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News Corp. Pulls Its Cable Empire Together Under New Fox Division

TIMES STAFF WRITER

Six years after forming its first cable channel, News Corp. has put its cable holdings under one banner called Fox Cable Networks. The reorganization is an effort to capitalize on News Corp.'s enormous clout--particularly in sports programming--and expand its influence with operators and advertisers.

The company today will name Jeff Shell to the newly created position of president and chief executive of Fox Cable.

Shell joined News Corp. in 1994, was instrumental in the formation of satellite services in Latin America as head of the television group’s business development team, and has served as president of Fox Sports Networks since 1999. News Corp. at that time bought out its 50-50 sports partner, Liberty Media Corp., and took control of the constellation of regional channels. With that deal, News Corp. became the sole rival to Walt Disney Co.'s ESPN cable juggernaut.

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Fox Cable Networks becomes one of four major arms of Fox Entertainment Group, along with the movie studio, the Fox network and its main TV production arm, and the Fox TV station group. The cable group has grown to 22 channels today from the single FX channel in 1994. It will be second in profitability only to the Fox station group, with estimated earnings this year of $190 million.

Fox’s other channels include the Fox News Channel, Fox Family Channel, the Fox Movie Channel, and News Corp.'s interests in the National Geographic Channel, the Health Network, the Golf Channel, Speedvision and Outdoor Life.

Although Shell will be in charge of advertising and cable carriage of most of the channels, some will continue to operate semi-autonomously. Roger Ailes, head of the News Channel, and Haim Saban, chief and co-owner of Fox Family, will continue to report to Peter Chernin, president of News Corp., and Chase Carey, co-chief operating officer.

Shell, who was also named to News Corp.'s executive management committee, will also oversee Fox Sports Enterprises. That division contains the company’s investment in Staples Center and its ownership of the Los Angeles Dodgers.

The new structure enhances the company’s ability to strong-arm cable operators, and Fox had already started flexing those muscles. In a sweeping deal with AT&T; last year, overseen by Shell, the leading cable operator agreed to carry two new and unproven Fox-affiliated cable networks, National Geographic and the Health Network, on all its systems over time. AT&T; made that major concession to lock in long-term rights to Fox’s far more valuable broadcast network signals and its regional sports channels.

“Increasingly, cable operators want to deal across a range of issues, so they are striking partnerships rather than just agreements to carry a particular network,” Shell said.

“It’s less and less about selling cable channels and more and more about broadband,” Shell said, adding that News Corp. is trying to figure out interactive applications that will help cable operators sell advanced set-top boxes to exploit new technology. Fox Sports, for instance, is working with technology companies such as ACTV Inc. so viewers can click their remote controls for instant replays, sports scores and a variety of camera angles while watching games.

News Corp. is also looking at ways to bundle its cable in packages for advertisers. The company could soon align sports channels and television stations in the same region to more effectively compete for ad dollars with other media conglomerates. CBS, for one, is offering local packages that include billboards and radio and TV outlets.

Shell said he also will be concentrating on new channel launches. Aside from National Geographic, which Fox jointly owns with NBC, and the Health Network, which is controlled by Healtheon/WebMD, Fox is launching a new service tentatively called Cable Sports Gold. It will condense the news and college games airing on its regional sports services into a new channel that will be exclusive to cable.

“This will give them an answer to some of DirecTV’s sports offerings,” Shell said. Because it is a national service, DirecTV already carries most of Fox’s regional networks.

Shell said the local sales organization formed with the TV group could also support a host of other regional channels tailored for cable operators that might focus on traffic, news and sports.

“One advantage that cable has over satellite is that it is local,” Shell said. “We are uniquely positioned to help them because of the local marketing and sales organization we can build using our station group and regional sports operation.”


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