot about the strategic direction for the network. And it will be anything but a knee-jerk response.

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