Peter Rice

The cable and television businesses continue to drive growth at 21st Century Fox, even as consumers’ viewing habits shift and change on a daily basis. As the chairman and CEO of FOX Networks Group (FNG), Peter Rice has been navigating these shifts—so successfully, in fact, that he was recently elevated to the post of president of 21st Century Fox.

FNG, however, continues to be Rice’s number one priority. He oversees a portfolio of assets that offer something for all viewing tastes. The group includes FOX Broadcasting Company, FX Networks, FOX Sports Media Group and National Geographic Partners. FNG distributes more than 300 wholly owned and managed services across Latin America, Europe and Asia, and has an international-distribution arm that sells content to linear and nonlinear outlets around the world. Rice says FNG does not discriminate between linear and nonlinear viewers. Rather, the group is making its content available on as many platforms as it can where proper monetization is possible. That includes its own apps, such as FOX NOW and the streaming FOX+ services in Latin America, Europe and Asia. And 21st Century Fox is a shareholder in Hulu, which recently announced its Live TV streaming service—a skinny bundle of linear channels that can be watched online.

As pay-TV platforms around the world offer scaled-down channel bundles, Rice believes that a focus on four core brands that have meaning and relevance to viewers—FOX, FX, FOX Sports and National Geo­graphic—is the right strategy in a constantly evolving media landscape. These brands’ meaning and relevance come from bold programming strategies, with shows whose production values are at the highest level, subject matter that has not been seen before, or sports coverage that takes viewers as close to the action as possible.

Some notable examples are National Geographic’s jump into scripted fare with Genius, which scored record ratings and earned critical acclaim; factual shows like The Story of God with Morgan Freeman, which will be followed by The Story of Us; the use of helmet cams during Super Bowl coverage on FOX; and the scripted series Atlanta, Feud and Fargo on FX.

FNG’s programs, across fiction and nonfiction, garnered a record 113 Emmy nominations in 2017. Rice believes quality programming is the fuel that will drive any platform, whether it’s a linear channel, a streaming service or a mobile app.

WS: How does the power of storytelling—fiction and nonfiction—help linear channels maintain their relevance in today’s world when viewers are increasingly watching on-demand?
RICE: In an on-demand world, people consume content whenever and however they choose. As a consumer, I think that’s fantastic and as a creator of content, Fox is fully supportive of that. There is, of course, still programming that people watch live. We have incredible live events in sports and powerful scripted and unscripted storytelling, which attract a large, global, live audience. But ultimately we’re agnostic as to how and when people choose to watch our content.

WS: How has National Geographic’s bold programming and foray into scripted fare been received?
RICE: In general, the response has been outstanding. We’ve made the three most-watched series in National Geographic’s history, Story of God with Morgan Freeman, MARS and Genius. We had Before the Flood with Leonardo DiCaprio, which reached more than 60 million viewers. We have a fantastic slate of upcoming programming. We just got 17 Emmy nominations, the most in the channel’s history. Genius, our first scripted series, got ten nominations, including best limited series, best director and best actor. That was more nominations than other high-level networks that have been doing this kind of programming for a long time. Eight months into the new strategy, we’re excited that the programming reflects the mission of the brand and that viewers have embraced the new direction.

WS: FX is known for quality programming and risk-taking. What message does the willingness to take risks send out to the creative community?
RICE: We encourage risk-taking. If you take risks, you invite the creative community to be original. Ultimately, originality is what sparks the imagination of the audience, whether that is Genius and MARS on National Geographic; Atlanta, Feud or Fargo on FX; or Empire on FOX. We also encourage risk-taking throughout the organization. You can see it in the programming; you can see it in the marketing. The moniker of FX is “Fearless,” and in a crowded marketplace you have to be fearless, and that means taking risks.

WS: A lot of attention is paid to original series, and rightfully so. What role do feature films still have on linear channels?
RICE: Films work terrifically well in both linear and nonlinear, for different reasons. Given the amount of money that is spent on production and the attention to detail, films provide high-quality programming. In the linear world, the bigger the hit movie, the more likely that someone who’s browsing for something to watch can either come in for an hour, then turn it off and go to sleep, or come in half an hour into the movie because they know the story. In an on-demand world, if you have the best films, they have a long shelf life. FXM, our cable movie channel, has been the number one video-on-demand channel in the American cable system for the past 18 months, every single month. That’s due to the power of the slate of movies that we have.

WS: FNG’s sports channels and services have been quite successful. The sports market is crowded, so what innovations have your properties brought to sports coverage to bring viewers in?
RICE: FOX Sports has always been a home of innovation. The market research we do continues to show that people prefer to watch a sporting event on FOX than on any other channel. I think it’s the amount of attention and resources we put into innovations in the productions themselves, with cameras and sound and graphics. In the Major League Baseball All-Star Game, we embedded 47 microphones on the baseball field in Miami. At the Super Bowl, we used 50 high-definition 4K cameras, and we also had a simulated helmet cam, which allowed you to see the play from the point of view of a player. I think we have the best executives in the business, and we are always trying to move the medium forward so that the viewer is getting closer to the action.

WS: When you are considering new ways of offering content to consumers, do you focus more on technology, and its advantages and shortcomings, or more on consumer demand?
RICE: It’s always ultimately the consumer and how technology brings content to the consumer in a better way. For example, there will be a tremendous amount of innovation around the FIFA World Cup next year—in production technology and also in the ways we bring the content to consumers. In the U.S., we’re in the process of redoing all our TV Everywhere apps, using technology to improve the way in which content is serviced and people are accessing it. We’re always focused on creating a better consumer experience, and we view technology as a conduit for that.

WS: You mentioned apps. How much content is currently available on FOX NOW, and how much content will be available in the future?
RICE: We used to have separate, siloed apps for FOX Sports, National Geographic, FX and FOX that were run separately on separate platforms. We’re now putting them together on one platform with a completely new user experience. FOX NOW was the first to be launched in that way and combines live and on-demand programming from FOX, FX and National Geographic for the first time. This allows us to make more 21st Century Fox content available to more people in a seamless way so that they don’t have to constantly search for it, and the initial few months have seen very significant spikes in viewership.

WS: As a shareholder in Hulu, how did 21st Century Fox and FOX Networks Group participate in Hulu’s Live TV bundle?
RICE: We are board members along with Disney, so we were intimately involved on a strategic level with Hulu management and [CEO] Mike Hopkins. But, ultimately, the live-TV bundle was executed by Hulu, and it’s a terrific product. They have a very good team and fantastic momentum right now with the live-TV product, the SVOD service and the originals they are making, such as The Handmaid’s Tale, which got 13 Emmy nominations. We feel very good about what’s happening at Hulu.

WS: What have been the advantages of reorganizing FOX International Channels into three separate groups, FNG Europe, FNG Latin America and FNG Asia?
RICE: By regionalizing it so that the managers in key regions have more independence, more authority and more responsibility, we’ve been able to break down silos and have more touchpoints on a global basis. The regions have become more entrepreneurial, which has allowed us to grow our FOX+ streaming service, which is slightly different in Latin America, Europe and Asia. At the same time, the regions are also working more closely with those of us in Los Angeles and New York. The combination of having more independence while also being closer to the parent company has been very effective.

WS: I know that pay-TV markets in different parts of the world are in different stages of development—some more mature, some less. In which territories do you see the greatest potential for growth in the international pay-TV business, and what is driving the growth?
RICE: What’s driving it for us is our four core brands: FOX, FX, FOX Sports and National Geographic. Ultimately, in a world of more choice, having fewer, stronger brands is the right way to go. As new distributors come into the marketplace, our brands are in every package. Whether they are telcos such as AT&T buying DIRECTV and then going over the top, or Optus in Australia launching a really good over-the-top service with National Geographic; or whether it’s Hulu or YouTube launching live-TV services, these new distributors need the best content, which increases competition for brands like ours that are truly meaningful to consumers. I believe we are very well positioned in a marketplace that is undergoing a lot of change.

WS: If skinny bundles catch on in the U.S., are you fairly confident that you would fare well in that environment, too?
RICE: We don’t think skinny bundles are a challenge for us. In many ways, they’re an advantage. A lot of distributors come to us and say, We want a skinny bundle. We say, OK, here are our four brands, which ones do you want? And they invariably say, We want all of them. We’re not trying to sell 20 different brands to a distributor.

WS: Historically, channel groups have marketed their channel brands. As viewers increasingly watch on-demand, is there a shift toward marketing individual shows more than individual channels?
RICE: The strongest brands are strong because they have the best content. The growth of the FX brand over the last five years has been based on the strength of the FX content. The strength of HBO is based on the strength of HBO content. Our channel brands have been built on the long-term success and originality of the content we put on them. The FOX Networks Group got 113 Emmy nominations this year. It’s the most in our company’s history, and it speaks to the quality of the executives that we have, whether it’s Dana Walden and Gary Newman at FOX; John Landgraf at FX; Courteney Monroe and Declan Moore at National Geographic; or Eric Shanks at FOX Sports. They are doing great work, and it accrues to the benefit of the brand.

WS: What opportunities are you seeing in the U.S. and internationally for OTT and nonlinear ad sales?
RICE: I think there’s a huge opportunity in marrying data to video delivery for advertising. The video product we have and the ability to deliver messages on behalf of advertisers is significantly more effective than Facebook or Google. What we lack right now is data. But if we work together with distributors to take better advantage of data, we can make the OTT and nonlinear ad experience better for everybody: better for consumers because they won’t have to sit through 20 minutes of commercial interruptions every hour. Better for advertisers because we can be more efficient in delivering people who are actually interested in their product. And more efficient for us because we can use less inventory to make more money.

WS: If you don’t have the data you need, who’s not carrying their weight in providing it?
RICE: It’s complicated. Essentially, the distributors have the data, but they don’t have any inventory to sell because we have the inventory. Therefore, there’s been this dance of who can leverage whom in order to get the most benefit. So, from my perspective, the distributor is not carrying their weight. I’m sure if you spoke to a distributor, they’d say the programmers are not carrying their weight. But we need to come together and make it a better experience for all the stakeholders involved. Everybody can benefit from this if we all work together.

WS: Where do you see opportunities to have the data you need?
RICE: Our own apps are where we have the most data, and they’re the best place for us to monetize our content. They are also the best place for us to innovate. For example, we can have a viewer engage with a single sponsor and remove all the other advertising from the show, which provides benefits to everybody. The advertiser is happy with the targeting, and with the fact that their ad is shown in a safe place and adjacent to a show they like. The consumer is happy because he doesn’t have to watch 20 minutes of ads in an hour. Everybody is winning and we are monetizing at the highest level. We would like to do that on all platforms around the world with all of our distribution partners.

WS: Looking ahead 12 to 24 months, in which areas do you see the greatest potential for growth at FNG?
RICE: National Geographic. It was a legacy brand that we have reinvigorated by uniting the digital, the social, the publishing, the travel, the channels and the production divisions, which used to be siloed. As a result, I think we’re going to see tremendous growth opportunities at National Geographic in the next four to five years.