As Netflix and Paramount duke it out for future ownership over Warner Bros. Discovery, one media company is perfectly content sitting on the sidelines when it comes to mergers and acquisitions.
At the UBS Global Media and Communications Conference on Monday, Fox CFO Steve Tomsic told attendees that the company is satisfied with its current portfolio and won’t be looking to add any media assets anytime soon. “We want for nothing. From a portfolio perspective, we have a pristine balance sheet. We have fantastic free cash flow that’s delivered by those assets,” Tomsic said, per Kayla Cobb of TheWrap. As such, the CFO said Fox has “an extremely high bar” for any would-be acquisitions.
“If there was something that took our core verticals to another level, which are sports and news, or if there was something that would benefit from the other thing, which is our capacity aggregate reach and really passionate reach, we would look at it. But nothing has ticked all the boxes,” Tomsic said. “We feel like we’re in a fantastic position, both from a portfolio perspective and a balance sheet perspective, to be able to pivot however we want.”
Few opportunities would seem to make any sense for Fox on paper, at least in the traditional media space.
TNT Sports could become available should Netflix win the battle for Warner Bros. Discovery, thus spinning off its cable assets into a new entity called Discovery Global. However, it’d make little sense for Fox to go after a purchase of the spinoff company. For one, Fox already has a robust portfolio of live sports rights. Secondly, and perhaps more importantly, Fox doesn’t need to buy cable networks that are in terminal decline. Fox’s cable portfolio is comparatively well-positioned against others in the industry. Fox News rivals only ESPN as the most-important network in the multichannel bundle. And Fox’s only other major cable network, FS1, holds solid sports rights and operates at a low cost.
On the other hand, Discovery Global’s cable portfolio consists of TNT, TBS, truTV, CNN, HGTV, Food Network, TLC, Discovery Channel, and others. Aside from when TNT, TBS, or truTV are airing live sports, or CNN is covering a breaking news event, those channels do not air programming that is important to the pay TV bundle. Should Fox be interested in some of TNT Sports’ broadcast rights, the network is better off simply waiting for current contracts to expire.
Versant, the Comcast spinoff that will hold NBCUniversal’s cable assets come next month, has already made clear it is not looking at any M&A itself. The company would be one of the other obvious candidates for consolidation on paper, though finding a buyer for a bunch of declining cable assets would prove challenging.
At every turn, Fox has made shrewd decisions regarding the decline of the cable bundle. Its mega-deal with Disney, in which it sold cable networks like FX and Nat Geo along with its suite of regional sports networks, looks better with each passing day. More recently, Fox’s decision to exercise patience before launching a streaming service has paid off. Fox One has been able to attract over two million subscribers at a premium price point, all while protecting what is left of the cable bundle. The company has also made forward-looking acquisitions like the FAST platform Tubi.
All that to say, it’s no surprise that Fox is being disciplined amid all the craziness taking hold in the rest of the industry. It knows what it does well — news and sports — and what assets can serve to complement its core businesses.
Before Fox’s ownership situation stabilized earlier this year, it seemed like the company could itself be a target for M&A. Those days are behind us, and Fox, by all accounts, is content with what it has.
About Drew Lerner
Drew Lerner is a staff writer for Awful Announcing and an aspiring cable subscriber. He previously covered sports media for Sports Media Watch. Future beat writer for the Oasis reunion tour.