March 5, 2021
With the exception of Fox Nation, the $5.99 monthly streaming video adjunct to Fox News, corporate parent Fox Corp. has little interest in the SVOD market. This strategy was underscored by the media company’s $71.3 billion studio assets sale to Disney in 2019.
Instead, Fox Corp.’s direct-to-consumer initiative is driven by Tubi, the San Francisco-based ad-supported VOD platform acquired 12 months ago for $440 million. The platform has skyrocketed in recognition since the acquisition in large part because Fox Entertainment is offering up its original pay-TV programming on Tubi — a first for the catalog-centric AVOD market.
“We can win in the AVOD world,” Lachlan Murdoch, CEO of Fox Corp., told investors March 4 on the virtual Morgan Stanley Technology, Media and Telecommunications Conference. “We think it will be a significant growth driver for our business. We don’t want to compete in the subscription on-demand world.”
Murdoch said that as Fox’s pay-TV business is centered around live news and sports — two areas the traditional cable bundle still has consumer leverage — the company’s digital assets, led by Tubi, will generate $1.2 billion in ad sales in 2021.
Indeed, prior to the acquisition, Tubi sold advertising around specific programming. Now, sales are incorporated within Fox Entertainment, which can cross-pollinate marketing efforts across the company’s brands. Murdoch said Tubi was a small part of Fox’s media buyer upfronts last year, while the platform will play a major role in media selling this year.
“If you own a movie studio, a big TV studio, or you own entertainment channels, get[ting] into a D2C future as quickly as you can is incredibly important,” he said.
Murdoch said Tubi is already profitable while it invests profits back into the business to help build up its profile in an AVOD market that has renamed itself FAST (Free Ad-Supported Streaming Television), and includes The Roku Channel, Pluto TV, IMDb TV, Peacock, Crackle Plus and soon HBO Max, among others. He cited Wall Street projections that the SVOD business can generate 20%-30% margins — a percentage he feels the AVOD market can replicate in time.
“We’re not there yet, [but] we can win [with AVOD] in a much more clever and careful way,” Murdoch said.