Media deals are having a moment and now a leading player, Fox, is looking to jump in as CEO Lachlan Murdoch told investors at a conference today that the company will train its solid balance sheet on M&A.
That’s an unusual statement. CEOs are always asked this but tend to say – true or not — that they like the hand they have and would rather invest in growing existing businesses.
It was towards the end of the session and there were no follow-up questions or potential targets named at the Goldman Sachs media conference after an analyst asked the chief executive how he sees the company evolving in the next three to four years. The rather painful progress of the Discovery-Warner Media merger and Paramount’s recent deal to combine with Skydance have been very much in the news. Fox shares are trading at about $37 with a market capitalization of $17.7 billion – above Warner Bros. Discovery’s $17.1 billion market cap and Paramount Global’s $7.15 billion.
“We like our strategy. We like being very focused. So we’ll continue to do that. We’ll continue to engage with our audiences, be it in news or sports, around live content. You won’t see us pivoting to entertainment, for example. But we do have the best [or] one of the best balance sheets in the business. So while we’ll invest organically in things like Tubi, with investment coming down every year, it’s a modest investment compared to what others have spent in streaming. We’ll continue to invest organically in business like that, which we think have a tremendous future. But we’ll also use our balance sheet increasingly, I think for M&A as we go forward.”
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It’s not clear what Fox will go for. He said the parent of Fox News, Fox Sports and Fox Television, will exercise its option to buy 18% of sports betting platform FanDuel by 2030 (when the options expires) and has started the licensing approval process with state regulators.
Fox will not bulk up on linear general entertainment linear – which Rupert Murdoch sold to Disney in 2019 — beyond what it has with the Fox network and stations. As cord cutting eats into affiliate fees, “it’s hard. You are like a gerbil running on the spinning wheel. But we are running very fast, we are very fast gerbils,” he said.
He also weighed in on Venu, the streaming sports JV a judge blocked from launching. An expedited hearing for the parties involved including partners Disney and Warner Bros. Discovery, and Fubu, which sued them all and achieved a temporary injunction, is set for Thursday.
“We were ready to launch Venu a few weeks ago until we were injuncted and not allowed to” he said of the service designed for cord cutters or so-called “cord nevers”. He thinks people misunderstand Venu, which is nothing like a channel package. Subscribers won’t even see channel brands as the service is marketed but will search by their favorite sport, he said. Fox remains “very excited to launch it.”
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