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Fox’s Future: Here Are Four Different Ways The Network Might Survive or Disappear If the Murdochs Sell to Disney

If 21st Century Fox sells its production units and cable networks, that leaves the Fox network hanging. But who wants a broadcast outlet in 2017?

As usual, ‘The Simpsons’ predicted this back in Season 10.

Fox

In the mid-1980s, Rupert Murdoch had just purchased 20th Century Fox and Metromedia’s TV stations in the top U.S. markets, giving him the means to launch a fourth broadcast network. He strung together a patchwork of low-rated UHF affiliates across the rest of the country, and the Fox network launched in 1986 with “The Late Show Starring Joan Rivers.”

Scripted fare followed, including “Married with Children” and “The Tracey Ullman Show” (which, of course, would beget the still-running “The Simpsons”). But much of the industry guffawed: NBC boss Brandon Tartikoff even dubbed it the “coat hanger network.” Early ratings were slow, and affiliates threatened to revolt (indeed, some dropped out).

But Fox eventually found a lifeline in 1994, when it nabbed NFL broadcast rights. From there, it upgraded affiliates and graduated into a seven-night-a-week programmer boasting a younger, more desirable demographic for advertisers. By the 2000s, “American Idol” made Fox the No. 1 network.

The rags-to-riches tale of Fox, however, may soon encounter another twist. As first reported this week by CNBC, the Murdochs (with sons James and Lachlan now at the helm) are mulling a major sale of some of their 21st Century Fox properties. As floated, past discussions with Disney have involved selling production assets such as the 20th Century Fox film studio and 20th Century Fox TV, as well as networks like FX and National Geographic.

Not on the table, at least in that potential sale: Fox Broadcasting (including the network and its owned stations), Fox News Channel and Fox Sports. Fox Broadcasting isn’t included partly because of FCC rules: A conglomerate can’t own more than one of the four major broadcast networks. (In this age of deregulation, it’s one of the few cross-ownership bans still standing.)

But the Fox network also isn’t on the table because, as the broadcast industry continues its fade, Disney wouldn’t have the need for two broadcast networks anyway. There has even been talk over the years that it might want to shed its ABC-owned TV stations, just as it did a few years ago with radio.

That leaves Fox holding the network, and perhaps it’s too hard to let it go after three decades, particularly when it’s still billing over $1 billion annually in the advertising upfront marketplace. But in an age when networks are hungry to own most or all of their programs, splitting Fox from 20th Century Fox TV seems antithetical. Without the studio, Fox becomes a very different programming service.

“It’s impossible for me to imagine the Fox Broadcasting Company continuing on,” said one executive familiar with the company. “Maybe they have to continue going until they sell the stations. There’s no long-term prospect for broadcasting. It’s going to come down to whether or not there’s value in maintaining the stations than selling them.”

Inside 21st Century Fox, the silence is deafening, leading many insiders to suspect that something is indeed up. The Murdochs have been plotting the future for some time. In 2014, they made a play for Warner Bros. in the hope of bulking up.

“When that didn’t happen, the writing was on the wall,” said one industry exec. “They couldn’t scale up. They almost have no choice. This may be ‘go smart or go home.'”

Rupert Murdoch Fox chairman Rupert Murdoch gestures during a New York news conference on . Fox, embroiled in a dispute over whether it misled federal regulators when it set out to build a new television network a decade ago, insisted on Monday that it had clearly laid out its ownership structure at the timeRupert Murdoch, Washington, USA

Rupert Murdoch in 1995

Clark Jones/AP/REX/Shutterstock

Here are a few options for the Fox network if the Murdochs do sell off their production units:

Keep Fox, but program it with news and sports fare produced by Fox News and Fox Sports.

If they can’t get into the direct-to-consumer game, the Murdochs may see their future in two verticals: news and sports.

“The two program forms that consumers watch live and are going to continue to watch with commercial breaks are news and sports,” one exec said. “Advertisers are going to have a real restriction in terms of options. Maybe by tripling down on those two verticals they’ll be able to maintain ad-supported services that generate ad fees and even go over-the-top. I think it’s a smart play.”

The stations and Fox network could remain a secondary part of that strategy, especially if the Murdochs really want to hold on to (or can’t unload) those 28 TV stations. A bare-bones “Fox Lite” network could continue to program them with something in primetime — as well as other affiliates that still need something to fill their time.

The new Fox would likely emulate what the company already does with its MyNetworkTV, a programming service it airs on many of Fox’s former UPN stations (consisting mostly of syndicated repeats).

Unlike the Big 3 networks, Fox only has two hours a night to program, making it easier to fill up the week. Fox Lite could continue to air NFL football on Sundays, and perhaps hold on to a handful of legacy programs like “The Simpsons,” but fill out its schedule with news (“Fox & Friends” in primetime!) and sports shows (NFL and MLB reality shows produced by FS1), movies, and loads of cheap reality TV (plenty of indie reality producers still out there willing to get on primetime for a song). Even the Fox-owned stations could produce some of that programing: That’s where “Cops” originated, after all.

Fox Lite wouldn’t get the ratings like the old Fox (well, unless they stumbled upon another “American Idol”-like monster reality hit), but the parent company would save money by cutting out most programming and marketing costs, plus eliminating traditional network overhead.

Many of its stronger affiliates would leave, either to another major broadcast network, or even to one of the multitudes of digital networks that have popped up in recent years (such as MeTV and Bounce). Those that remain would likely be given more local ad time to counteract plummeting ratings.

Sell Fox and the stations to another entity.

This is a bit more problematic, because stations aren’t as valuable as they once were. Beyond Sinclair itching to get bigger by buying Tribune, there isn’t the hunger for that kind of distribution anymore.

In the age of Netflix and Hulu, the need for a broadcast pipeline is a bit last decade. If Disney is kicking the tires on 20th Century Fox, it’s to bulk up more content for the already planned streaming services, not to produce more shows for ABC.

But nonetheless, there may be a few indies out there still looking for a more mainstream way to monetize more production — in particular, Sony, which still doesn’t have a network to call its own, beyond its Crackle streaming service. (Lionsgate at least now has Starz to park some of its programs).

Whether a Fox-branded network would still be valuable to Sony in an age when distribution is moving to digital is a big question. But Sony Pictures CEO Tony Vinciquerra knows the Fox network business perhaps better than anyone, having led Fox Networks Group for a decade.

The other major indie studio, Warner Bros., is in the process of bulking up through the AT&T/Time Warner merger (unless that’s derailed by the government), making a broadcast network seemingly unnecessary. “They have all the distribution they need,” an exec said.

Depending on the price, another suitor may come from an unexpected place, if the price is right. Byron Allen has been a master at making money by producing cheap programming for obscure outlets; maybe he’s eager, with a few investors, to reinvent Fox. Perhaps the aforementioned Sinclair would like to be more in control of its own primetime destiny, and simply take over Fox (just as past station groups once owned networks — Capital Cities with ABC, and Chris-Craft with UPN).

Rupert Murdoch Rupert Murdoch, right, chief executive officer of News International and Michael D. Eisner, chairman and chief executive officer of the Walt Disney Company, shake hands at a news conference at Channel 5 television in New York on . The two companies have agreed to a joint venture that will provide Sky Movies, a new feature film and entertainment service, and the Disney Channel to the United Kingdom and IrelandRupert Murdoch, New York, USA

Rupert Murdoch and then-Disney boss Michael Eisner in 1988

Lederhandler/AP/REX/Shutterstock

Shut it down.

What? Given the history of the network, and the amount of advertising dollars in play, this seems unlikely. But these are revolutionary times in TV, and if the Murdochs were to sell its production units, what would be the point of keeping Fox or its stations? Fox News would be the profit center of the remaining company, and between that and Fox Sports, there wouldn’t be much reason to keep in the broadcast game, other than for nostalgia’s sake.

As the business changes, prognosticators have been suggesting for years that it’s only a matter of time before at least one of the broadcast networks folded.

“These guys are not in the business of limping,” one observer said. “Whatever they do will be smart and aggressive. The world may have finally passed them by.”

Wait for the winds to change, and a better scenario to unfold.

In these crazy times, fortunes can always quickly flip. Perhaps Apple decides to swoop in and buy the entire company before Disney. (Although the question would then switch to, “Why would Apple want to keep the Fox network going?”)

And the biggest question of them all: If the AT&T/Time Warner merger falls apart thanks to Trump administration meddling, would the Murdochs be there to resurrect their 2014 bid?

Inside Fox, execs admit there’s not much to do but wait and see how any of this plays out. Just about everyone employed at a broadcast network, just like at a newspaper, magazine, record label or any other industry in its twilight, knows that they’re working on borrowed time.

On this week’s edition of KCRW’s “Screengrab,” we discussed the future of Fox and more:

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