15 key quotes from 21CF’s full-year and Q4 2017 earnings call: The future of video, TV and film strength, DMVPD growth, and more

15 key quotes from 21CF’s full-year and Q4 2017 earnings call: The future of video, TV and film strength, DMVPD growth, and more

Company

Yesterday, 21st Century Fox announced its fiscal year and Q4 2017 financial results. Afterward, the company held an earnings call featuring Executive Chairman Lachlan Murdoch, CEO James Murdoch and CFO John Nallen. The call was an opportunity for 21CF to discuss a wide range of topics, including the exciting growth in the DMVPD marketplace, reaching customers in increasingly diverse ways, the strength of 21CF’s TV and film businesses, and more.

Here are some of the key comments from Lachlan and James on the call:

On focusing on 21CF’s core brands: “[In the] last few years, we have focused our investments on our core video brands. This has proven to be the right strategy, and as a result, these brands are experiencing robust domestic affiliate fee gains, reaching 10 percent for the most recent quarter.” – Lachlan

On a successful fiscal 2017: “In 2017, across the whole business, the team delivered against almost every metric we established for ourselves. And, importantly, this sets us up for greater velocity across the business, especially in the key areas of affiliate revenues, how we license our brands, and how we shape new experiences for customers and shape this company to create extraordinary value.” – James

On exciting growth in the digital MVPD marketplace: “While it's true the broader industry lost approximately 2 percent of subscribers over the last year, we have maintained our aggregate subscriber level. This includes subscriber additions from all of the emerging DMVPD products, including from the newest launches, YouTube TV and Hulu Live, as well as growth in our younger channels. We are excited by the progress of this new marketplace and believe advances in the viewing experience and increased value to customers will provoke further innovation across all platforms and distributors and underscores the core pay-TV bundle as the best video proposition for customers.” – Lachlan

On the future of video: “The underlying changes of universal connectivity, the proliferation of connected displays, and the potential for unfettered access to these creative assets for customers globally are what make possible the acceleration and expansion of engagement with our customers. From Hotstar in India to Hulu Live and Sky Go and Sky Q, we've never been able to reach customers in as diverse, flexible and rewarding a fashion as we can now. This is, of course, just the beginning. We've got great confidence in the future of this video business for us.” – James

On the strength of 21CF’s TV and film businesses: “Creatively…2017 has been a year of achievement for our teams. Our television studio produced No. 1 shows on five networks, including the biggest new hit of the season, ‘This Is Us,’ and was a key contributor to FOX Broadcasting having its highest number of returning shows in a decade, a positive for both businesses. ‘Feud’ and ‘Legion’ reinforced FX Networks’ position as a creative leader, highlighted this past year by the most Emmy wins ever for a basic cable channel… At our film studio, ‘Logan’ and ‘Hidden Figures’ exceeded expectations, while serving as great examples of the benefit of original storytelling.” – Lachlan

On the domestic DMVPD market: “Our commitment to making our programming more available and not less, combined with the increased and sustained investment in extraordinary storytelling, manifests everywhere in the business. Domestically, the new digital MVPD market has already delivered an aggregate 2-plus-million subscribers, set new benchmarks in user experience and packaging innovation, and I'm convinced will prove to be a great catalyst to increased and accelerated innovation in the sector. And whenever that happens, that means growth is coming.” – James

On the power of live news and sports: “We believe that as time-shifted, on-demand and ad-free viewing continue to grow in popularity, our strength in live news and sports globally is a great advantage. News and sports, the least likely programming to be watched delayed, comprised more than half of our advertising revenues. In fact, network entertainment programming, while important, accounts for less than 3 percent of our total revenue.” – Lachlan

On innovation in international markets: “In Europe, Asia and Latin America, we've introduced FOX+ and FOX Premium, a non-linear access to programming and a digital live experience that is second to none. And Hotstar set the pace for the streaming market in the world's fastest growing economy, crossing 1 billion minutes of watch time in a single day during the fourth quarter. So as you can see, the transformation of the company is not only well underway but gaining pace.” – James

On building an organization for the future: “Underpinning our momentum is a keen focus on our organization. With an eye to the future, we have evolved the leadership at our film business, at FOX News and at our national ad sales organization, and have brought in a small handful of senior executives at the corporate level to ensure we empower our businesses globally with the best talent and technology to drive us forward, especially in this time of transformation and opportunity.” – Lachlan

On innovation and experimentation with packaging content: “We have really been focusing on the customer experience, on how we build these products and how we license our content and brands into third-party products. But also, we remain very open-minded about an independently priced direct-to-consumer offering as well. We're certainly mindful of what we're seeing in the marketplaces, and we're mindful of how these things are progressing for some other firms out there as they experiment with packaging as well. One thing we've found around the world with bundling digital products, be it at Sky Go and Now TV or Hotstar, is that constant iterations and constant innovation and experimentation with packaging is really beneficial, and to be able to do that at a high pace is the best way to build our business and find the best combination.” – James

On the advantages of streaming platforms: “Streaming platforms…[are] a fundamentally better ad product and a fundamentally better platform for us to monetize these brands and these investments that we're making, either by pricing them innovatively to customers or by creating new ad products that are priced at a premium with respect to targeting capability. [They] also create a better ad experience for customers with fewer interruptions, shorter formats and the like.” – Lachlan

On growth in non-linear and advanced advertising: “We now see less than…50 percent of the viewing on our entertainment programming is viewed live. And a growing amount is viewed, obviously, on our own apps and a slightly shrinking amount is viewed on sort of non-streaming DVRs and whatnot. So within this environment, we've achieved a lot of success in terms of streaming advertising and non-linear advertising. I think this past year alone, our non-linear advertising has grown by 30 percent, and within that our advanced advertising products revenue has grown by 40 percent, which is something that's really pleasing to us.” – James

On the SVOD marketplace: “We continue to see a competitive marketplace for product there, but we also want to make sure that we're licensing things in a way that's consistent with our strategy of making things more available and not less… We think that there's a broader marketplace for us to license into.” – Lachlan

On the long-term value of the DMVPD customer: “I mean in every way, the digital MVPD customer and partnership is one that [can] be more valuable and should be over time. I think that the flexibility it gives us for packaging, pricing and advertising innovation is tremendous.” – James

On Hulu Live: “I think the Hulu Live product is really setting a new benchmark in terms of user experience. And I think it's a really interesting time for innovation in the marketplace. I really think it's just the last few months where we've seen these new products hit the market and they're really setting the bar very high. And that's a great thing for customers, and it's a great thing for creators and content makers that can gain access to those platforms.” - Lachlan

The earnings call is archived and available for playback.

Read the internal memo Lachlan and James sent to 21CF colleagues and colleagues across all its global businesses shortly after the company's earnings were announced.