The future of Rupert Murdoch’s Fox is live TV.
The deals show how much Fox (FOXA) is willing to bet on sports and entertainment programming as it prepares for life as a leaner company. Disney (DIS) has agreed to buy most of 21st Century Fox, including the iconic movie studio, for more than $71 billion. Comcast (CCZ) might counter, which would push the value of the sale even higher.
The new Fox — the part of the company that isn’t up for sale — will be defined by TV. Murdoch is holding on to Fox News, Fox Sports and the Fox broadcasting network, a combination the MoffettNathanson research firm has valued at $23 billion.
Fox declined to comment for this story. But analysts say the decisions to double down on live TV and ink major sports and entertainment contracts makes sense. Fox is making moves that capitalize on an audience it is already good at attracting, said Brandon Ross, an analyst at BTIG Research.
“The strongest asset that’s in their portfolio going forward is Fox News,” he said, adding that the “core Fox viewer” likely lives in a red state and / or likes live sports. “I think the reason they did the WWE deal is because it fits with both of those things.”
Fox’s investments are also a sign of how rapidly the media industry is changing. The scripted dramas and comedies that used to be TV’s bread and butter aren’t a sure bet now that Netflix (NFLX) and Amazon (AMZN) are competing in the same space.
Those companies have a strong, on-demand streaming model — watch a show when you want it, where you want it — that has upended traditional appointment TV. Apple (AAPL) is expected to jump into the race soon, too.
But live TV is different, especially sports. Netflix and Amazon took audience from the networks in part by coming up with their own scripted programming: Think “House of Cards.” They can’t just start airing the NFL every Sunday.
That’s what makes sports so valuable for a legacy business like Fox, said Jay Rosenstein, a former CBS Sports executive and current adjunct professor at New York University’s Tisch Center for Sports Management.