Exclusive Interview: Fox Networks Group’s David Haslingden

February 16, 2012 World Screen Top Stories

PREMIUM: The president and COO of Fox Networks Group, David Haslingden, talks about the strength of the group’s portfolio of channels, the power of original programming and the global launch of the new Tim Kring/Kiefer Sutherland drama Touch.

Last year, when the Fox Networks Group (FNG) was restructured, Haslingden was tapped as president and COO of this unit of News Corporation that has valuable broadcast and cable assets in the U.S. and throughout the world, including Fox Broadcasting Company (FOX), FOX Sports Media Group, the company’s national and regional cable programming services, FOX International Channels, and Fox Networks Engineering & Operations.

Besides the FOX network, FNG’s holdings in the U.S. include FX, National Geographic Channel, Nat Geo Wild, Speed and a portfolio of Fox Sports Channels for a total of 43 services that reach more than 550 million subscribing homes. Around the world, FNG’s assets have a very broad footprint comprised of the Fox International Channels (FIC), which include more than 350 networks delivered in 35 languages across Latin America, Europe, Asia and Africa, as well as the STAR channels.

Prior to joining FNG, Haslingden had been the CEO of FIC and National Geographic Channels Worldwide for ten years. Responsible for the fastest-growing group of channels in the world, he acquired extensive experience working with cable operators and satellite platforms in various countries, identifying niche opportunities and underserved audiences. He also encouraged substantial investment in original programming in an effort to make the channels unique in their markets.
 
Haslingden leveraged the strength and reach of FIC’s bouquet to make it a viable and desirable programming partner. One example was The Walking Dead, the hit sci-fi series that first aired on AMC in the U.S. in the fall of 2010. FIC, which owns all international rights to the series outside of North America, premiered the series on its channels across 120 countries, one week after AMC. FIC and AMC joined forces again for the launch of season two last November, with FIC delivering more than 10 million viewers.
 
FNG took this model for premiering shows across multiple territories and used it for Touch, the new drama from Tim Kring (Heroes) and Keifer Sutherland (24). FNG reached out to sister companies and in a television first, Twentieth Century Fox Television Distribution, FOX Broadcasting Company, FOX One, Twentieth Century Fox Television and FOX International Channels collaborated to premiere Touch simultaneously in more than 100 countries on March 19. And Unilever signed on as global sponsor in an unprecedented media partnership.
 
News Corp. is widely considered the most international of all the major media companies and Haslingden, who first joined News Corporation in 1993 and over his career has been based in Australia, Asia, Europe and the U.S., is making sure FNG smartly takes advantage of the business opportunities its sister companies can offer. He talks to World Screen about profitable and innovative initiatives at FNG.
 
WS: As president and COO of the Fox Networks Group, what are some of your priorities?
HASLINGDEN: My job overseeing Fox International Channels has not changed, but now I also look after the U.S. cable television group alongside David Hill [chairman and CEO of Fox Sports Media Group] and Peter Rice [chairman, entertainment, Fox Networks Group]. I’m responsible for the corporate functions for the Fox Networks Group: strategic business development, finance, legal, advertising sales, network engineering and operations, and corporate communications.
 
WS: Many in the television industry believe that cable and satellite channels, with their dual revenue streams of advertising and subscriber fees, are better suited to withstand future fragmentation of the audiences and advertising. And yet, FOX has negotiated some groundbreaking retransmission deals with major cable companies in the U.S. Why were these deals important and how do they help ensure the financial viability of FOX?
HASLINGDEN: First I’d like to give a shout out to Mike Hopkins [the president of affiliate sales and marketing for Fox Networks] and his group who run affiliate distribution and have really done a fantastic job, as you say, in securing groundbreaking retransmission consent deals. We have not completed all of them; we are still in the middle of this process, but there is no question we’ve set the bar for the rest of the networks. I won’t mention specific dollar amounts…there is a lot of information in the market already…but everyone knows we are talking about a transforming number—hundreds and hundreds of millions of dollars. It really transforms the economics of the broadcast business, which was dependent on advertising alone and competing with cable networks that have always had two revenue streams.
 
Retransmission consent deals bring to an end an idiosyncratic structure in this market where the leading channels in the U.S. were under a significant economic disadvantage to the smaller channels and in fact were substantially less profitable than much smaller channels. If you look at FOX—which is the number one broadcast network in the U.S.—until we negotiated these retransmission deals it was considered a challenged business. It’s now going to end up being a business that is as profitable (or more so) as the most profitable cable networks. That’s logical when you consider that it is the number one network in television.
 
WS: Do you see the day, or has it arrived already, when cable operators will value FOX as highly as a USA Network or a TNT or an FX?
HASLINGDEN: Yes, I would say that day has arrived. As soon as you normalize the economic model that all of those networks are working under, then the value goes to the networks that are most popular and powerful and as I said FOX is the leading network in the U.S. 
 
USA Network is far down that list so you would expect that FOX will be a much more profitable asset. And I think it is substantially more valuable as a property now.
 
WS: What opportunities for growth do you see in the U.S. for the Fox portfolio of channels?
HASLINGDEN: I’ll start by giving another shout out, this one to FX, which has had an amazing two years. At the beginning of 2011 it became a fully distributed network, reaching over 100 million homes and was therefore put on a level playing field with its principal competitors, TNT, TBS and USA Network. And its success in terms of delivering ratings since then has been fantastic. 2011 was the most-watched year in FX’s history. It was up 21 percent in total viewers, and 22 percent in viewers 18 to 49. It became basic cable’s number two network in prime time reach in the 18-49 demographic. And most importantly, it had continued momentum in the ratings and the passion of our viewers in our original series Justified, which won a Peabody in 2011 and has been hugely critically acclaimed. Its third season premiere this past January was up considerably over the first two seasons. Sons of Anarchy, American Horror Story and It’s Always Sunny in Philadelphia also broke previous records we’ve had for original series on the channel. And our off-network series, Two and A Half Men and How I Met Your Mother, also grew ratings significantly.
 
I look at FOX as being in another category compared to USA or TBS and is a significantly more valuable asset than those cable networks. I think FX is the real challenger to USA Network or to TBS and should be viewed as valuable as they are and its ability to generate profits as significant.
 
WS: And you recently announced MundoFox, which will target the U.S. Hispanic market.
HASLINGDEN: That is another broadcast network so it shows our faith in that business. This is really a programming-led play as we believe there is a very underserved audience for the type of high-quality, fast-paced action dramas and original series in the U.S. Hispanic market and that we can build share and become a competitor to Univision and Telemundo very rapidly. There is a very substantial ad market for U.S. Hispanics, its total is approaching $2 billion and when it’s dominated as dramatically as it has been by one player, we think there is plenty of opportunity to move in and shake things up and create a very profitable business.
 
WS: And you believe that as successful as telenovelas are, the Hispanic audience wants to see other genres as well?
HASLINGDEN: That is right and advertisers who want to reach the Hispanic audience would also like different type of content to run their ads in.
 
WS: In the channel business do you continue to see more growth potential in international markets than in the U.S.?
HASLINGDEN: Our U.S. business is growing impressively. We have critical mass and we have premium products and we are very optimistic about the U.S. International, though, is showing enormous growth and many of the markets we are in are not nearly at the same level of maturity as the U.S. market is. There is much greater opportunity internationally.
 
The Fox International Channels (FIC) and STAR businesses have grown to revenues in the range of $2 billion. They are very substantial businesses and they have grown at a pace of over 30 percent since 2003. We are far and away the largest international television operation when you look at our assets in totality. In our financials, sometimes we have broken these out into different segments, so it’s difficult to see it, but when you look at STAR India and the FIC channels in total, they far exceed the businesses of Discovery, or Turner Broadcasting, or Viacom around the world and we have substantially more momentum. We continue to see very significant growth and we continue to invest. We recently expanded our stake in the Fox Sports Latin America business to own it outright, which is a testament to our confidence in the international markets.
 
WS: Certainly distribution is key, but one huge engine in the channel business is original programming. How important have original series been in branding your channels and creating awareness not only with the audience but also with advertisers?
HASLINGDEN: It’s vitally important to create unique and high quality content. If you don’t provide original differentiated programming you will inevitably lose viewers and your programming and channels will be less valuable to platforms that are trying to win new subscribers and retain existing subscribers. Our business is all about having fans that are passionate and there is no better way of generating fans and making then passionate than having unique and high-quality product. Any time we improve our programming or invest more in programming we believe we are adding value, so it is our number one priority.
 
WS: Can the partnership between Fox International Channels (FIC) and AMC on The Walking Dead serve as a model for other shows?
HASLINGDEN: Absolutely. The Walking Dead has been an unmitigated success story for us. It’s a model we believe we can duplicate over and over again. We recently had our global launch of Touch, which is a slightly different model because we launched that show actually day and date with the U.S. network and used all of our Fox International Channels as well as a number of networks owned by third parties—networks that have output deal with Twentieth Century Fox Television Distribution. The Touch global launch was a variant of The Walking Dead model and that is a key point. FIC has the flexibility to adapt to a variety of development, financing and production models. We want to be a one-stop shop that can lead projects from initial stages of development to their international launch across our networks and we understand that being flexible and being able to move with alacrity is key to being an effective partner in this area.
 
WS: Viewers no longer just go to the TV screen to enjoy programming. They have a number of screens and devices at their disposal. What have you learned about viewing preferences from streaming shows on your own websites?
HASLINGDEN: Firstly, we’ve learned that being able to allow viewers to experience our content on any of six different types of screens, and at any location and at any time, is an incredibly powerful tool and one that leads to significant increased viewership and enjoyment of those shows. We’ve learned that really the Internet is proving to be most impactful in making our oldest and most conventional product, namely long-form television series, a much more powerful product for our viewers. And, of course, this is particularly the case with younger viewers, who are more likely to have a large number of these devices and use them more frequently.
 
We have learned that this is an absolutely tremendous opportunity and one that we have to fully embrace; it’s a huge priority for us. It’s really TV Everywhere for our long-form content. This is going to show that those organizations that are able to produce premium content are going to progressively win greater viewership and more mind share than they have in the past, simply because the number of opportunities for people to experience that content has increased so dramatically through this expansion of devices that can receive it.
 
WS: What is Fox Networks Group’s general strategy for making shows available on third-party digital platforms?
HASLINGDEN: Obviously, if we embrace TV Everywhere we are going to have our shows on a number of platforms. But one comment I would make is that we understand the importance of the current ecosystem and the value to us and to that ecosystem of our existing distribution partners. And that is why we believe that authentication [the process by which consumers verify or “authenticate” that they have a subscription to a cable or satellite provider] is a key tool in linking TV Everywhere to the way that most people, by far the majority of people, access our television programming, mainly through their MVPDs [multichannel video programming distributors, or cable or satellite operators].
 
WS: How have you seen, through your own websites, advertisers’ willingness to move online? Is that still a difficult conversation or has it become easier?
HASLINGDEN: Let me start out by saying something general, and that is that advertisers assume, and want, a gradual evolution of television as being something more than a one-to-many distribution model. They understand that there is enormous value in reach and scale and that the ability of networks to deliver their programming and have their programming enjoyed by a mass audience is uniquely valuable. But they do want those one-to-many distribution models to be enhanced by one-to-one messaging through addressable technologies that are made available by the Internet.
 
Advertisers want interactivity and consumer engagement to become a key element in their advertising campaigns and they want to be able to become progressively more granular in the way evaluate their effective reach and engagement. So advertisers are supporting our moves to extend their campaigns beyond our traditional broadcast of shows, into all of the other ways that we make those shows available to consumers. This is a sales product that we loosely called Fluidity in last year’s Upfront presentation. So we are working very closely with our key advertising partners and we see this as a very large and important opportunity for us.