Fox Chiefs: Network Will Carry Entertainment Programming After Disney Split

The Fox network will continue to carry scripted entertainment programming after the anticipated split of the 20th Century Fox studio from its Fox Broadcasting Co. sibling. That was the word from Fox Television Group chairman Gary Newman and Dana Walden as they gamely fielded questions from reporters about the impact of Disney’s acquisition of 21st Century Fox assets on the operations of the TV studio and network.

Newman and Walden emphasized that Fox and the studio would operate in “business as usual” mode for the 12- to 18-month period that is expected for Disney’s $52.4 billion transaction with 21st Century Fox to undergo regulatory review.

The pair, who were joined on stage by Fox entertainment president Michael Thorn and alternative chief Rob Wade, said they had made no decisions on a personal level about their own futures with Fox or possibly Disney. Nor have they discussed any big-picture strategy with Disney brass about the vision for how the Fox TV assets will be managed. But they did say they were confident that Disney had no intention of mandating radical changes in the nature of 20th Century Fox TV productions, which have a legacy of innovation and pushing content boundaries.

Walden and Newman received a call from Disney chairman-CEO Bob Iger on Dec. 13, the day the deal was formally announced.

“Disney management has been incredibly vocal to us about how much they liked our brand and admired our programming,” Newman said. “They’re not acquiring Fox to somehow turn into into a PG-form of a company, or to Disney-fy it as Bob Iger has said.”

Speculation that the Fox broadcast network would evolve to a news and sports-focused outlet emerged in the wake of the Dec. 13 announcement of Disney’s $52.4 billion acquisition pact.

Walden noted that the remaining assets of what is being called “New Fox” will emphasize live event programming in the Fox News and Fox Sports divisions, but that doesn’t mean the complexion of FBC will radically change.

“The network will continue to do entertainment programming,” Walden told reporters during the Q&A that kicked off the winter Television Critics Association press tour in Pasadena, Calif. “Rupert (Murdoch) sees this as an enormous opportunity for the broadcast network.”

Walden and Newman stressed over and over amid the questioning that Fox and 20th Century Fox TV are proceeding with “business as usual” until the deal closes. Fox expects to do about the same number of pilots for the 2018-19 development season as it has in the past few years, he noted.

“It is business as usual for the next 12 to months,” Newman said. “We have to operate at Fox as if this deal might not go through. The company needs to remain as strong as possible in that eventuality.” Newman quickly added that “all the lawyers and advisors” have assured executives that the deal should pass regulatory muster. 

Newman cheekily nodded to the keen interest in Fox’s future in light of the Disney deal in his opening remarks. He opened by displaying mocked-up photos of Walden and Newman at Disneyland on the large screens in the ballroom of the Langham Huntington Hotel, where the TCA tour runs through Jan. 17.

Newman and Walden acknowledged that the Disney-Fox deal came as a surprise and has generated some angst on the Century City lot. Executives have spent a lot of time calming the nerves of creative talent under contract to 20th Century Fox TV.

“I would be lying if I said there wasn’t anxiety,” Newman said. “Dana, Michael and I remain very committed to the business. The people at Disney are enormous fans of our brand and the work we’ve done. The future bodes extremely well for creators working for 20th Century Fox TV. We think the studio is going to remain very robust.”

Under Murdoch, Fox etched the template for the modern vertically integrated network-studio combination. Now Murdoch sees an opportunity to shift gears and make Fox an attractive home for shows from studios such as Warner Bros., Sony Pictures TV, Lionsgate and MGM that don’t have an affiliated broadcast network.

It may be hard to imagine given Murdoch’s focus on empire-building over the nearly 40 years that he has owned 20th Century Fox and related assets, but Walden noted that the business has changed and the streaming giants have seriously altered the marketplace for TV programming.

It’s also a surprise because of the emphasis on the value of global content licensing outpacing the traditional network business rooted largely in advertising. CBS, NBC, ABC and the CW are largely focused on using the network as a platform for launching shows that make money downstream through licensing. Walden told reporters that she would never “bet against” the Murdochs and their vision.

“Times have changed beyond even what’s happening in our company,” Walden said. “There aren’t really those sort of ‘Seinfeld’ syndication big windfalls of cash of backend on our shows. There’s clearly still an opportunity to monetize those shows. (New Fox) will be shedding a lot of costs in terms of the overhead of the studio and all the productions.”

That said, Fox is sure to drive a hard bargain in its dealings with content suppliers. “The real estate on the broadcast network is very valuable,” she said. “Anyone who wants to be in business with New Fox will probably have to contemplate some sort of ownership split with Fox in order to gain entree to their schedule.”

Walden added that “New Fox” will be “an extremely lucrative, domestically focused business.”

New Fox may also decide to invest in its own production facilities. The company will be endowed with plenty of free cash flow and far less overhead than the larger 21st Century Fox operation at present. But all of those questions are still in the theoretical stage while the corporate masters sort through the biggest issues with the deal and the aftermath, Newman said.

“The exciting parts of this new situation is they can kind of do anything they want,” Newman said. “This is company that is going to generate a lot of free cash flow. If they chose to invest in some sort of production company, to have an in-house presence, they could. … The entire environment is wide open to them.”

Walden and Newman resolutely refused to engage on questions about their own futures. “We don’t have a timeline for our decision. We both anticipate staying the course through this period of time” during the regulatory review, Newman said.

“We’re incredibly committed to our (executive) team,” Walden said. “We have enormous talent in terms of executives. Clearly we’re all going to have decisions to make over time. When I finally decide, I will tell my children, my mother, my husband, and my father — and then my father will tell everyone.”

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