• by Paul Gough , September 30, 2003

Don't count News Corp. as a media company terrified about the prospects of personal video recorders wrecking the ad model. Fox's parent company is being proactive in finding ways to navigate tomorrow's advertising landscape at the same time through its proposed acquisition of DirecTV is trying to speed PVR (personal video recorder, also known as digital video recorder) penetration.

Peter Chernin, president of News Corp. and chairman-CEO of the Fox Entertainment Group, said Fox was spending vast amounts of time trying to figure out how to deal with the challenge posted by PVRs.

"We're spending a lot of time thinking and working on this," Chernin said Tuesday morning at the Goldman Sachs Communicopia XII Conference in New York City. He said that the main challenge is on the scripted side of the TV business, and that live coverage of news and sports would benefit.

"I don't think what it's challenged is advertising. I think what's challenged is the three-minute pod of sort of bland 30-second commercials. I think it behooves all of us to work aggressively to think of different ways to get different messages out," Chernin said.

He said Fox already is working on new ways to advertise, from product placements on "American Idol" to Ford's sole sponsorship of the second and third season premieres of "24," with long-form advertising before the beginning and after the end of the drama. Fox is also aggressively advertising its content on TiVo, with spots for FX and 20th Century Fox to, more than anything else, to learn about the form. But Chernin also made it clear Fox isn't going to take its eye off the big picture.

"The challenge is how do you manage the transition in a way that you don't give up your main business. So we're going to be focused, on the broadcast advertising side, in making sure we maintain those revenues and grow those revenues and look at the targeted PVR ads as gravy on top of that for certainly the next three to five or six years," Chernin said.

Even though networks, agencies and advertisers have been in various states of denial regarding PVRs, News Corp. isn't losing sleep over it.

"It's a pretty easy thing to come to grips with in that we're not going to stop it," Chernin said. "If one side of the company said that we'd prefer to live without PVRs. Well, you know what, too bad. You're not going to live in a life without PVRs."

He said News Corp. expects to be "very aggressive" in rolling out PVRs, which DirecTV already does in a deal with TiVo. DirecTV sold 56,000 TiVo subscriptions in the quarter ended July 31, for 326,000 of TiVo's 793,000 total subscriptions. DirecTV's competitor, Dish Network, announced last week that it had rolled out its one millionth PVR.

"We think it's the right strategy," Chernin said of DirecTV's PVR plans. "We think it's as compelling a product as we've seen." He said consumers love the PVR capabilities and it's a great way for direct-broadcast satellite to differentiate itself from cable, which has also begun to rollout its own PVRs.