Fox CEO James Murdoch: ‘Fundamentally, We Have to Make Better Movies’

Exec acknowledges that shakeup atop film studio was due to poor box office performance

James Murdoch Fox
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Twenty-First Century Fox CEO James Murdoch said the executive changes at its movie studio were driven by a string of poor box office performances, echoing statements that his brother, Fox Executive Co-Chairman Lachlan Murdoch, made last week.

“[We] acknowledge failures where they are,” Murdoch said at the Goldman Sachs Communacopia conference in New York. “We have not been as consistent as we wanted to be — as we had been historically.”

In his remarks at the three-day event, Murdoch explained that the moves at 20th Century Fox, which saw Chairman Jim Gianopulos depart earlier than expected this month and Stacey Snider replace him, came down to its inability to repeatedly deliver movies that won over audiences, as expressed in Fox’s weak box office performance over the last couple years.

“Fundamentally, we have to make better movies,” he said. “We have to do it more consistently. To that end, that’s what the business is focused on.”

Murdoch lamented that even when Fox delivered a hit, like February’s R-rated superhero flick “Deadpool,” the studio couldn’t carry forward that momentum.

“[We wasted] those great things by then having something bad like an ‘Ice Age’ or ‘Independence Day,’” he said.

Like Time Warner CEO Jeff Bewkes earlier in the day, Murdoch spent a good part of his session extolling the virtues of the new streaming services, such as Hulu — in which Fox and Time Warner are both investors — that have been popping up with increased frequency. Borrowing part of an analogy that his brother used at last week’s Bank of America Merrill Lynch conference, Murdoch said content owners, who operate upstream in the distribution pipeline, stand to benefit from more competition downstream.

“We want more of those out there, we think that’s great for upstream investors like us in content and brands,” he said.

Murdoch also called Hulu “the most attractive space for us from a digital advertising perspective right now.”

Advertising was another major theme in Murdoch’s remarks. He said the current “interruptive” nature of TV commercials made for a poor user experience. Murdoch drew a contrast with Fox subsidiary TrueX, which produces interactive ads that viewers on streaming or mobile platforms can choose to engage with instead of watching a traditional commercial break.

Murdoch hardly addressed Fox News, other than to praise the company’s handling of former CEO Roger Ailes’ sexual harassment allegations and subsequent resignation, and its success in the ratings. He allocated more of the TV section of his remarks to sports and National Geographic.

He acknowledged the challenges faced by sports channels as they pay more and more for sports rights, but Murdoch said that as long as investments were made in the right sports, there’s still plenty of money to be made. He pointed out that in St. Louis, the Fox-owned regional sports network is regularly the No. 1 channel when baseball is on, “and baseball’s on a lot.”

“There’s not a blanket equivalency across the sports-rights marketplace,” he said.

Murdoch added that Fox Sports 1 and Fox Sports 2 required a peak investment of about $250 million to $300 million, and now spin off $100 million in profit.

“It’s fundamentally underpriced relative to what it delivers for customers,” he said.

Murdoch also talked about Fox’s plan to dedicate more resources to National Geographic, which he called a “global super-brand” with one glaring weakness.

“One of the things that doesn’t live up to the brand in terms of what its capable of is the channel,” he said. “I think we have a much bigger opportunity to make it something really relevant that can drive affiliate fees. That means we need to invest more in programming.”

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