Murdoch maneuvers

News Corp. seeks Chris-Craft re-up, while coveting a slice of UPN

By Steve McClellan -- Broadcasting & Cable, 11/20/2000

Though not involved in the negotiations directly, News Corp. has asked Chris-Craft to renew its station-affiliation agreements with UPN, News. Corp. Chairman Rupert Murdoch said-and he acknowledged he might like to own a chunk of the littlest weblet, too.

Separately, on the advertising front, Murdoch's message to FOX shareholders at last week's FOX Entertainment Group annual meeting was, in effect, just wait'til next year.

As other major network executives have noted in the past month, Murdoch said that the TV ad market is now soft and will remain so for the rest of the year, due largely to the disappearance of dotcom companies and the end of the Olympics, which sucked gobs of money out of the scatter ad market.

But if the economy holds up, he said, FOX expects the market to bounce back, giving the company a "solid year, if not a boom year," in 2001.

Murdoch confirmed that FOX has an interest in a possible equity stake in UPN, although he said no current talks along those lines are ongoing and probably wouldn't rev up until Fox's acquisition of Chris-Craft is completed. That's expected in second quarter 2001.

"It's certainly something we'd discuss with them," Murdoch said, "but we haven't made up our own minds about it."

But that issue aside, he said that, if FOX ends up with a bunch of UPN affiliates via Chris-Craft, "we'll be very active and supportive of that network in every way."

Murdoch's comments on UPN echoed comments made to analysts a week earlier, whom he told, "We'd be very happy for the Chris-Craft stations to remain members of UPN at least for the foreseeable future." Under the acquisition agreement, Chris-Craft has the right to re-up with UPN for another five years, said FOX general counsel Arthur Siskind.

News Corp. has received a second request for more information from the U.S. Department of Justice, which is conducting an antitrust review of the proposed Chris-Craft deal. Both companies said that they intend to "respond promptly" and don't think it will delay closing.

Otherwise, Murdoch boasted that, in October, FOX News Channel reached profitability for the first time, 19 months ahead of its own projections. But he admitted to "frustration and disappointment" with the slow ratings turnaround at FOX Family, the cable network co-owned with Saban Entertainment.

Still, things could be worse. That network is generating operating profits of about $150 million annually (split equally with Saban), Murdoch said. But the company believes that number could be doubled in the next two or three years.

The key is better programming, and FOX Family has been acquiring syndicated shows, like The WB hit 7th Heaven, which should help, FOX executives said. They're also considering adding a weekly Major League Baseball game. Under its new six-year deal with Major League Baseball, FOX has the right to put two games per week on cable. It also has the right to sublicense games to a cable network outside of FOX, as well as the right to sublicense the first round of division playoffs, said News Corp. President Peter Chernin.

Asked if FOX would try to tap its broadcast affiliates for some financial help on big sports-rights packages like NASCAR or Major League Baseball, Murdoch said it is unlikely. Unless, that is, those rights fees grow to the magnitude of those charged by the National Football League. "Then I'm sure we'd approach them."

As for the advertising market, Murdoch said, "There's a lot of sorting out going on" in the dotcom world. But, after the shake out is complete, he expects that surviving companies will be back in the TV ad market to reach consumers.

Murdoch also said FOX believes some big advertisers are "holding back to see if they can negotiate better rates."

Similarly, last week, Disney President Robert Iger said the fourth-quarter scatter market was soft, noting that prices were lower than rates agreed to during the upfront market last spring. Still, Iger too expects the market to bounce back after the first of the year.

Several weeks ago, Viacom President Mel Karmazin downplayed the notion of significant fourth-quarter softness. "The advertising business is great," he said, though acknowledging that daytime is "a little softer" than the other dayparts.