PACIFIC • Lachlan Murdoch Isn't Selling 

August 9, 2018  |  Hollywood
What's Next: Lachlan Murdoch Scales Down: At a time when the entire media industry is chasing scale, Lachlan Murdoch's "New Fox" -- the company made up of the assets 21st Century Fox cannot sell to Disney -- is poised to be one of the most successful players in the game precisely because it is lean, nimble and focused.

Despite much Hollywood scuttlebutt, the Murdochs are not planning to sell these remaining assets any time soon, sources with knowledge of their plans tell me. Instead, they will focus on building a brand around the one thing keeping linear television alive: live events, from sports to news to reality TV.

The Aces in Lachlan's Hand:

Fox Broadcast Channel: In recent months, FBC has acquired rights to "Thursday Night Football" and "WWE SmackDown." It will now focus on programming its best shows around those events, Lachlan said on an earnings call yesterday. With NFL rights on Thursday and Sunday, Fox now expects to capture 40% of the total NFL audience.

Fox Sports: FS1 has emerged as a real challenger to ESPN, growing every year since its launch and beating ESPN in total viewers so far this year due to its broadcast of the World Cup. Fox expects its increased share of NFL rights will drive more viewers to FS1, as well.

Fox News: Fox News is the undisputed king of cable news and one of the highest-rated networks on television, period, bringing in billions of dollars in revenue each year. It also plans to add a direct-to-consumer OTT service ahead of the 2018 midterms.

On the scripted side, Fox will look to become the favored choice for independent studios like Warner Bros., Sony and Lionsgate that have suffered at the hands of Netflix. As Fox's Dana Walden noted last week, the highest rated scripted series on broadcast last season all came from independent studios.

The Big Picture: Scale isn't for everyone. In fact, scale often means taking on a surplus of assets or projects that don't work in order to have a handful that do. By spending less on proven successes, a small company can yield a greater return on investment.

The Rub:

• Lachlan is about to become the face of Fox News, which is one of the most toxic, divisive and controversial brands in American news media.
The Agenda
Good Morning. Fox News is still Fox News, only more so.

What's Next: Universal Pictures Chair Donna Langley will host a fundraiser for Gavin Newsom next week, Deadline reports. The host committee reportedly includes Langley and Ramin Shamshiri, NBCUniversal vice chairman Ron Meyer, J.J. Abrams and Katie McGrath, Steven Spielberg and Kate Capshaw, Universal Filmed Entertainment boss Jeff Shell and wife Laura Shell, and Jeffrey and Marilyn Katzenberg. Tickets range from $1,000 to $29,200.
Dead Deal
So long, Sinclair-Tribune

"The Sinclair Broadcast Group acquisition of Tribune Media is dead," my colleagues Charles Riley and Hadas Gold report:

• "Tribune said in a statement Thursday that it has terminated its merger agreement with Sinclair, scuttling a $3.9 billion deal that would have given the broadcasting group an even broader reach into American living rooms."

• "Tribune said it will sue Sinclair, arguing Sinclair's negotiations with the US Justice Department and FCC were 'unnecessarily aggressive.' Tribune also said Sinclair refused to sell certain stations that would have helped the deal secure regulatory approval."

The Big Picture: Sinclair is already the largest local television operator in the United States. Had the deal gone through, it would have become a national conservative media powerhouse and worthy competitor to Fox News.

Who Wins: The Murdochs, again.
Court of Chancery
Sumner tape in play

One week ago today, we reported that the legal fight between Shari Redstone and Les Moonves for the future of CBS could hinge on a video recording of Redstone's father that one CBS board director took to "memorialize Mr. Redstone's physical state."

The judge overseeing that legal battle has now expressed great interest in said tape, per WSJ's Keach Hagey and Peg Brickley:

• Judge Andre Bouchard ruled that the video wouldn't be made public, but "refused National Amusements' request to strike the video from the case record altogether, calling it 'highly probative.'"

• Bouchard "said he had concerns about the medical condition of 95-year-old media mogul Sumner Redstone and declined to order that he be deposed in the legal battle."

• Bouchard said "he worries that Mr. Redstone might not be aware of what was being done in his name. The judge struck from the court record representations of the ailing mogul's responses to questions related to the case."

The Big Picture: Shari Redstone's effort to merge CBS and Viacom could rest on her claim that Sumner, who legally controls the family holding company, is aware of and supports her plan to merge the two media properties that he previously separated. The video recording could prove that is not the case.

Meanwhile ... Shari is "quietly looking for a potential replacement for Les Moonves," despite the fact that the board has just begun its investigation into the sexual misconduct allegations against him, NBC's Claire Atkinson reports.
What Shari Wants
The Viacom debt factor

Let's talk about Viacom's debt, since no one else is.

Viacom reported Q3 earnings this morning, and not one story about the financials mentions the fact that the company has more than $10 billion in outstanding debt.

The debt is important. CBS sources believe its one of Redstone's primary motivations for merging Viacom with CBS, which is highly profitable. They also believe she's overlooking the damage a merger could do to the CBS business.

Vanity Fair's William D. Cohan outlined this issue last month:

• "CBS shareholders have had a great ride under [Les] Moonves. The company's stock has as much as tripled since he took the helm of the independent public company in 2006. The fate of Viacom, meanwhile, has been much different: its stock has tread water since it returned to independence, down around 30 percent."

• "Shari has tried twice in the past few years to force a re-merger between CBS and Viacom and both times her efforts have failed, in large part because the CBS shareholders voted with their feet, so to speak, by selling their stock in the face of the proposed merger."

• "A year ago, after Shari's second effort to merge the companies began in earnest, CBS stock was trading at around $70 per share. As Shari kept pushing for the merger, the CBS stock fell into the high $40s. It had returned to nearly $60 a share by mid-July after it was clear to the market ... that there would be no merger this time either."

What the CBS board is reading this morning, fearfully: "Viacom revenue declined in the latest quarter as lower international sales from its filmed entertainment division, which includes Paramount Pictures, and advertising sales weighed on its top line."
Talk of Tinseltown
How ABC changed Oscar

Variety's Daniel Holloway has the backstory on how ABC executives influenced the Academy's decision to make changes to the Oscars, including an earlier air date, a shorter telecast, and the introduction of an "achievement in popular film" category:

• "Days after the 90th Academy Awards telecast aired in March to record-low viewership, Disney-ABC Television Group executives met with leaders of the Academy of Motion Picture Arts and Sciences to convey a message: You are facing irrelevance."

• "At the come-to-Jesus meeting after March's show, the TV people walked through the lousy ratings at a granular level, identifying precise moments during the show that prompted viewers to stop watching."

• "They made several recommendations about the ways that the telecast's length could be reigned in, and proposed a 'best blockbuster' category that would reward films that had been seen by larger audiences. They also argued that viewers had become fatigued by the ever-increasing number of televised awards shows ... and that the Oscars should be moved to an early calendar period."

It's not just Hollywood that's upset. Page Six reports that fashion insiders and couture connoisseurs are already fretting about an overlap with New York Fashion Week.
What Next: The Ringer's Adam Nayman and Sean Fennessey look back at 18 movies that may have won an Oscar had the "best blockbuster" category existed in years past.

See you tomorrow.
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