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Fox’s Lachlan Murdoch Talks Sky Acquisition, Theatrical Windows, Core TV Brands and Digital MVPDs

Lachlan Murdoch, executive chairman of 21st Century Fox, was unequivocal on two topics raised during a wide-ranging Q&A held Wednesday at Goldman Sachs’ Communacopia conference.

For one, Murdoch said 21st Century Fox remains confident it will complete its acquisition of the remainder of European satellite giant Sky by next year, despite the continued hurdles it is facing with U.K. regulators. For another, Murdoch was emphatic that the traditional windowing template for new theatrical releases in the U.S. has to change.

Murdoch said closing the $15 billion buyout of the 61% of Sky that the company does not own is Fox’s “number one priority.” The decision announced Tuesday by U.K. regulators to refer the deal for further study on the question of whether the Murdochs will control too much of the U.K. media landscape is a setback, but Fox is determined to power through. “We’re disappointed it’s taken six months to come to this point,” he said. “We’d like to be referred as soon as possible.”

Murdoch was pressed on the issue of changing the pattern of theatrical releases at a time when some studios are again considering taking big steps to offer premium VOD options for new releases.

Murdoch didn’t get too specific but said the standard of waiting 90 days from the time a film hits theaters before it becomes available on other platforms has become “a highly inefficient system,” given the money studios spend on marketing to open a film. He noted that there is often a great deal of piracy that ensues in what he called the 45-day “blackout period” after most films are out of theaters.

“The system has to change,” he said. “It will change sooner rather than later….The blackout period doesn’t make any sense for anyone.” He cited 20th Century Fox studio chief Stacey Snider’s recent prediction that windowing strategies will start to change “within the next 12 months.”

Other highlights of the 45-minute session:

— 21st Century Fox is focusing most of its TV investments around what Murdoch called five “core brands”: National Geographic Television, FX, Fox Sports, Fox News, and Asia’s Star TV. He singled out Star TV as one of the company’s greatest growth engines that is on track to deliver $1 billion in earnings by 2020.

— “Make no mistake — everyone will go direct-to-consumer,” Murdoch said of major media companies. The challenge is balancing the opportunity for free-standing content offerings without damaging the existing pay-TV eco-system that is so vital to earnings. Murdoch cited as an example the FX Plus premium service, offering ad-free access to new and library Fox shows for $6 a month, that just launched in partnership with Comcast.

— The new wave of digital MVPD upstarts has been a boon to Fox’s advertising business because there is so much audience data to be mined from the digital platforms. The carriage deals with Hulu, YouTube, DirecTV Now et al are also more lucrative for Fox. “There’s no instance where we’re not doing better in a world where there’s more digital subscribers than in an analog world,” he said.

— Murdoch was also clear on the question of whether Fox wants to acquire more TV stations. There’s been speculation that with Sinclair Broadcast Group and other pure-play station owners bulking up, Fox would seek a deal to blunt their influence over Fox and expand its retrains-generating footprint. “It’s not something we would commit a lot of capital to,” Murdoch said. “If we could do that in other manners it’s something we’d be open to looking at.”

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