Fox’s Lachlan Murdoch says ‘we have the required scale’ to compete in a changing media world
Once a year, Rupert Murdoch and his sons address such corporate housekeeping chores as overseeing the reelection of 21st Century Fox’s board of directors, selecting an accounting firm and fielding questions from investors about the company’s direction.
This year, there was no shortage of topics to rivet those who attended the company’s annual meeting Wednesday morning at the Fox lot in Los Angeles. Would Fox sell key assets to the Walt Disney Co. or some other company? Would Fox win the approval for its $15-billion bid to buy European pay-TV service Sky? Would the corporate brass comment on the sexual harassment scandal that has unfolded for more than a year at Fox News in New York?
But the family that is famous for its stable of news outlets — including Fox News, the Wall Street Journal and other papers that circle the globe — succeeded Wednesday by not making any news and instead painting an upbeat picture of the company’s prospects.
“In a universe of infinite choices, we deliver what audiences want,” Executive Chairman Rupert Murdoch said during the carefully choreographed annual shareholders meeting in the Zanuck Theater at Fox Studios. “Across entertainment, sports and news, we produce high-quality output that sets us apart from our peers.”
Fox’s 2017 annual ritual lasted just 26 minutes. There was scant mention of Walt Disney Co.’s approach to the Murdoch family in recent months to inquire about buying key Fox properties, including the Los Angeles-based movie and television studios, cable TV channels FX and National Geographic, and Fox’s international TV operations.
Such a sale would have been unimaginable a few years ago, but rapid shifts in consumer behavior have forced the Murdochs, who control Fox with 39% of the voting shares, to review their strategy. Although talks with Disney have broken down over price, analysts have said they would not be surprised if other bidders such as Apple, Amazon or Google emerged.
The topic was clearly on the minds of some shareholders.
“It seems like the tech giants are going to rule the world, and we are all going to get crushed by it — even our company,” said John Lindsay, one of two shareholders who spoke during the meeting. He said that when he read that Fox might sell key businesses, “I was shocked, then I thought maybe it was a good idea. How do we keep up with Facebook, Amazon, Google — even Netflix? Can you give us more assurance that we can do this?”
“Sure,” said Executive Chairman Lachlan Murdoch, the oldest son. “In a world where people have more choices than the human race has ever had before to access any piece of content at their own discretion … we have invested in our core brands and in the content that feeds those core brands.”
Lachlan Murdoch also dismissed the notion that Fox is too small to compete in a rapidly consolidating media landscape.
“Sub-scale players are finding it difficult to leverage their position onto new and emerging video platforms,” he said. “Let me be very clear: We are not in that category. We have the required scale to continue to both execute on our aggressive growth strategy and deliver significant increased returns to shareholders.”
Fox’s board of directors, which includes 12 men and one woman, were reelected, according to Lachlan Murdoch, who announced the early vote returns toward the end of the meeting. A proposal by the Nathan Cummings Foundation to abolish Fox’s system of having two classes of stock, which keeps the Murdoch family firmly in control, was defeated by “a majority vote,” Lachlan Murdoch said.
Helped by its broadcast of the Super Bowl, Fox produced 4% higher revenue to $28.5 billion in its fiscal 2017, which ended June 30, compared with the year-earlier period. Fox’s widely traded A shares closed up about 2.5% to $28.73. The company’s shares are up nearly 15% since the news leaked of the Disney talks.
After the meeting, Lachlan Murdoch met with Lindsay, the shareholder, for a few minutes to reinforce that the Murdochs weren’t poised to flee the business.
“They seem gung-ho to continue, but if someone came along and offered them a lot of money, who knows? It’s fluid,” Lindsay told The Times as Fox security officials began shooing people from the auditorium.
“Netflix, Amazon and Google might destroy everything,” said the Australian property developer who now lives in New York. “There’s no reason to think that these guys won’t get destroyed too.”
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