Shell game for Fox

News Corp. creates division, names prexy-CEO

Rupert Murdoch’s News Corp. has created a new division called Fox Cable Networks to manage its growing portfolio of cable channels, appointing Jeff Shell to serve as president and CEO.

Shell, who moves over from president of Fox Sports Networks, says one of his first tasks will be to sell the vast array of Fox networks to cable operators in one comprehensive package for contracts that could run as long as 10 years. The two biggest cable operators in the U.S., AT&T and Time Warner, have already concluded long-term multi-network deals with Fox as the result of far-reaching negotiations led by Shell.

The Fox lineup includes two general entertainment networks, FX and Fox Family Channel, which cable systems clear on their most widely circulated analog tiers, and more narrowly targeted channels such as Fox Sports World (live soccer matches from Europe) and the Fox Movie Channel.

Digital tiers

The latter two will go up on digital tiers, which, at least initially, will reach only a small portion of a cable system’s subscriber base. “Sports and movies are the categories that will drive the digital boxes into people’s homes,” Shell says.

The cable networks owned by Fox are beginning to generate such lucrative profits that News Corp. is positioning Fox Cable Networks as one of the key players in the Fox Entertainment Group. In cash flow for 1999, Fox Family harvested $115.2 million and FX chalked up $95.3 million, according to Paul Kagan Associates.

The Fox News Channel, which Kagan says lost $62.2 million in 1999, will continue to run separately from the rest of the Fox Cable O&Os. Both Shell and Fox News president Roger Ailes will report to Peter Chernin, president and chief operating officer of News Corp., and Chase Carey, co-chief operating officer of News Corp.

Sports background

Because of his sports background, Shell will oversee local-rights negotiations for the 11 regional sports channels Fox owns. He’ll also serve on the board of the various networks Fox maintains equity stakes in, such as Golf Channel, Speedvision, Outdoor Life and the half-dozen regional sports networks it shares with Chuck Dolan’s Cablevision Systems.

And Shell will continue to be in charge of Fox Sports Enterprises, which includes the company’s investments in the L.A. Staples Center.

Shell is particularly bullish about two Fox-owned networks he’ll be running — the nine-month-old Health Network (which will get a name change to Web MD TV) and the National Geographic Channel. Fox says Web MD TV has rollout guarantees from cable operators, including AT&T, and direct-broadcast satellite distributors that could get it into as many as 50 million homes in a few years, and even though National Geographic doesn’t open for business until November 2000, it already has commitments for 25 million subscribers.

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