Fox: Tubi AVOD Offsets Lack of Super Bowl Broadcast

Free ad-supported streaming television platform Tubi keeps paying dividends for Fox Corp. — a year after being acquired for $440 million. The AVOD service contributed to Fox generating $915 million in advertising revenue for the third quarter (ended March 31). That compared to ad-revenue of $1.26 billion in the previous-year period when Fox hosted Super Bowl LIV. Current-quarter ad revenue topped the previous non-Super Bowl period in 2019 by 11% at $812 million.

Fox doesn’t break out Tubi revenue separately, but the company expects the FAST platform to generate $1 million in incremental ad revenue in the fiscal year.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

Through nine months of the fiscal year, ad revenue is tracking at $3.4 billion, compared with $3.7 billion a year earlier.

Tubi’s viewership increased more than 30% and now reaches 40 million monthly active users. Tubi generated more than 275 million hours of total viewing in March, a monthly record for the platform. It also set a quarterly record for total view time with nearly 800 million hours streamed — up more than 50% year-over-year. Tubi streamed more than 2.5 billion hours of content.

“Contrary to the strategy of the major SVOD services, Tubi’s goal is to turbocharge certain genres of content that already make Tubi successful, and thereby allow us to super-serve certain segments of Tubi’s audience. Again, all to continue to drive engagement and therefore monetization to new heights,” CEO Lachlan Murdoch said on the fiscal call.

Murdoch said another important differentiator of Tubi’s content is live local news. Tubi recently closed deals to bring an additional 20 local new stations to the platform later this year. These added stations extend Tubi’s news reach to 24 of the top 25 markets.

“Underpinning the news on Tubi offering our live local news feeds from 18 owned and operated Fox Television Stations,” Murdoch said. “In total, news on Tubi will carry nearly 100 local station feeds in 2021 covering 58 DMAs and offering the most robust local news offering of any free streaming service.”

Fox CEO: ‘We Can Win in the AVOD World’

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.”

Subscribe HERE to the FREE Media Play News Daily Newsletter!

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.

 

Fox Corp. Buys Tubi TV for $440 Million in Cash

Fox Corp., the Rupert Murdoch-controlled media company following the sale of 21st Century Fox to Disney, March 17 said it has acquired ad-supported video-on-demand service Tubi TV for $440 million in cash. Fox used its previous 5% ownership stake in Roku to fund the transaction.

Tubi founder/CEO Farhad Massoudi will continue to head the service. The transaction, which is subject to regulatory approvals, is expected to close before June 30.

The purchase price is about $100 million more than what ViacomCBS paid for Pluto TV last year. The deal underscores media companies’ desire to enter the over-the-top video space with an alternative product to SVOD platforms such as Netflix, Amazon Prime Video and Hulu.

Follow us on Instagram

Tubi brings Fox an expanded consumer offering with a sizable, younger-skewing and directly connected user base that spends over 160 million hours per month watching content on the service.

San Francisco-based Tubi, which is currently available on more than 25 digital platforms in the United States, features over 20,000 titles and 56,000 hours of film and episodic television programming from over 250 content partners, including many of the major studios. The combination of Tubi’s reach, the resonance of its content and the quality of its technology platform have doubled the service’s usage and monetization over the last 12 months.

“Tubi will immediately expand our direct-to-consumer audience and capabilities and will provide our advertising partners with more opportunities to reach audiences at scale,” CEO Lachlan Murdoch said in a statement.

Fox plans to continue to run Tubi as an independent service anchored by its consumer offering of licensed entertainment content. Fox said it would “evaluate” opportunities to expand the AVOD offering not through original content, but rather in a cost-effective manner by leveraging “its expertise” in national and local news and sports programming.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

Fox Corp. owns and operates Fox News and SVOD platform Fox Nation, among other properties.

“Tubi provides a substantial base from which we will drive long-term growth in the direct-to-consumer arena,” Murdoch said.

On the sale of Fox’s ownership stake in Roku, Murdoch said the company continues to admire the ongoing accomplishments of founder/CEO Anthony Wood and his team.

“We are pleased to expand our partnership with them as a result of the Tubi acquisition,” he said.

 

Lachlan Murdoch to Become Chairman/CEO of New ‘Fox’

Twenty-First Century Fox May 16 revealed the senior management team at the revamped “Fox” once it consummates the asset sale of 20th Century Fox Film Corp. to The Walt Disney Co. (or Comcast).

Current executive chairman Lachlan Murdoch will serve as chairman and CEO of the new company, while his father, Rupert Murdoch, will serve as co-chairman. John Nallen, CFO at 21st Century Fox, will take a broader role as new COO.

No mention of current Fox CEO James Murdoch, who apparently won’t have a role in the new company.

The younger son was seen as more progressive politically than his father and brother. Indeed, James was reportedly embarrassed by ongoing sexual harassment issues at Fox News, and late last year wrote an email criticizing President Trump’s response to the deadly skirmish in Charlottesville, Va., between protesters and white nationalists and alt-right groups that left one woman dead and 19 people injured.

The downsized Fox will feature Fox News Channel, Fox Business Network, Fox Broadcasting Co., Fox Sports, Fox Television Stations Group, and sports cable networks FS1, FS2, Fox Deportes and Big Ten Network.

It will house the top cable news channel in the country, and a stations group in nine of the 10 largest metro areas in the U.S. Its broadcasting and cable sports brands will have long-term sports rights to the NFL, MLB, World Cup soccer and NASCAR.

“We have worked through the winter ‘standing up’ a reimagined independent Fox,” the younger Murdoch said in a statement.

Rupert Murdoch said the revamped company would become the only media company solely focused on the domestic market.

“Focused on what Americans love best – sports, news and entertainment,” he said.

Fox’s Lachlan Murdoch Declines Comment on Comcast Bid, Touts Studio Home Entertainment Releases

Lachlan Murdoch, executive chairman of 21stCentury Fox, refused to comment on “market speculation” surrounding a possible $60 billion cash offer from Comcast for 20thCentury Fox Film Corp., and related assets.

The Walt Disney Co. currently has an accepted $52.4 billion stock offer for Fox – a transaction that must be approved by shareholders and regulators.

That didn’t stop Rich Greenfield, analyst with BTIG Research, from asking whether any offer other than Disney’s would be considered.

“We are committed to our agreement with Disney … and working on the conditions to bring it to closure,” Murdoch said, adding Fox’s board was aware of its fiduciary duty to entertain all offers.

Notably, Disney has to pay Fox $2.5 billion should the deal not be approved, while Fox is on the hook to Disney for $1.52 billion should it back away from the deal.

Meanwhile, speaking on the brief (28-minute) third-quarter (ended March 31) fiscal call, Murdoch gave a shout out to recent home entertainment releases of The Greatest Showman, The Shape of Water and Three Billboards Outside Ebbing, Missouri and Maze Runner: Death Cure.

“The home entertainment release of these films, along with the theatrical release of Deadpool 2, should propel a strong fourth fiscal quarter,” Murdoch said.

The Fox film unit generated pre-tax operating income of $286 million, which was down 23% decrease from $373 million in operating income in the prior-year quarter. Revenue was flat at $2.24 billion.

The operating income decline reflected lower contributions from the television production business due to higher deficits related to more new drama series delivered during the quarter and the absence of revenue from the prior-year subscription-video-on-demand licensing of “The People v. O.J. Simpson: American Crime Story”.

Fox, like other Hulu corporate parents Disney, Comcast and Time Warner, accrued increased losses from the SVOD service and Hulu Live online TV service. Fox lost $148 million on Hulu in the quarter, up from a loss of $62 million during the previous-year period. Through nine months, Fox has lost $318 million on Hulu compared to a loss of $161 million last year.

Separately, Murdoch acknowledged presence of a “potential further offer [i.e. Comcast],” for “our businesses” – reiterating a “no-comment” company policy on the issue.

He said he expected U.K. regulatory approval shortly for Fox’s bid for shares of satellite TV operator Sky it does not already own. Comcast also has an outstanding bid for Sky that substantially exceeds Fox’s offer.

“Comcast has just begun its regulatory process, and we think it’s very reasonable that Comcast undergo a very robust regulatory review – which could take months,” said Murdoch. “Given Comcast’s bid for Sky, we are considering our options.”

Murdoch said planning for the New Fox (absent 20thCentury Fox) was well underway, including the just-announced $910 million acquisition of seven TV stations from Sinclair Broadcast Group.

Fox chairman Rupert Murdoch and his sons, are keeping Fox News, including new SVOD service Fox Nation, Fox Broadcasting and Fox Sports.