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Tony V. on Rice, Hill and Fox-TWC Deal

News Corp.'s TV operation has made more news in the first two weeks of 2010 than many companies do in a year. The fortnight started with its landmark retransmission consent deal with Time Warner Cable. It concluded with the restructuring of the upper echelons of its TV executive ranks; Fox expressing interest in courting Conan O'Brien, who publicly rejected NBC's plan to move The Tonight Show to midnight; a face-off with the FCC in court in its profanity case; kicking off the ninth season of American Idol; and setting plans for Simon Cowell to wrap his Idol run and launch The X Factor next year.

News Corp.'s man in charge of all things television, Fox Networks Group Chairman and CEO Tony Vinciquerra, spoke with B&C Executive Editor Melissa Grego about how he expects the company to continue to claim retrans and advertising wins, and why the new executive structure will “hyperdrive” News Corp.'s business. An edited transcript follows.

Earlier this month, you made a landmark retransmission consent deal with Time Warner Cable. News Corp. was asking for $1 per sub for Fox-owned stations and got close, according to reports and sources, with a deal that escalates over five years to 75 cents. Can you confirm the terms?

I won't comment on terms except to say it was a seminal moment in the evolution of broadcast TV, getting this deal and others [with Bright House and AT&T] done at the same time. We were very happy with the result.

Time Warner claimed in an FCC filing that Fox is “hijacking” retrans by getting involved in its affiliates' negotiations. How is Fox working with their affiliates on retrans?

I think the hyperbole that gets out to the public through these negotiations is unfortunate. We're not hijacking anything. We're simply following the agreement we have with our affiliates in that we have the right to approve their retransmission agreements. We have contractual arrangements with our affiliates, and these contracts have been reviewed by the FCC. I'm not concerned that there's anything untoward here.

What's the next step in your retrans evolution?

We'll continue to engage with our partner satellite, cable and telephone companies over the next two to three years, and hope to replicate the same kind of jointly successful deals we made with Time Warner Cable, Bright House and AT&T.

You just restructured the TV organization at News Corp., consolidating sports under David Hill and entertainment under Peter Rice. What is the aim of this structure?

It's to facilitate conversations in the various genres. We have the nonfiction group, which is Nat Geo, soon-to-be Nat Geo Wild and extensions of that business [managed by David Haslingden, Global CEO of National Geographic Channels, who also reports to Vinciquerra]. Then we have the entertainment channels, which are Fox, FX, Fox Movie Channel; then all the sports businesses.

To viewers, it doesn't make any difference whether the content is delivered via satellite, via terrestrial, via fiber optic. They're channels. So what we're doing is looking at these businesses—whether they're broadcast or cable—and recognizing that. We will be better equipped to pass information, use best practices amongst the various channels and share ideas among the various genres that can benefit those businesses.

We have the No. 1 broadcast network in Fox; we have FX, which for the last quarter was the No. 3 cable net in 18-49. Nat Geo is on a big run, Soccer is on a big run and Speed has improved. So we're in a really good place and want to put those into hyperdrive, and continue to be a dominant content producer in America and around the world.

What are some of the things you expect David Hill to accomplish by putting national and regional sports together?

The real addition here is putting the broadcast network next to the cable networks. The national cable and regional networks were together in my group before. We did some significant things together—we did the BCS with Fox Sports, with the regionals and with our national networks; and we share programming amongst Speed Channel, the regionals and all the networks. So there was some of that going on. I'm looking at this as a way to, again, hyperdrive more of that.

Peter Rice has been at the broadcast network for close to a year. What has been his impact on the network so far?

Peter got ramped up very quickly with what's going on with the broadcast network; I think he would admit there's still a ways to go. But adding the minds of FX and the broadcast network together in a room, I think we can see some real advantages come from that. We'll have Peter manage that process. He's not going to be managing FX day-to-day, hands-on, but he's going to try to coordinate ways to advance the program development of both channels by fostering collaboration amongst the very smart people we have at both places.

Ratings for the premiere for American Idol were on par with last season's premiere. What do the results portend for the show's performance this season?

It shows that American Idol clearly is still far and away the No. 1 show in America and will continue that track this year. We haven't seen Ellen [DeGeneres] live on television yet, but we've seen her in Hollywood and we think she's going to do terrific. We think the relationship between the judges will be very strong and positive, and you're going to see some very funny and interesting moments between them. So we're optimistic that the show is going to do very well.

What can you do to keep The X Factor from seeming like another season of Idol and spreading the audience’s attention too thin?
Idol will be early in the year, X Factor will be late in the year. They’ll be separated by a substantial amount of time in the year. And the shows are very different. Number one, the judges aren’t impartial on X Factor; they actually choose talent, try to help talent. And number two, there is no limit on age so there’s a much broader range from which to draw talent. There are not just individual singers either. It’s a very different show. It will be shot differently with a very different feel and very different aura about it. I’m confident we can keep them separate. In Great Britain there’s both Britain’s Got Talent and X Factor, and they’re the No. 1 and No. 2 shows in Great Britain.

Let’s talk about another show. In B&C’s analysis of how Tonight Show host Conan O’Brien would potentially work out for Fox affiliates in late night, we found they stand to do better sticking with the syndicated programming they have there because they have more ad inventory and get similar ratings to Conan on NBC. Would the network consider giving affiliates more inventory than it typically would to make this work for affils?

We don’t know what Conan can or will do because he’s under contract at NBC. That has to play itself out first. But when you look at a show like this, you have to look at it from the perspective of it as a business and if it would be profitable as a business. If not, it doesn’t even make sense to look at late night. If you give more inventory to affiliates, there’s less revenue at the network, and then it affects the economic ability to do the show you want to do.
This is all a hypothetical conversation because we don’t know what’s going to happen, and we certainly respect the contract he has with NBC.

Given all that is going on just weeks into 2010, it looks like a busy year ahead. Will News Corp. and TV have some big wins to build its future on this year?

I hesitate to say this because anytime you start to feel good about what you’re doing, some crisis develops. But the business are all doing extremely well, and we’re all happy with the process and progress and track that all them are on with their constituents—the audience, cable operators, satellite operators, stations, all the various constituents. We have an enormous well of talent with all these businesses that are churning out obviously very attractive, creative product. I say “obviously” because the ratings are developing. So on that front, we’re very confident and look forward to continuing to pour the coal on that fire.
On the advertising side, business is very good on all the networks. The sports market is a little less buoyant than the entertainment side but has improved dramatically in the past month or two. Even the regional advertising side and the local advertising side have improved dramatically over the past few months.
Scatter’s been very strong for the entertainment side of the networks for a couple of months. The upfront was better than we anticipated. There was a moment when sports was soft, but early to mid-December it started ramping up and is in a pretty good place right now. It is very satisfying and very indicative of a good future trend. So we’re pretty happy with it right now.
It’s a very, very good story. We’re going to take this opportunity to continue to invest in programming, continue to invest in people, and put people in places where they’re empowered and feel like they have room to fail and to take risks, and in that process develop some really creative product for us and develop really terrific businesses as well.

Do you see a clear recovery of the ad market this year?

The ad market on the national network business never took a strong turn south. The local businesses did. The national market is very buoyant, a little more than we would have anticipated. The local market is much stronger than we anticipated from what I see on the regional side and hear from the stations.
To say that it’s a complete recovery, that depends on what happens with the general environment of business in the country and around the world. That’s a question you have to answer in hindsight rather than foresight, but we’re feeling pretty good about it right now.