Chase Carey, News Corp.’s COO, wants a dual revenue stream for his ad supported properties like FOX’s broadcast network and Hulu.
It’s been made clear in the earnings reports from media companies that two revenue streams — one from ads, and one from affiliate fees — are the way to go.
Just look at the difference between News Corp’s broadcast and cable division.
In the last quarter, News Corp. had operating income in its television (broadcast) division drop to $38 million from $83 million the year prior. Meanwhile its cable network programming had operating income of $495 million, up from $350 million a year ago.
The desparity is thanks in part to affiliate fees which kick up year after year.
Not having affiliate fees to back broadcast ad revenues “is like fighting with one hand tied behind your back,” says Carey.
He made a similar point when speaking about subscriptions on Hulu. He said: “Hulu will always have its core which is free, but we have to develop a dual revenue stream.”
Carey spoke at the Dow Jones Money and Media conference. Here’s a few other points he made:
- The Comcast-NBC deal makes sense for Comcast. There’s real synergies, real opportunities, it’s smartly structured, and Comcast gets an entry into unique content franchises. There will be fairly significant regulatory baggage
- On the future of cable channel expansion: There is less value to the 201st channel, so make the channels as strong as you can. People will still be building new channels that drive to new levels of success, but you need to focus them.
- On DVR: Not as many people skip ads as you think.
- DVDs will not die. Sales of DVDs are falling, but rentals are growing, Blue Ray growing, video on demand is growing, in aggregate though it’s declining. I think the future moves to electronic, VOD. Electronic grows as DVD matures….People will gravitate to certain things like DVD sets.
- On MySpace: It will build the experience around key content strengths, right now is music.
- TV Everywhere: I think it’s a good important step, largely defensive, making an add-on, not one that undermines it. It’s important we figure out how we make new experiences and add on experiences,
- Why did you sell part of the Dow Jones index? It’s not at the heart of what we do. It’s a good franchise, but it’s not the heart of our business.
- Are you talking to MGM? “Talking? We talk to everyone, we talk to anyone, wouldn’t be doing our job if we weren’t talking to people.” He says he’s happy with the current relationship.