Media Fortune Fame & Folly

Will Murdoch buy GB News TV?

The Murdoch family’s News Corp today announced the launch of a new UK channel, TalkTV, early in 2022. It is being developed from the company’s radio stations including talkRadio, talkSport, Times Radio and Virgin Radio. It already produces video content including programming currently branded as “talkRadio TV” on Apple TV, Rakuten, Samsung TV+, Roku, YouTube and Amazon Fire TV, and through its own app.

The launch of TalkTV was announced along with news that broadcaster and former newspaper editor Piers Morgan would be joining the station and would also appear on Sky News Australia and the US subscription streaming service Fox Nation in a “360 degree” contract across Murdoch family media (TV, books and newspapers) which, it is believed, will be a pattern for other “celebrity” signings over the next few months.

The news comes just five months after News Corp, which had secured a TV broadcasting licence in the UK, apparently decided not to proceed with its plans to go head-to-head with the new GB News which itself had tried to sign Morgan after he had walked out of ITV.

The announcement coincides with crisis at the three-month-old, Discovery-backed GB News, as a result of poor ratings, advertiser reluctance and the departure of high-rated ex BBC anchor Andrew Neil.

It was always going to be difficult for a new standalone channel to establish itself in a market where neither the commercial Sky News nor the State-owned BBC care about profits. The existing 24-hour news channels share a total monthly audience of 20m, about 30% of the population. But GB News has been getting weekly audiences of only 1m, a grim story made worse by average viewing times of a mere 21 seconds.

The new channel has had persistent technical difficulties. But the root problem has been the lack of consensus among GB News presenters and executives alike on what it should really be doing. They have been divided between those – like Neil – who believed there was an opportunity merely to defy the London-centricity of the UK’s national media, and those who saw the need for a much more strident voice embracing the ant-woke spirit of Brexit voters and of Fox News (so-called ‘culture wars’).

The departure of Neil (nominally chairman of the company) after a handful of on-screen appearances, and the arrival of punchy Brexit leader Nigel Farage as a prime-time presenter seem to indicate which side has won.

But, even before news of the Murdoch launch, more changes were planned for the company whose £60m fundraising had been almost 50% over-subscribed by shareholders including Dubai-based Legatum, UK hedge fund owner Paul Marshall – and Discovery. It was always a combination of investors who expect a return on their investment and those who regarded their stakes as political contributions to a war against the established, liberal forces of broadcasting (especially the BBC).

What had brought them together in 2020, however, was the seemingly simple economics of GB News whose £20m cost base was some 25% of of the Sky News budget (which employs 500 people) – and equivalent to its persistent losses.

Investor confidence in the new broadcaster had not been dented by claims from the CEO of ITV – the country’s largest free-to-air commercial broadcaster – that the “Foxification” of news could not be successful in a UK market dominated by the BBC and governed by seemingly strict regulations on broadcasting ‘balance’.

It had been assumed that the shareholder funds – one-third provided by Discovery Inc – would see the company through to profitability in 3-5 years. But what is likely to have been a sharp shortfall in budgeted advertising revenue would anyway have prompted a change not only in the content of GB News but also in its ownership. This has been made more urgent by the plans for TalkTV.

In the last few weeks, some GB News shareholders have been suggesting that News Corp which – over 30 years built the pan-European Sky TV and its flagship Sky News before its £30bn sale to Comcast – might be interested in rescuing the ailing channel. After all, Murdoch’s most profitable brand is Fox News, in the US. But there were other reasons why News Corp had been expected to swoop.

GB News is the brainchild of Andrew Cole and Mark Schneider, two executives linked to Liberty Global whose chairman John Malone is the largest shareholder in Discovery which itself is expected to get approval to merge with Warner Media in the first-half of 2022. (Liberty is also the largest shareholder in ITV).

The GB News founders had first approached News Corp even before they got Discovery’s support for their project. They were rebuffed. But they renewed the approach late last year after Discovery had committed £20m. At that time – before the additional £40m launch funding had been secured – News Corp itself was planning to launch its own news channel, then under the leadership of former Fox News and CBS executive David Rhodes.

News Corp’s big idea always seemed to be the integration of newspapers, audio and video in the UK where its interests include: The Times of London, The Sun, and the Sunday Times; the Wireless Group of Virgin Radio, TalkSport, TalkRadio – and Times Radio, launched in June 2020. The proposed News UK TV had been thought likely to have the following characteristics:

  • 4-5 hours every evening, including an early-evening politics show, a daily political debate programme and an evening news bulletin.
  • Broadcast by satellite but also streamed and “pushed” as online video/ podcasts, perhaps including links with streamers Netflix, Disney+, or even Spotify
  • Some integration with News Corp’s own UK radio stations, including the new Times Radio
  • Shared talent with its newspapers, radio and podcasts

Despite having fallen foul of the UK regulator’s impartiality rules in 2017, some kind of relationship with Fox News (owned by the Murdoch-controlled $18bn listed company Fox Corp) seemed likely, if only to share programmes and/or advertising sales. (Now, we know the Murdoch-controlled media will share content and talent wherever possible.)

In the event, News Corp appeared to abruptly abandon its plans: “While there is consumer demand for alternative news provision, the costs of running a rolling news channel are considerable, and it is our assessment that the payback for our shareholders wouldn’t be sufficient. We need to launch the right products for the digital age.”

The explicit concern about “shareholder payback” was unusual for the gutsy News Corp, but the reasons for the climbdown may mainly have been the fear of an expensive fight with GB News – during the pandemic.

But GB News’ early failure has now raised the prospect of urgent talks to “merge” GB News into TalkTV in what could become a reprise of the successful combination of satellite channels BSB and Sky in 1990. Like what proved to be a triumph of a deal for Rupert Murdoch 31 years ago, any combination (however described) would be more acquisition than merger.

An intriguing part in any deal will be played by the GB News CEO, Angelos Frangopoulos. He was previously the boss of Sky News Australia. Across almost two decades, he developed what has been described as “a Fox News-style formula, mixing respected news reporting during the day with influential right-wing punditry programmes during its evening After Dark slots”.

Despite local accusations of misinformation about Covid and climate change that have led to YouTube taking down controversial videos, it has been a ratings success. But there is a complication. Sky News Australia is operated by News Corp under a licence from Sky TV in Europe. Owner Comcast is believed to have become increasingly unhappy with Its Aussie licensee, believing the style and content to be at odds with the parent brand – and, perhaps, even in breach of its licence. Murdoch is no longer the Sky boss and a fight has been looming.

That’s before there is any News Corp deal to acquire and relaunch GB News in the spirit of Fox News – with the CEO who did it in Sydney. Even if Comcast isn’t already prepared for a legalistic fight with News Corp in Australia, it may just be provoked by this move to compete with Sky News in the UK.

So, there are some potential headwinds for News Corp’s latest TV ambitions. But Rupert Murdoch and son Lachlan are itching to return to TV in the UK where they created what is, arguably, the world’s most successful pay TV network. After a few months of pain, GB News shareholders are daring to dream of the ‘Foxification’ of the UK’s newest TV channel. May be closer than they thought.

News Corp