The fact that your company is on the verge of a mega merger does not mean that Peter Rice does not have much to say about mergers and acquisitions of media.
The president and chairman of the board and executive chairman of 21st Century Fox of Fox Networks Group The majority stayed on Thursday in a Q & A at the annual Variety Dealmakers event about the imminent possibility of an agreement that could send it to Disney , along with tens of billions of dollars in assets of Rupert Murdoch.
But Rice cited sensitivities around high-risk negotiations as a reason for executive silence on both sides of the agreement, opening up to a wide range of issues, from how the media sector will be transformed through consolidation and competition with Silicon Valley until Fox's own conclusions about the Sexual harassment scandals shook Hollywood.
Although he would not answer any questions about the possible agreement, Rice made some relevant observations. When Variety's co-editor general, Claudia Eller, asked her if a merger as massive as Disney-Fox's proposal could theoretically meet with regulatory hurdles, she replied: "Each time you have two large media companies combining, you'll see By the Department of Justice, it will be considered "
Rice also addressed how the DOJ appears to be treating the AT & T-Time Warner union, and noted that the behavior of the government body under the Trump administration is not consistent with how it was conducted under previous presidents. "It seems that there is a head of the Department of Justice who does not believe in putting conditions on mergers," he said. "That's different from how they dealt with Comcast and NBCUniversal."
Across the pond, Fox is also seeing emerging regulatory obstacles in his quest to take full ownership of Sky. But Rice expressed confidence that Fox would get the go-ahead from the UK Competition and Markets Authority, which received the merger for review in September.
"They're saying they'll decide in January," Rice said. "Our expectation is that they will fail in favor of that, we hope the agreement closes next year."
Consolidation was an issue that Rice repeatedly heard in her conversation with Eller, which took place at the Citizen restaurant in Beverly Hills. By sizing a field of eight distribution giants – AT & T, Verizon, Comcast, Charter, Google, Facebook, Amazon and Apple – he recognized that content companies will inevitably combine to sell programming to all of them or end up being acquired by one of them.
But he also suggested that, although Silicon Valley companies have started paying for content, the programming creation capabilities of Fox, Time Warner and Disney are too easily underestimated. He estimated that Fox and Time Warner each spend about $ 12 billion per year on content, while Disney spends $ 15 billion.
Rice mocked Silicon Valley's rush to amass large volumes of content without applying true experience, a strategy that characterized "I'll make 100 TV shows and order them as pizzas and hopefully some will be good."
Although Rice did not specifically cite Netflix while taking that particular jab, she directly refuted the claim of Netflix content official Ted Sarandos. Earlier in the week at a conference of analysts that sports leagues would eventually go directly to the consumer, as if companies like Fox were just easy intermediaries to disintermediate.
"It's not just someone with an iPhone in the league broadcasting the game," Rice said. "We have an experience in how to do that, it costs us a billion dollars a year to produce games, the leagues are not prepared to do that, it's not their experience."
Rice also pointed out that many of the rights packages for the league's biggest games are locked in the 2020s and beyond, though she has no illusions that Fox will face new competitive bidding as these rights are approaching expiration. "My expectation is that someone will bid for them when they are available," he said.
Rice resumed the issue of the scale regarding Silicon Valley when evaluating how Fox squeezed against Google and Facebook for the market share of advertising. He cited statistics for the fourth quarter of 2016, when Fox properties delivered 20 billion minutes of advertising, compared to YouTube with 4.5 billion and Facebook below one billion.
But Rice acknowledged that the advertising capabilities of media companies are insufficient in one important aspect.
"We have this amazing product to deliver advertising messages but not to focus," he admitted. "One hundred and ninety-three cents of each dollar goes to two companies because they point to machines."
But Rice also expressed confidence that media companies will improve their targeting, a dynamic that believes critics of the sector are not at all appreciating "The idea that advertising is heading inexorably in one direction is a bit short-sighted ", He said.
Another issue related to mergers and acquisitions that Rice addressed was Hulu, of which Fox owns Disney and Comcast, which is about to become involved in the joint venture when the consent decree expires next year. Rice said all involved were very optimistic about Hulu, which presented a kind of challenge.
"Any of the three partners would happily buy the other two," he said. "The other two do not want to sell because we all love the business."
Although he acknowledged that there have been times in the last decade when Hulu owners have distanced themselves from their strategic perspective on the company, he called those differences mild and infrequent. Rice said the three companies are currently very aligned with Hulu, although he acknowledged that the status quo could be altered once the consent decree expires. "Will that change when Comcast returns to the board?" Rice said. "Potentially change the dynamics".
Rice also hinted that the companies have discussed the potential for international expansion for Hulu, which is currently strictly in the US. UU (Except for an operation licensed in Japan).
"There is definitely an opportunity to have a global platform with Hulu," he said. "It's complicated how we treat each differently international rights."
Eller closed the conversation with Rice by delving into the impact of sexual harassment on Fox, which has been shaken by Bill O & # 39; Reilly's accusations against Louis CK. Rice applauded the courage of the victims who came forward and credited them with the start of a conversation about gender and equality that is so necessary in the media business.
He also said that Fox would emerge a better company in how he has responded to the crisis. "Fox in recent years, due to the problems of Fox News, we have changed the processes," he said. "We try to make it more accessible for people to file complaints and have a sense of security in doing so."