James Murdoch not ready to ditch cable TV for Internet just yet

While 21st Century Fox Inc.’s co-chief operating officer, James Murdoch, is enthusiastic about the dynamic future of television, he’s not ready to give up on the established profit machines in the business.

Appearing Tuesday morning at the 42nd annual Global Media and Communications Conference, Murdoch said he could envision his company’s Fox channels distributed “over-the-top” to consumers via the Internet. But the advancement of that technology shouldn’t come at the expense of disrupting traditional distribution over cable and satellite systems.

“I don’t think you have to choose between the two,” Murdoch said.

The corporate will to remain in the over-the-air television business will be tested by the federal government’s game-changing plan to buy broadcast TV stations’ spectrum to create more capacity for the rapidly growing mobile broadband business. Murdoch will watch how those spectrum auctions go before participating — which could mean taking TV stations off the air.

“If it makes sense to broadcast over wires then we’ll do it,” he said. “But there are many unknowns.”

Murdoch added that the over-the-air local TV station business currently “is a good one for us right now. It’s not just the NFL. It’s local news. It’s performing pretty well.” Fox also uses its local stations to leverage retransmission consent fees from cable and satellite operators.

However, when upstart tech company Aereo sold broadcast channels in a package to subscribers, Fox was one of the loudest saber-rattlers threatening to pull its signal from the airwaves and become a cable-only channel if the courts did not deem the service illegal (a Supreme Court ruling effectively shut Aereo down).

While Murdoch treads carefully when discussing the future, he’s clear-eyed about the present challenges at 21th Century Fox. The company recently put its television studio co-chiefs, Gary Newman and Dana Walden, in charge of the Fox Television Group, which has experienced a prime-time ratings collapse over the last two seasons due to aging hits and a paucity of new show successes. “We have to give that time to bear fruit,” he said.

Murdoch also asked for patience in the development of the national sports cable channel FoxSports1, launched in August 2013. While the channel has added bigger events, such as the Major League Baseball playoffs this past season, it has yet to become an automatic destination for TV sports fans that grew up with ESPN. “The challenge is not just the live programming,” he said. “It’s how you create habits.”

No question-and-answer session with the son of News Corp.Executive Chairman Rupert Murdoch — now 83 — can pass without a query about succession. James Murdoch did not dish beyond emphasizing that the company has “a deep and broad management team across the board,” citing himself, co-Chief Operating Officer Chase Carey and Chief Financial Officer John Nallen. “We’ve got a lot of options,” Murdoch said.