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Murdoch: MVPD Out-of-Market Streaming ‘Inevitable’

As Hulu readies its expanded live video streaming service next year and other distributors eye following suit, small, niche-oriented pay TV networks are living on borrowed time, 21st Century Fox CEO James Murdoch told an industry audience Wednesday.

“We think that most of the big MVPDs in the U.S. will probably seek to go out-of-market, competing with each other on an over-the-top basis,” Murdoch said. “They all deny that, but I think it’s pretty inevitable. That will open up a whole new range of competition downstream for ultimately what customers are buying, which is content.”   

Hulu – owned by Fox, the Walt Disney Co. and Comcast – announced plans to launch its live streaming package next year in May and Murdoch, speaking at the Sanford Bernstein Strategic Decisions conference in New York, said it is only a matter of time before traditional MVPDs begin to toy with the idea of offering service outside of their footprints. In the meantime, Murdoch said the “hundreds” of niche networks that were created as “incremental spin-offs” by programmers over the years could find themselves in the lurch.

He added that although MVPDs all deny plans to move outside of footprint – Comcast chairman and CEO Brian Roberts did just that during May’s INTX show in Boston – it will happen eventually.

Fox, he said, is focusing on its core brands and pointed to past efforts to pare down its portfolio, jettisoning networks like Fox Reality Channel, Fuel, and Fox Soccer Channel. (Those networks were not eliminated, though: Fox Reality became Nat Geo Wild; Fuel became Fox Sports 2 and Fox Soccer became FXX. Fox also reformatted Speed into Fox Sports 1.)

“In a streaming environment and more importantly an on-demand environment, it really becomes a question of how do you focus on the things that are going to matter for customer over the long term, how do you make sure you’re not just in the game of taking up space on the dial and getting incremental affiliate fees,” Murdoch said.

As for Hulu, which announced plans to offer live cable and broadcast network feeds online earlier in May, Murdoch said all the details haven’t been ironed out just yet. While the Hulu service could be perceived as a competitor to distributors, Murdoch sees it as another vehicle for content.

"We have always really succeeded when we have had more competition downstream for our products. We see that as very much the same situation," Murdoch said, adding that cable operators at first objected when programmers began selling content to satellite TV and telco TV companies. “We see this as another wave of distribution technology.”