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Rupert Murdoch wants to charge for access to news-oriented Web sites in the News Corp. portfolio. Now, he's determined to extract fees from cable and satellite operators to carry the Fox network.
At a company shareholder meeting Friday, the CEO said cable and satellite operators need to pay News Corp. "a small portion of the profits" they gain from offering the Fox network.
The model does not appear to be novel. News Corp. would seek retransmission consent fees from all distributors to carry the Fox-owned local stations. And the company has some leverage -- owning the Fox outlet in nine of the top-10 markets.
"We realize this is going to be a tough challenge," he said. "And we're determined to take a leadership position in creating an economic template for the future."
But CBS has pursued that path, as have multiple station groups. A News Corp. representative declined to elaborate on Murdoch's comments. No word on why Fox has not pursued this strategy sooner or if it has received some payments and is simply taking a harder line.
NBC and ABC appear to have gone in a different direction, opting to cut quid-pro-quo deals, where operators can carry their stations for free -- effectively in exchange for paying a premium to offer their cable channels.
What would be different here is if Fox could craft a deal structure where an operator was willing to engage in some sort of profit-sharing, rather than a straight carriage payment.
Murdoch suggested that paying retrans fees is advantageous for both sides. Fox (and other broadcasters) provide operators with their highest-rated programming. But continuing to produce those hits is a struggle. Less compelling programming from Fox would, in turn, trickle down to operators and possibly hurt customer retention efforts.
"Clearly, the broadcast model is challenged," he said. "Good programming is expensive and can no longer be supported solely by advertising revenue."
Murdoch has also said he wants to charge users access to Web sites for the New York Post, Fox News Channel and top London papers. Plus, he's determined to marginalize aggregators that sell advertising on Web pages that may just direct viewers to News Corp.-owned sites.
"Successful newspapers in the future will charge for their content and aggregators will largely be excluded," he said.
Over the next year, Murdoch said News Corp. as a company will depend "significantly less" on ad dollars to provide revenues than it traditionally has.
"I'm confident this trend will continue to grow in the coming years," he said.
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