×
You will be redirected back to your article in seconds

James Murdoch Talks Future of Advertising, Content Distribution and Fox Transition

The media biz needs to focus on innovation in advertising and content distribution. That was the message from 21st Century Fox CEO James Murdoch, who opened the Paley Center for Media’s International Council Summit on Thursday with wide-ranging conversation with Discovery Communications CEO David Zaslav.

“What we haven’t seen enough of is advertising innovations and new products,” Murdoch said. Netflix and other digital upstarts have made inroads with viewers because they offer a more compelling platform. Traditional TV needs to experiment with new ways to present sponsor messages.

The present concern about the health of TV advertising “assumes the status quo of how we sell advertising today will stay the same,” Murdoch said. “There are lots of creative ways to go about it. I don’t think it’s right for the video business to give up on advertising in any way … but it has to evolve more rapidly and innovate.”

Murdoch cited a deal that Fox has struck with Pepsi to integrate the soft drink into the network’s smash hit “Empire” by having the storyline involve one of the key characters become a celebrity spokesman for the company.

The deal came about through a collaboration with the show’s creative team — right down to featuring “Empire” co-creator Lee Daniels playing the director of the Pepsi commercial that will star Jamal Lyon, played by Jussie Smollett.

The Pepsi integration should work especially well for the brand because “Empire” is among the most time-shifted shows in TV. Viewers won’t time-shift through Pepsi in the storyline. “It pushes the narrative forward,” he said.

Streaming services offer the best platform for experimentation. “That’s where ad innovation will really work,” he said. “I think you can do a great job there creating new ad products that will propel the business forward. That’s where I see the future of video advertising going.”

He cited Hulu’s increasing use of spots that give viewers the option to watch one longer commercial at the start of a program in exchange for interruption-free viewing. Murdoch noted that he chose that option himself the night before while watching an episode of “Seinfeld.”

Hulu’s decision to offer an ad-free subscription option at a higher monthly price ($11.99 vs. $7.99) is another means of offering viewers more choice. Those users who choose the lower-cost service “complain less about the advertising” because they have been given the option, he said. In linear TV, “probably the ad loads have been too high in a lot of places,” Murdoch added.

On the incredibly complex issue of content distribution, Murdoch emphasized that he sees the distinction between types of screens — linear TV, tablets, smartphones — fading over time. That’s why it behooves media companies to focus on making content available as much as possible.

“The retailing of audiovisual entertainment is being separated from the infrastructure” of distribution, he said. “We need to make things available in the best possible way for consumers so they don’t have to worry about the way we’re windowing the product.”

He gave a nod to Netflix for accomplishing “something really incredible — they’ve introduced competition into the marketplace with a service people really like.”

Prompted by Zaslav, Murdoch said there were clear shortcomings with the way traditional MVPDs are making programming available via authenticated apps that are often clunky and hard to use.

“Cable and satellite companies haven’t really innovated enough over the last 20 years. That’s why you have this explosion of new entrants,” he said. “It’s one of the reasons people give up and say ‘This is too complicated. I’ll just watch Netflix and Hulu.’ ”

Fox has learned a lot about the potential of OTT and direct-to-consumer services through its experience in the U.K. and and other global markets with products such as the SkyGo, he added.

But he’s also skeptical that the traditional MVPD bundle is going to disappear in favor of a purely a la carte OTT distribution environment. He sees a middle ground emerging between a skinny bundle with only a handful of channels and the whole-hog 200-plus channel services that are driving up monthly bills.

“Bundling has become this bad word … but it’s economics 101. It drives prices down and drives consumption up,” he said. “I think we’re going to see a re-bundling where smaller bundles emerge — things that are really inclusive of (TV) brands that really matter.”

Amid all the discussion about finding new roads in the age of disruption, the act that the media business is entering a new era was subtly reinforced at the session by the fact that both Murdoch and Zaslav took the stage in jeans and sneakers (topped by blue blazers).

Among other topics touched on during the Q&A:

  • Murdoch said the leadership transition at 21st Century Fox with his rise to CEO and his brother Lachlan’s move to chairman in July has been “pretty smooth.” But he admitted that there’s “that little bit of extra pressure” now that he’s CEO. “I didn’t think I would notice it that much..On the first day standing at my desk I remember thinking ‘Now here we go.’ ”
  • He’s not a fan of “binge” viewing. “I prefer calling it marathons. That way you’ve accomplished something at the end. Whereas a binge is something you feel guilty about — I don’t think you should feel guilty about it.”
  • The acceleration of Hulu in the past 18 months holds a lot of promise for its partners. Asked if it will continue to expand internationally, Murdoch said “more likely than not.”
  • Murdoch like most CEOs yearns for a uniform currency that would allow Fox to more seamlessly sell ads in shows across platforms. But it’s going to take leadership by media companies to solve the conundrum. “The industry in general is definitely not there. I don’t think we’re going to see some broad consensus emerge spontaneously,” he said. “Companies are going to have to lead the way. … We are having a much more transparent and active dialogue (with marketers) about this today than we did a year ago.”
  • Fox loves being in the big league sports business around the world. But budget-busting rights fees are forcing them to be selective. “We invest a ton in spots. … But you have to make tough choices about what are the sports that are really going to matter and what are the things you just can’t afford to have. That’s hard.”

More TV

  • Dan Lin's Rideback, MRC Announce Writers

    Dan Lin's Rideback, MRC Announce First Class of Writers and Mentors for TV Incubator

    Rideback, Dan Lin’s production company, and MRC have announced the inaugural class of writers and mentors for their TV incubator.  The new TV writers residency program, which was launched in February, offers a paid, eight-month residency program to a group of writers who have each previously been staffed on series and want to create their [...]

  • CBS Viacom

    CBS and Viacom Move Closer to Merger Talks

    The CBS Corp. board of directors is moving closer to initiating acquisition discussions with Viacom, according to multiple sources close to the situation. The move has been expected for months, although there may still be obstacles on the road to a reunion for the two sides of the Redstone media empire. Price could still be [...]

  • Santa Fe Studios Netflix

    Santa Fe Studios Competes With Other New Mexico Stages for Streaming Business

    Albuquerque Studios entered the spotlight last October when it was purchased by Netflix. While the complex is clearly the jewel in the crown of New Mexico’s production infrastructure, with eight soundstages totaling 132,000 square feet, 100,000 square feet of production offices, a large backlot and support space, it’s not the only modern studio facility in [...]

  • Wahlburgers

    'Wahlburgers' Renewed for 10th and Final Season at A&E

    A&E has renewed “Wahlburgers” for a 10th and final season. The reality series following brothers Mark, Donnie and Paul Wahlberg will debut the new installment at on May 15. A&E has also released a trailer for the season. Season 10 will continue to focus on the Wahlberg brothers as they balance family and their eponymous [...]

  • Game of Thrones Season 8

    From 'Game of Thrones' to 'Big Bang Theory,' Spinoffs Will Keep the Hits Alive

    By this time next year, many of the brightest lights in the current TV universe will cease to shine. Some of the most popular and acclaimed shows are set to air their swan songs this year and during the 2019-20 broadcast season. While programs come and go all the time, the sheer number of iconic [...]

  • Jussie Smollett Empire

    TV Ratings: Jussie Smollett's Final Episode of 'Empire' Season 5 Goes Low

    Last night, Jussie Smollett’s final episode of “Empire” season 5, and potentially his last episode on the show ever, went up in the ratings from previous weeks, but still posted low figures for the series. The episode, in which Smollett’s character Jamal Lyon tied the knot in TV’s first-ever black, gay wedding, returned a 1.1 [...]

More From Our Brands

Access exclusive content