Rupert Murdoch has built his media business by betting big on things that he believed in. The common story often circulated is how he pulled himself up from the brink of bankruptcy after investing heavily in BskyB. Closer home, he upped the stakes when it came to deciding on the prize money for his flagship show ‘Kaun Banega Crorepati’ that changed the fortunes of his Hindi general entertainment channel Star Plus in India way back in 2000.
21st Century Fox co-chief operating James Murdoch realises the risk culture that travels across the media businesses of his father. “I think all of our business is risk. We like to look at a competitive landscape where you might have strong incumbents in a place, but we like to look at places where we think we can make a challenge,” he said.
James added that investing in original programming is delaying some profits, which is another risk the company is willing to take in the right kind of content.
21st Century Fox made ‘The Simpsons’, then acquired it for cable syndication in the US against much competition and they are making 100 per cent of it available on an authenticated basis online, which was another risk as the team did not know how the customers will react.
James mentioned, “I think in the structure of the business—I mentioned the value of programming, copyrights going up, I think that’s going to continue to be the case… you’re really shifting the value from downstream margin to upstream creators. The competition to be genuinely meaningful to customers is so intense, that investment needs to be made.”
The competitive set that everyone operates in is larger than it has ever been before. “If you make a TV show today, you’re competing with every single TV show that’s ever been made before,” he said.
Speaking about customers and billing, he suggested that it is not going to be about everything being totally atomised à la carte. Customers generally like bundling, because bundling drives prices down and drives consumption up.
James thinks that people will bundle things in different ways and “the stack will be re-ordered… but subscription television is alive and kicking, and it’s changing, driven by a competitive dynamic”.
The younger Murdoch strongly believes in the Winston Churchill saying, ‘when you’re going through Hell, keep moving’.
In the near future, he believes strongly in the Oculus Rift virtual reality technology.
“There’s a class of storytelling that’s benefiting from this technology, and the trajectory is towards immersion, towards entertainments that are indistinguishable from reality. We are on that path. It will not be appropriate for every type of storytelling… but for certain types of storytelling it will be the most extraordinary experience… and it’s not science fiction.”
Speaking about the recently-announced merger of production companies Shine and Endemol, he stated that the company felt that the opportunity to create something that was really the global leader in terms of scale was something that should not be passed up.
However, he was quick to add that one cannot over-synergise in these businesses and one has to allow people to run their own show.
James also answered questions about the bidding for Time Warner by 21st Cenury Fox, which eventually dropped its interest in what would have been an enormous media merger.
“It was an opportunity at a moment in time when we thought a combination could be very attractive for both companies. Given the nature of these things, we don’t want to get into things like hostile takeovers… We’re highly confident in our business and our base plan. We’re a good size; we don’t see a lot of gaps. That was really an opportunistic thing at a moment in time that we didn’t really want to drag out,” he said.
Following in the footsteps of his father, James is working towards building a home for creativity out of the businesses under the conglomerate.
So, what’s his mission? The journey started 30 years ago with the acquisition of the film studio, then Fox Network, then the Sky businesses.
But James also calls it ‘a business that’s just a year old’. “We’re trying to take what we believe and what we aspire to be one of the great homes for creativity and storytelling, and really take it forward many decades. We don’t always hit that mark, but that’s what we’re aspiring to do,” he stated at Mipcom 2014.
For him, the business at the end of the day is really a digital video business, and a business of ideas. And the rules of the business are changing now. James said that the challenges they face in one part of a world versus another are really very similar.
Speaking about how the company is structured, he said that when you have a strong team of colleagues around, it is easy to rely on them.
“We try to have a very collaborative culture. We’re sometimes not as collaborative as we should be. Sometimes more… We’re a very lean business. We have a very flat structure at the top, and we like to have our operating companies, the companies we’re invested in, be empowered and independent,” he stated.
The media giant believes in giving its executives and talent the freedom to think and create. “The culture that we are creating is that right from Mumbai to LA, the executives should have the confidence for risk taking and do great story telling,” he said.
Working across its portfolio of businesses, James’ role also includes direct responsibility for its television interests, from Fox in the US to BSkyB in the UK and Star India.
India is one of the important markets for Murdoch and he pins a lot of hopes on it. Two businesses doing really well for them are Star India and Sky in the UK.
“If we continue to innovate and lead in India, it will prove to be a game changer for us. It is the number one network in India,” he asserted.
Speaking about businesses, he stated that rapid consolidation can be seen in television, cable and satellite. He also expects an explosion in competition of the over-the-top business.
“But in the upstream business, the copyright business, I do think we will see consolidation,” he added.
21st Century Fox is completing the merger of its three Sky businesses in Europe, the UK, Germany and Italy, where the combined entity can be a faster and better innovator in areas like over-the-top services such as Sky Go. Europe in particular is a great opportunity for these kinds of studio businesses.
With such a big conglomerate, can the team afford to take risks and get them wrong?
“You’d rather they didn’t exclusively get them wrong,” quipped Murdoch.
One of its most challenging investments was in MySpace, which was a total disaster.