This article is part of a series about a legal threat sent to Crikey by Lachlan Murdoch, over an article Crikey published about the January 6 riots in the US. For the series introduction go here, and for the full series go here.
The Murdochs’ business model for Fox News is in trouble, at risk of being torn apart as global streaming wars destroy the cable delivery the company has relied on for the “carriage fee” revenues that made it so profitable.
Cable “cord-cutting” threatens the family media businesses in their North American base. But it’s echoing here in Australia, too, with the continuing slide of Foxtel.
As its sibling News Corp did with print newspapers, Fox has stumbled on a short-term solution: up the rates cable companies charge users. Short-term gain. Long-term pain. And it’s accelerating the pace as US households (Australians, too) are abandoning cable.
As a result, it’s attempting to pivot to direct-to-consumer streaming, simultaneously making them bound more tightly to the passions of its audience and, trapped in an echo chamber of its own making, less influential in expanding that audience.
More, streaming is a crowded space in the war for attention, what with Netflix and Disney on one side and YouTube and TikTok on the other.
Fox built its US success by being the highest-rating news channel with a passionate sticky-for-cable (read: older) demographic. That’s given it the power to clip the bundle at a higher rate than other news services like CNN or MSNBC.
Fox has a regular audience of about 2.2 million viewers. But whether they watch it or not, just about all of the 70-odd million US households with cable pay about $30 a year for having Fox in the bundle.
While its audience may be holding, cable is sliding — down from more than 80% of households in the pre-streaming days to about 60% now, and falling by between four and five million households every year.
In Australia, News Corp is both the content supplier (for news, through Sky) and the carrier, through its two-thirds ownership of the country’s pay-television monopoly, Foxtel. It’s seeing the same slide. The latest figures show household subscribers down by a third since 2019, dropping about 170,000 in the past year alone to 1.48 million of Australia’s 10 million residential households.
In the US, Fox has pivoted to direct-to-consumer streaming with Fox Nation. (Think of the name as sports marketing schtick applied to ethno-nationalism.) So far, it’s signed up about 1.5 million subscribers at about $AU100 a year, which is a strong conversion of its 2.2 million cable audience. Trouble is, even if it signed up all those cable watchers, it would need to charge about $1000 a head to make the same money it’s making out of clipping the cable charge.
In Australia, it’s tried the pivot to news streaming through Foxtel’s Flash. Launched about a year ago, it provides access to more than 25 news services: Australia’s Sky and Fox News, of course, but also the general news services available on Foxtel like CNN and the BBC.
Smart idea. Good execution. Failure in the roll-out. The take-up has been so low that the company hasn’t even included the figures in its latest report on subscriptions to the US Securities and Exchange Commission. At a guess, assume it’s significantly less than your typical “far-left internet gossip magazine”.
In the UK, News Corp is rolling out TalkTV (highlight: Piers Morgan, including an exclusive Trump interview) but it’s lagging other commercial news services, including direct right-wing streaming competitor GB News (also available through Flash).
The news streaming stumbles mark the third failure by News Corp/Fox to adapt to the 21st-century media landscape. It tried to get in on the ground floor of social media when it paid $US580 million for MySpace in 2005 before being overrun by Facebook and selling out six years later for $35 million.
In 2014, Fox attempted to position itself as the streaming entertainment giant when it pitched a takeover of Time Warner. After its bid was rejected, the Murdochs (or Rupert, at least) faced the reality of scale and swapped their entertainment assets for Disney shares in 2018.
(Those shares are now the bulk of the family’s wealth. So for the five children no longer working in the family’s media companies, count that a win.)
Meanwhile, Lachlan is left to work out just how news streaming can save Fox.
