Rupert Murdoch, the founder and CEO of News Corp (NASDAQ:NWSA), has a vast range of upcoming issues surrounding his company. At 81 years old, most Americans are ready to throw in the towel and move to the beach, but Mr. Murdoch has bigger plans that he’d like to accomplish before retiring.
In our opinion, it is clear that the first point on Murdoch’s agenda is to place a greater focus on 21st century media technologies, most notably in the realm of streaming movie services. As more consumers shift away from DVDs and turn their attention to streaming platforms like Netflix Inc (NASDAQ:NFLX) (see why billionaire Julian Robertson and Tiger Cubs bet on Netflix), Hulu, and UltraViolet, it’s extremely important that the company continues to expand its own footprint in this arena.
UltraViolet is an online collection of movies and TV shows that lets users stream their content through multiple devices. UltraViolet’s partnership with Wal-Mart Stores Inc (NYSE:WMT) has recently opened up another service to the website’s members. Customers can build their media libraries on UltraViolet by either purchasing movies online, or by taking their discs to a Wal-Mart store, where they can access standard-definition or high-definition versions of their favorite content. Wal-Mart executive John Aden believes that the program “allows customers to reconnect with the movies they already own on a variety of new devices, while preserving the investments they’ve already made in disc purchases.”
While companies such as Time Warner Inc. (NYSE:TWX), Paramount, and Sony Corporation (NYSE:SNE) currently utilize the UltraViolet digital locker system, News Corp will begin to stream films through the platform beginning on September 18th. This month’s stroll into streaming content is News Corp’s second attempt at breaking into the business. Last year, the company offered films that had been theatrically released for two months, though each piece of content cost nearly $30 a piece. Customers didn’t line up to the pay the large premium for these movies, and the program did not work as planned.
This time around, News Corp has taken a different approach, as it plans to sell its movies via UltraViolet at around $15, a discount from competitors’ prices that are in the $20 range. This streaming service will allow movie watchers to purchase hot titles, such as Prometheus, about three weeks before the movie is available on DVD. Below is a statement from 20th Century Fox Home Entertainment regarding the rollout:
“At the time of launch, more than 600 Fox films will be made available in HD through online retailers including Amazon, CinemaNow, iTunes, PlayStation, VUDU and Xbox. PROMETHEUS will be the first new release movie on DIGITAL HD™ and be made available three weeks before the Blu-ray, DVD and video-on-demand (VOD) release for under $15.”
News Corp is becoming increasingly popular among hedge funds. In this year’s first quarter, 25 hedge funds held shares of News Corp, good for a collective holding value of $640.5 million. By the second quarter, a whopping 40 hedge funds initiated new positions in the company; its total interest is in excess of $2.5 billion. The Children’s Investment Fund and Beach Point Capital Management are the largest News Corp bulls, as each hold more than 40% of their portfolios in the company. Additionally, prominent managers like David Einhorn and Ken Griffin also are long News Corp.
To recap: We believe that News Corp’s partnership with UltraViolet has solidified the company’s push into streaming movie services, a move that will help it make the much-anticipated jump to the 21st century media arena. Due to its discounted pricing model and pre-DVD release schedule, all signs are pointing in the right direction for Rupert Murdoch and Co. As mentioned above, hedge funds seem to agree quite emphatically.