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FOX CEO EXPLAINS WHY NETWORK IS LETTING SMACKDOWN LEAVE

During Fox's Q1 earnings call today, the first question asked was about not renewing WWE's Smackdown contract. 

Operator

[Operator Instructions] One moment for first question. And that will come from Robert Fishman from MoffettNathanson. Please go ahead.

Robert Fishman

Good morning everyone. After deciding on passing on the WWE renewal can you share anything specific on how you evaluated the ROI of the deal in the context of driving higher advertising and affiliate fee revenue? And then, maybe just more broadly can you discuss whether you expect to see any impact on future sports right negotiation if the Disney Charter renewal impacts the industry rate of cord cutting or affiliate fee growth going forward? Thank you.

Lachlan Murdoch

Hey. Good morning, Rob. There's a lot in there. So let me unpack it bit by bit and if I hope I don't miss anything. So how we -- I think we've talked about this before, but how we analyze the WWE renewal, and we look at all of our sports portfolio in the same way and on all new rights, opportunities are for new rights in the same way. We -- on the base of analyst -- analysis sorry. We on both an advertising point of view, we were not hitting the advertising numbers due to the audience of the WWE to make return for our return on investment to be above the levels that we would accept.

But also, we didn't attribute enough significant retransmission revenue to WWE either so it made sense for us to move on from them. They've been a great partner for many years. But just quite simply we're very disciplined and the RR didn't meet our pretty disciplined parameters. So we wish them luck and we've moved on from them. We're currently in I think the final status of a very constructive negotiation for our NASCAR renewal. We look forward to continuing that partnership with NASCAR. It's been a great partnership for many years.

And obviously, NASCAR exceeds our expectations from an ROI point of view. In terms of Disney and Charter and how that affects our view going forward. I think it's a net positive for us. I think that we want our distributors to do well. We want them to continue to invest in high-quality programming and high-quality brands. And obviously, between FOX News and Fox Sports our station group and our network we have a very focused very valuable set of core brands that distributors such as Charter value. So net-net the Disney Charter deal has been positive for us and positive for our strategy.

 

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