Rupert Murdoch plays what-if with NBC Universal

Fox Business Network interviewed News Corp. Chairman Rupert Murdoch today (gee, wonder how they were able to book that one) and the media mogul acknowledged taking a look at General Electric's NBC Universal after word got out that Comcast was in talks to take control of the entertainment company.

"I thought it was interesting, but at that stage, Comcast was way, way too far down there," Murdoch said, adding, "I was late into the scene."

We have only a transcript, so it's hard to tell whether Murdoch was being witty or talking about the differences in valuations between broadcast and cable when he added that if he had done a deal, "I would have to sell off NBC, which would have been difficult, and MSNBC, which would not have been difficult."  We'd like to think that Murdoch was taking a shot at the liberal-leaning MSNBC, especially since there are no regulations on the books that would stop him from owning two cable news channels. 

Murdoch said he did not anticipate any major regulatory hurdles for NBC-Comcast, echoing a sentiment expressed yesterday by former News Corp. President Peter Chernin. Murdoch did say he expected some conditions to be put on a deal similar to those that were put on News Corp. when it acquired DirecTV. In that case, the concession was that it treat everybody equally when it came to selling its content. Requiring a company to treat everyone equally? Yeah, that sounds pretty extreme.

-- Joe Flint

Photo: News Corp. Chairman Rupert Murdoch with Fox Business Network's Alexis Glick

News Corp.'s top mouthpiece exiting

Gary Ginsberg, the communications chief for Rupert Murdoch's News Corp., is leaving after almost 11 years in the job.

Ginsberg, whose official title was executive vice president of global marketing and corporate affairs, will be replaced by the well-regarded Teri Everett. 

Although his job was corporate communications, Ginsberg cut a wide swath throughout the company. He had close ties to Murdoch and former News Corp. President Peter Chernin. He was, besides Chernin, the most visible Democrat in the company and his stint in the Clinton White House made him particularly valuable to the company on Capitol Hill.  For example, he used his political ties to help News Corp. when it was in an ugly battle with Nielsen over new measurement systems the ratings service wanted to implement that the media giant worried would adversely effect its TV ratings.

Ginsberg's relationship with the elite financial press also came in handy for Murdoch, particularly when News Corp. was buying the Wall Street Journal. He had tight relationships with many of the top editors at the paper that gave him a unique insight and access to the inner workings of the paper and made him a valuable resource for Murdoch during negotiations.

His departure was not a complete surprise and had been gossiped about both inside and outside the company for several months. While Ginsberg reported to both Murdoch and Chernin, he was seen as closer to the latter. Chernin left News Corp. earlier this year.

Whether Ginsberg's stature inside the company and with Murdoch was hurt by Michael Wolff's less-than-flattering Murdoch biography "The Man Who Owns The News"  will be what some are wondering. Wolff was given tremendous access to Murdoch and the inner workings of News Corp. for the book which when it came out caused headaches for Murdoch, Chernin and Fox News chief Roger Ailes among others.

Company insiders downplayed the idea that the Wolff book played any part in Ginsberg's exit and for what its worth, News Corp. said Ginsberg would consult for Murdoch after he leaves the company at the end of the year. 

-- Joe Flint

Fox Television Studios tries new model for network TV

When Emiliano Calemzuk was tapped by Peter Chernin to take over News Corp.'s Fox Television Studios, the media giant's boutique production house, the first thing he did was move its offices off the Fox lot in Century City and away from all the glitz and glamor to a bland building next to an old gas station on Santa Monica Blvd.

"I wanted to get out of the 'lot mentality,' said Calemzuk, referring to the fancy office and fresh flowers approach to entertainment. "We're here to do things differently."

By differently, he means cheaply. After cutting the staff of Fox Television Studios by almost half, he pulled the plug  on shows he didn't think would yield long-term success, such as the TNT drama "Saving Grace."

Fox Television Studios has had a good run as of late producing for cable, with the USA Network hits "Burn Notice" and "White Collar" to its credit. Both are done faster and cheaper than a show would cost on broadcast TV.

Now Calemzuk wants to reinvent producing for broadcast TV. Rather than make an expensive pilot for a network and hope it orders the show, he is partnering with international broadcasters for the bulk of production money and trying to get the networks to commit to 13 episodes right from the start. That way, he skips the pricey pilot competition and the networks don't pay as much because much of the money has been supplied abroad.

So far his track record is mixed. While he was able to get a couple of shows on the networks over the summer, they didn't stick around after 13 episodes. One problem was since the networks had little invested creatively in the shows, they didn't feel as strong a need to market and promote them.

Now Calemzuk is trying his foreign-first approach again but getting his U.S. partners more invested as well. If he is successful, other producers and networks will take note. If he's not, he says he still hasn't lost the money that goes down the drain under the traditional approach to making series.

For more on Fox Television Studios and Calemzuk, please see today's story in the Los Angeles Times.

-- Joe Flint

Photo: Fox Television Studios President Emiliano Calemzuk on the set of the NBC drama "Persons Unknown." Credit: Carlos Somonte.

News Corp.'s Chase Carey says there will be no last-minute bid on NBC Universal

News Corp. President and Chief Operating Officer Chase Carey said not to expect his boss, Chairman Rupert Murdoch, to make a last-minute bid on NBC Universal, whose parent General Electric Co. is in talks to sell control of the entertainment company to cable giant Comcast Corp.

"You're not going to see any midnight headlines coming from us," Carey told Fox Business Network's Neil Cavuto.

There has been speculation that News Corp. might make a play for NBC Universal. Carey said it was only natural to "kick the tires on anything like that" but made clear that that's as far as it went.

He also said he didn't think his predecessor, Peter Chernin, would end up working for Comcast if it were to succeed in acquiring control of NBC Universal.

"I would be surprised if Peter took that job," Carey said. "I don't think Peter is looking at this point to go to work for somebody."

Chernin, who left News Corp. earlier this year but remains tied to the media giant as a producer with a very lucrative deal, has been quietly consulting with Comcast, which has led to speculation that perhaps he would be in line for a big position there if the NBC Universal deal goes through.

One of the reasons Chernin stepped down was that he realized he would never ascend to the top job at News Corp. -- Murdoch has made it clear that the company will always be run by a member of his family. Comcast is run by Brian Roberts, whose father Ralph founded it in 1963.

-- Joe Flint

Photo: Chase Carey, News Corp.'s president and chief operating officer. Credit: Matthew Staver / Bloomberg

Scripps makes its travel plans, and they're not cheap

Scripps Networks Interactive has bought a majority stake in the Travel Channel in a deal that values the cable network at $975 million.

That price tag is sure to raise eyebrows in the industry. When Travel Channel parent Cox Communications first put the network on the  market, most analysts and industry experts thought it would fetch a price tag in the $600-million range. Though the channel has been growing in ratings in recent years and is in more than 90 million homes, it does not have any shows that regularly draw over 1 million viewers and is hardly a cash cow.

But you know what happened next. Rupert Murdoch's News Corp. jumped in and started kicking the tires and drove the price up. Then when it got too high for even them (which is a pretty good sign that something's out of whack here), they bailed. Under the terms of the deal, Scripps will have a 65% stake in the network. Cox will get $878 million in a cash payout and keep 35% of the network.

For Scripps, the channel makes sense because it already owns Home & Garden TV and a big chunk of the Food Network as well as other lifestyle channels. It will likely cut and merge a lot of the operations at Travel Channel to save on costs. Also, Scripps will probably be able to leverage its current channels to boost what cable and satellite operators pay to carry the Travel Channel.

-- Joe Flint

Previous Posts:

News Corp. cuts travel budget

News Corp. in lead for Travel Channel but it could be expensive bid

Cox's Travel Channel on road and searching for a buyer

'Ice Age' heats up News Corp.'s earnings, but overall revenues experience cooling

A strong summer box office, a healthy cable business and strong book sales helped News Corp. report an 11% increase in net income, helping to offset decreases in the media conglomerate's broadcast television, newspaper and Internet businesses.

The company reported net income of $571 million, or 22 cents a share, in its fiscal first quarter, compared with $515 million, or 20 cents, a year earlier. News Corp. said the year-over-year gains reflected higher operating profit and equity contributions due to the absence of a a $422-million write-down of its investment in satellite broadcaster Sky Deutschland AG (formerly known as Premiere AG).

Revenue for the quarter ended Sept. 30 fell to $7.2 billion, down 4% from $7.5 billion. 

Filmed entertainment posed an operating income of $391 million, compared with $251 million in the same period a year earlier, thanks to the box-office performance of "Ice Age: Dawn of the Dinosaurs," which it said is the highest international-grossing film of all time and generated more than $880 million in worldwide ticket sales. The results also include the home entertainment release of "X-Men Origins: Wolverine."

The television group reported a 26% drop in operating income to $38 million, from $45 million a year earlier, reflecting a drop in automotive, movie and political advertising. The cable networks, however, experienced a 41% jump in operating income to $495 million, from $350 million in the comparable period a year earlier. Fox News Channel achieved its highest quarterly profit and increased its operating income 79% compared with a year ago.

Strong sales of Maurice Sendak's classic illustrated children's book, "Where the Wild Things Are," and of L.J. Smith's "The Vampire Diaries" helped fuel HarperCollins' operating income, which rose to $20 million from $3 million a year earlier.

Update (8:25 AM, Nov. 5): For more on News Corp. earnings, including a shift in strategy at MySpace, see the story in today's Times.

-- Dawn C. Chmielewski

Networks preparing to battle cable and maybe their own affiliates over retransmission consent

In the search for new revenue streams, the broadcast networks are going to their affiliates with their hands held out or their guns drawn, depending on one's viewpoint.

Specifically, if their affiliates are getting money from cable and satellite operators in return for carrying their signal, the networks want a cut. Today, the CEO of Belo Corp., which owns a handful of ABC affiliates, said that Walt Disney-owned network had approached them about receiving a portion of any revenue it is getting from cable and satellite operators. Belo CEO Dunia Shive declined to say how much ABC was asking for but said it wasn't "100%." Well that's nice of them. The news was first reported by TVNewsCheck, a well-regarded industry website. Belo currently gets more than $40 million annually from cable operators for their signals.

The industry lingo for payments from a cable or satellite operator for a broadcaster's TV signal is "retransmission consent." Yes, that phrase will make your eyes glaze over, but it's actually a very important issue for broadcasters and cable operators. In a nutshell, broadcasters want cable operators to pay them to carry their feeds just like they already pay cable channels such as ESPN and TNT. Cable operators have always argued that since broadcast signals are available free over the air, why should they pay.

But momentum seems to be swinging toward the broadcasters on this one. Whenever one of these battles reaches a stalemate and a cable operator stops carrying a broadcaster, the public outcry is usually vented toward the distributor, not the program supplier.

News Corp. cuts travel budget

After jumping in the race to land the Travel Channel and no doubt driving up the price, News Corp. is now pulling out, people close to the situation say.

To be sure, the bidding for Travel Channel has gotten out of hand. When Cox Communications said it was putting the cable network on the block, most analysts and industry observers thought, at most, it would fetch between $600 million and $700 million. Now it is about $1 billion. That's just crazy for a network that doesn't have any shows that regularly average more than 1 million viewers.

With News Corp. backing off, Scripps Network, which owns Home & Garden Network and a big chunk of Food Network and Fine Living, is now in the driver's seat. Obviously Travel Channel is a good fit for them but with News Corp. out of the picture are they now going to go back to Cox to try to lower the price? Other bidders include a private equity consortium led by Providence Equity Partners.

While there is lots of room for growth at Travel, both in terms of ratings and the bottom line (its subscriber fees are a lowly 6 cents per-month, per-subscriber, and it has a net operating revenue of only $186 million, according to SNL Kagan) at that price it is a pretty risky bet. Sure, whoever buys it will immediately lay off half the staff, but the new owner will also have to pump in a lot of money to beef up the programming.

If Rupert Murdoch and News Corp., which isn't shy about spending money on risky gambles (MySpace, Wall Street Journal, etc.) says $1 billion for the Travel Channel is too much then it is too much.

Of course, don't be surprised if this is all a smoke screen and Murdoch jumps back in. Nothing like fear of not getting something to lead to an irrational decision.

-- Joe Flint

Previous posts:

News Corp. in lead for Travel Channel but it could be expensive bid

Cox's Travel Channel on road and searching for a buyer

Photo: News Corp. Chairman Rupert Murdoch and wife Wendi at Sun Valley mogul gathering. Credit: Douglas C. Pizac / Associated Press

News Corp. mulls the Chernin factor

Peter Chernin is not flying the News Corp. jet into Philly.

But he probably could if he wanted to. 

The veteran movie and TV executive, who stepped down as president and chief operating officer of the News Corp. media empire this summer, has spent the last few months as a key, behind-the-scenes adviser on cable giant Comcast Corp.’s negotiations to take control of NBC Universal. Revelations this week of Chernin’s involvement in the proposed deal has prompted speculation that the prominent and savvy executive could emerge as a powerful player at NBC Universal if the Philadelphia-based Comcast succeeds with its bid.

Chernin's new role is intriguing because of his well-known desire to head his own enterprise -- one where he is firmly in charge. The situation also is complicated by Chernin’s ongoing relationship with his old boss, Rupert Murdoch, and News Corp.

Chernin's work with Comcast does not violate his current agreement and production deal with Murdoch. Chernin has spent the last few months forming his own movie and television production company – a venture financed by News Corp. His six-year contract requires Fox to pay his new TV and film production firm’s overhead and greenlight at least two movies a year. Fox also has first crack at any TV shows that he produces. As part of Chernin's exit package, which took effect in July, he continues to enjoy an office on the Fox lot and the use of the News Corp. jet.

For now, Chernin also is free to help Comcast design a company that could become a more potent competitor to News Corp.  "Basically, News Corp. is a little bit out in the cold on this one," said Clinton Korver, a partner at the Palo Alto-based investment firm Crescendo Venture Management and co-author of the book "Ethics for the Real World," published by Harvard Business Press. 

But because of Chernin's production deal with Fox, taking a bigger role within a Comcast-run NBC Universal could become thorny. Interestingly, two of Chernin's senior staffers are also former NBC Universal executives. Read the full story in today's Los Angeles Times.

-- Meg James

Photo: Peter Chernin. Credit: Scott Eells / Bloomberg News

News Corp. closing in on Travel Channel, but it may be an expensive trip

Apparently the cost of travel really is on the rise.

News Corp. has emerged as the leading contender to buy the Travel Channel, the cable network that Cox Communications put on the block, according to a report in today's Financial Times. That News Corp. is interested in the Travel Channel isn't surprising, but the price tag being tossed around for the network may raise some eyebrows.

Originally, when the channel went on the block, industry scuttlebutt was that it might fetch north of $600 million. Now the speculation is that it will top $800 million and could even reach $900 million. Other bidders for the network include Scripps Network and a private equity consortium led by Providence Equity Partners. Time Warner's Turner Broadcasting has glanced at the channel but is not actively looking, and NBC Universal was interested but perhaps has bigger things on its plate these days between trying to do a deal with Comcast Corp. and figure out what Vivendi is going to do with its 20% stake in the company.

Does $800 million sound a little steep for the Travel Channel? Well, yes. But Rupert Murdoch's News Corp. certainly doesn't mind overpaying for assets ($5 billion for the Wall Street Journal, $580 million for MySpace). In this case, the scenario being discussed would have News Corp. acquire the channel through its partnership with National Geographic, according to the FT report. The two co-own the National Geographic Channel and a soon-to-be-launched spinoff channel.

News Corp. is probably betting that it can cut costs from the channel and boost what cable and satellite operators pay for it. Right now, according to Kagan Media, Travel Channel charges about 6 cents per subscriber. To give you an example of how out of whack that is, Kagan says Fox Business, which won't disclose its ratings because, well, you figure it out, gets 11 cents per subscriber and the little-watched Fox Movie Channel gets 16 cents per subscriber. See what having a big corporate parent can get you? The more networks one owns, the better negotiating position one has with distributors.

The Travel Channel has done a decent job of improving its ratings over the last few years. Its audience is small but on the rise. Its biggest show is Anthony Bourdain's "No Reservations," which has nearly a million viewers.

The logic behind News Corp.'s desire for the Travel Channel is similar to what is motivating Comcast's move to take control of NBC Universal. Cable networks are cash cows and, because they get subscriber fees and advertising revenue, are better positioned to weather economic uncertainty.

That said, one day distributors may actually find a way to start tying the fees they pay to carry channels  to ratings performance, and then it'll be a whole new ball game.

-- Joe Flint

Previous posts: Cox's Travel Channel on road and searching for a buyer

Photo: Rupert Murdoch. Credit: Jemal Countess/Getty Images