• by Wayne Friedman , December 5, 2017

Against the backdrop of a possible deal for its movie/TV production and some cable networks with Walt Disney, 21st Century Fox sees continued strong revenues and subscriber revenue gains from new virtual multichannel video program distributors.

Speaking at the UBS Global Media and Communications Conference on Tuesday, CEO of Fox James Murdoch said the total customer market for these new TV distributors -- including DirecTV Now, Sling TV and Hulu with Live TV -- is growing rapidly and could hit 4 million customers by the end of the year.

“That’s a big shift,” he said. “A 5% market share shift in 18 months is a big number.” Fox, along with Comcast and Walt Disney, each own 30% in Hulu, while Time Warner owns 10%.

He adds: “The competition they put into the marketplace means the traditional MVPDs will have to innovate faster for a better user experience and better price points.”

One example, Murdoch says, comes from the company’s FX cable network, which has only seen a modest 1.5% decline in overall TV subscribers due to adoption by virtual multichannel video TV program distributors.

“[For FX that] is much better than the industry because the vMVPDs are starting to take up the slack. We see some real traction among customers for these vMVPDs. It’s going to start to grow the overall pay TV universe.”

Key is “user experience,” which is vastly improved versus traditional cable, satellite, and telco providers, notes Murdoch. In addition, he says “core” packages of popular networks are moving the market.

Earlier in the day, DirecTV Now announced it had hit the 1 million subscriber level. Estimates for Sling TV suggest the Dish Network virtual/digital package of channels is around the 2 million subscriber level.

On Tuesday, CNBC reported that Fox is close to a deal to sell its TV-movie production business and some cable TV networks to Walt Disney for $60 billion. Murdoch declined to comment about the possible deal.