Post by The Ultimate Nullifier on Dec 8, 2017 21:10:29 GMT -6
deadline.com/2017/12/fox-stations-future-disney-deal-local-tv-plans-1202223124/
Could Local TV Stations Drive Slimmed-Down 21st Century Fox Post-Disney Deal?
As Disney and 21st Century Fox continue negotiations on the acquisition of a group of prized Fox divisions in a deal that could be announced as early as next week, one of the assets left behind has largely been overlooked in reports on the mega-merger: the 28 Fox owned & operated TV stations.
They are expected to remain under the control of the Murdoch family along with Fox Broadcasting Co, Fox News Channel and national sports networks FS1 and FS2. While not as visible as the others (see our story examining what could be FBC’s future if its sister studio 20th Century Fox TV moves to Disney), the stations could be key to Rupert Murdoch’s growth plans for s trimmed-down 21st Century Fox, industry insiders say.
Fox owns and operates 28 stations in 17 markets covering more than 37% of U.S. television homes — just below the current 39% cap — including duopolies in seven of the top 10 markets in the U.S. In 2016, the stations pulled in $1.7 billion, ranking No. 1 among all station groups in revenue. (The broadcast networks reach their viewers via local TV stations. Some of them, called O&Os, are owned by the network’s parent company; they currently cannot cover more than 39% of the U.S. households. For the rest of the country, the nets have to rely on affiliate stations owned by other companies.)
The station ownership cap could soon be lifted by the Republican-controlled FCC, which has been arguing that the rules were put in place before stations faced advertising and programming competition from a number of different platforms. Possibly anticipating that, as part of the ongoing station-group consolidation, Fox recently made an unsuccessful bid for Tribune Media, owner of what was the largest independent station group in the U.S. Fox lost out to Sinclair Broadcast Group, which is emerging as the largest station owner in the country with its $3.9 billion Tribune acquisition. Their combined station footprint would reach a startling 72% of U.S. households if no divesting is made.
That is a model observers see Murdoch possibly pursuing with the Fox station group if the cap is lifted, pointing to such station owners as Nexstar, Gannett, E.W. Scripps and Hearst as possible acquisition targets. Some go as far as speculating Murdoch could get ABC TV stations in the Disney deal. (Disney owns the smallest group of O&Os among the broadcast networks, consisting of eight stations). That of course is an extreme scenario, which I hear appears unlikely, though media companies had been talking about decreasing their reliance on broadcast in the future and eventually going direct-to-consumer. FCC chairman Ajit Pai’s deregulation plan would allow broadcasters to own two Big 4 network affiliates in any market regardless of size and also operate additional stations in the same market through local sales and marketing agreements.
Industry observers see a lot of upside in the local station business. Unlike national networks, which are threatened by well-funded digital upstarts like Netflix and Amazon, depressing viewership and driving up the cost of content, stations focus squarely on local programming — news, weather and sports — so they won’t have to compete with cable and digital platforms.
The biggest problem has been scale, with 40% reach in the country only providing modest aggregated ratings to sell. “But when you get to 80% as (Sinclair executive chairman) David Smith is doing, you get a real business,” one industry insider said.
Additionally, local stations yield “much more influence on political opinion than national news,” a source said, noting that owning multiple TV stations in key swing states like Ohio and Florida could be a financial windfall.
Fox’s station group is run by one of Murdoch’s closest confidants, Jack Abernethy, who also serves as co-president of another asset that would be part of 21st Century Fox 2.0: Fox News. There could be a symbiotic relationship, with the centralized ad sales, promotion and other forces handling all stations, bringing efficiency to their management.
Could Local TV Stations Drive Slimmed-Down 21st Century Fox Post-Disney Deal?
As Disney and 21st Century Fox continue negotiations on the acquisition of a group of prized Fox divisions in a deal that could be announced as early as next week, one of the assets left behind has largely been overlooked in reports on the mega-merger: the 28 Fox owned & operated TV stations.
They are expected to remain under the control of the Murdoch family along with Fox Broadcasting Co, Fox News Channel and national sports networks FS1 and FS2. While not as visible as the others (see our story examining what could be FBC’s future if its sister studio 20th Century Fox TV moves to Disney), the stations could be key to Rupert Murdoch’s growth plans for s trimmed-down 21st Century Fox, industry insiders say.
Fox owns and operates 28 stations in 17 markets covering more than 37% of U.S. television homes — just below the current 39% cap — including duopolies in seven of the top 10 markets in the U.S. In 2016, the stations pulled in $1.7 billion, ranking No. 1 among all station groups in revenue. (The broadcast networks reach their viewers via local TV stations. Some of them, called O&Os, are owned by the network’s parent company; they currently cannot cover more than 39% of the U.S. households. For the rest of the country, the nets have to rely on affiliate stations owned by other companies.)
The station ownership cap could soon be lifted by the Republican-controlled FCC, which has been arguing that the rules were put in place before stations faced advertising and programming competition from a number of different platforms. Possibly anticipating that, as part of the ongoing station-group consolidation, Fox recently made an unsuccessful bid for Tribune Media, owner of what was the largest independent station group in the U.S. Fox lost out to Sinclair Broadcast Group, which is emerging as the largest station owner in the country with its $3.9 billion Tribune acquisition. Their combined station footprint would reach a startling 72% of U.S. households if no divesting is made.
That is a model observers see Murdoch possibly pursuing with the Fox station group if the cap is lifted, pointing to such station owners as Nexstar, Gannett, E.W. Scripps and Hearst as possible acquisition targets. Some go as far as speculating Murdoch could get ABC TV stations in the Disney deal. (Disney owns the smallest group of O&Os among the broadcast networks, consisting of eight stations). That of course is an extreme scenario, which I hear appears unlikely, though media companies had been talking about decreasing their reliance on broadcast in the future and eventually going direct-to-consumer. FCC chairman Ajit Pai’s deregulation plan would allow broadcasters to own two Big 4 network affiliates in any market regardless of size and also operate additional stations in the same market through local sales and marketing agreements.
Industry observers see a lot of upside in the local station business. Unlike national networks, which are threatened by well-funded digital upstarts like Netflix and Amazon, depressing viewership and driving up the cost of content, stations focus squarely on local programming — news, weather and sports — so they won’t have to compete with cable and digital platforms.
The biggest problem has been scale, with 40% reach in the country only providing modest aggregated ratings to sell. “But when you get to 80% as (Sinclair executive chairman) David Smith is doing, you get a real business,” one industry insider said.
Additionally, local stations yield “much more influence on political opinion than national news,” a source said, noting that owning multiple TV stations in key swing states like Ohio and Florida could be a financial windfall.
Fox’s station group is run by one of Murdoch’s closest confidants, Jack Abernethy, who also serves as co-president of another asset that would be part of 21st Century Fox 2.0: Fox News. There could be a symbiotic relationship, with the centralized ad sales, promotion and other forces handling all stations, bringing efficiency to their management.