Media consolidation is coming, but 21st Century Fox isn’t looking to get any bigger, president and chief operating officer Chase Carey said at the Morgan Stanley Technology, Media & Telecom Conference on Wednesday.
“We’ve always said we’d rather build than buy,” Carey told an investor-heavy crowd.
It hasn’t always seemed that way. Last summer, Fox made headlines with an $80 billion bid to take over Time Warner. But Carey stressed that was a case of being opportunistic.
“A.) We’ve moved on and B.) something of that scale was unique,” he said.
He also dismissed reports that Fox was interested in merging with Discovery to create a pay-TV superpower, calling such reports false.
Fox may not see itself as a buyer, but most analysts predict that smaller media companies such as DreamWorks Animation and Lionsgate will look for allies because as long they’re going it alone, they will not be able to secure distribution deals for their content that are as rich as those enjoyed by larger players.
Carey agreed that Darwinian imperatives will motivate companies that “find they don’t have the attributes you need to be successful.”
The Fox executive said that hit shows such as “Empire” and “Gotham” have become more important in a digital world, where viewers are increasingly watching content on mobile devices and on-demand platforms instead of tuning in to a channel on a particular night and time.
“Mediocre content is going to get lost, and hit content is going to be more valuable than ever,” Carey predicted. “You had a rush to have quantity over quality; now you have quality over quantity again.”
The cable bundle, through which consumers pay a fixed amount for a standard set of channels, has been under attack in recent years with subscribers pushing for more a la carte options. If it frays, that could be disastrous for Fox, which makes money by pushing channels such as FX and Fox News into packages that cable operators must buy in bulk in order to offer customers.
The status quo is also under pressure from over-the-top services such as HBO’s planned digital-only package that will give consumers digital access to programming without forcing them to subscribe to cable. Even with these choices, Carey argued that consumers will still prefer to access channels in bunches.
“People like bundles … the traditional bundle has a lot more resiliency and staying power,” said Carey.
Fox’s broadcast network has had a rough few years, with “American Idol’s” ratings dropping and “Glee” going off of the air, but Carey said the success of “Gotham” and “Empire” are pulling it out of its rut.
“‘Empire’ and ‘Gotham’ give us tools to build off of, even ‘Idol’ has stabilized,” he said. “Profits will follow momentum.”