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Full video and transcript: 21st Century Fox CEO James Murdoch at Code 2018

“You look at all of this crazy stuff in the news industry, news and entertainment industry, but I mean, it looks like nobody can keep their pants on.”

Editor’s note: The following is an unedited transcript from the 2018 Code Conference. It may have spelling or grammatical errors that will be corrected at a later date.

Peter Kafka: Our next guest is someone who said, yeah, I’d come to Code Conference last fall, then he said he was going to sell his company, and now, things are getting even more interesting. So, please welcome James Murdoch from 21st Century Fox.

James Murdoch: Thank you, Peter.

How are you? Can I put you over here by this one?

Yep.

Thanks for joining us.

Thanks for having me here. It’s nice to be here. Thanks for coming.

Can we call this an exit interview?

No, not yet. I still have a few projects to-

You’re CEO of 21st Century Fox. At some point in the near-ish future you’re not going to be, either Disney’s going to buy the company and you won’t be CEO, or maybe Comcast will buy the company. What are you going to do after that?

Well, I don’t know. I think the first thing is that I’m really focused on trying to land the plane. I think when you have a big transaction like this, it’s not entirely straightforward. There’s quite a lot of work to do. We have to see which way things kind of play out, but there’s regulatory work well underway with that with a merger with Disney and the spin of the New Fox. There’s a number of months left to go there. Then at the right time, I’ll think about something new. But I do think it’s an exciting time when we look out over the next number of years, just to see the opportunity to dive into and be useful in a number of areas. So I really don’t know yet, but I think right now I’m 100% focused just on getting this thing done and doing what’s right for the business, for my colleagues, and for all our shareholders.

I want to ask about Comcast in a minute, but if the Disney deal goes through as planned like we said, you don’t have a role at Disney. You don’t have a role at the stub company, New Fox. You’ve been working for the Murdoch family business for all your life, basically, trying to build a really big media business. Now you’re at a point where this has become an even bigger media business. Why not stick it out and run that thing that you’ve been working to build for decades?

Well, I think, you know, I’ve been in the business for 23 years now and been lucky to be involved in some great projects, from building our Asian business at Star TV to, you know, running our European business, building out our Italian and German companies, and running our UK business, coming back here and being CEO for the last number of years of the whole company. I feel like after a period of time you might look at it and say where’s my ambition or what’s driving me to do things. I think the right choice here was to create a firm in a merged Disney/Fox ... which is the transaction that we have before us and that we’ve agreed to ... that can be really competitive and super competitive going forward in an industry that’s changed a lot. It’s an industry that continues to thrive on scale.

I think what we’ve been able to build at 21st Century Fox is genuinely unique. It’s why people are interested in it. If you want to be a global company, if you want to produce high quality content at a high volume everywhere from, you know, Karnataka to New York, there aren’t many firms that do that. I think that, for me, when I looked at it, I thought actually this is really a great answer for these businesses in our industry-

You’re describing why Disney would want to buy it, not why you wouldn’t want to stick around and run it.

But then you look at it and you say, well, everything five years or so ... Man, every five years or so I sort of do something newish, so I think ... I started out ... Karen and I were talking before, we used to meet at these conferences in the ‘90s. I spent a bunch of time in the ‘90s working in the digital area, et cetera. I had moved to Hong Kong, built our Star business out for a number of years there. Moved to London. Did a number of things there in two different jobs. It’s been kind of the five-year mark since I moved back to New York, so I think it’s time to do something new.

All right. I’m not going to get you to announce the new job yet on stage?

No.

Okay. The Comcast deal-

Well, I don’t know what it is, so-

Fair enough.

... I’m open to ideas.

Comcast tried to buy you guys once. You said, no, we want to sell to Disney. Now they’ve literally put out a press release, instead of theoretically putting out a press release, saying we really want to buy this company, and we’re going to make another bid. Explain to this audience why it seems like your position is we prefer to sell to Disney even though Comcast is going to offer us more money.

Well, we made an extensive filing around this. It has all the details in it for the record. But essentially, we had an agreement with Disney ... and we have an agreement with Disney which we find very attractive for our shareholders. It’s an all-stock agreement. We think the prospects for the new firm are very strong, and we think from a regulatory perspective, and we thought as well in December from a regulatory perspective, then you have a higher certainly of close. When you weigh up of those factors, that’s really what we thought was the right thing to do. Now whether or not the board is asked to consider a different offer from somebody else in the future, we’ll deal with that as we go. We have responsibilities to our shareholders. We know what those are, and we’re going to get the right answer for ...

I mean, Comcast has literally said we’re going to make another bid. It’s going to be all cash. It’ll be more than what Disney’s made.

But they haven’t done it yet.

Right, but they-

So, you know, you have to ... What did you say? But they’re coming.

They’re coming.

I think, you know, what we have to do is continue to plow kind of the furrow that we’re on here until something changes. I think right now, you know, we’re making a lot of progress on the regulatory front with sort of getting all the right filings in and doing that stuff with Disney. If something changes that the board has to consider, they know what to do and we know how to deal with that.

Let’s pull back even further. You, your brother, especially your father, have been building Fox for decades and decades trying to become a really big company. You tried to buy Time Warner a couple of years ago. Now you’re selling, not the entire company, but a big chunk of it. Jeff Bewkes is trying to sell Time Warner. Shari Redstone and Les Moonves can’t agree on it, but they really want to sell those two companies, Viacom and CBS. All the people who have been building these big media assets have decided it’s time to sell. Shouldn’t that worry me if I’m on the other edge of the table?

Well, I don’t think so. I think it’s not so much are you selling or you buying. It’s a question of what kind of firms are going to be the most competitive in this area going forward and in this piece. I think what we concluded ... certainly what I feel ... is that from an organic perspective, we can do a lot. We can continue to grow our business. Our business is growing fast. It’s growing super fast in India, super fast across Latin America. Nobody really focuses on our Latin American business. It’s a very large business today. Our European businesses, the Sky, have really been transformed over the last 15 years in terms of scale and velocity. Our studio business, our creative business in television and film here in the U.S., has been pretty strong actually.

We made, I think, a lot of the right bets in terms of focusing on big brands that matter in an environment where you were going to have much, much more pressure on the kind of cable bundle. You wanted to make sure that you were somewhere where it really mattered to customers that you were included there. We made these bets. We kind of set that strategy a number of years ago. We simplified our business. We really transformed it in a number of different ways. We look at it today and say, we like our prospects. We think it can continue to grow and we can be successful, but in a certain context of a merger with another firm, you may be able to really accelerate that and kind of move forward in a different way. For the businesses themselves, we care a lot about that, and for our shareholders, we care a lot about that. It’s a question. Whether you’re a buyer or a seller, the point is the combination of these firms is something that we think is very attractive. That’s really what’s driving our thinking.

But you were a buyer a couple of years ago ... and again, I don’t want to beat this in the ground ... but it seems like a lot of folks that have been running media businesses for a long time are saying now is a good time to get out. They’re all sort of calling a top at the same time. You’ve got, in AT&T’s case, a phone company. You’ve got other sort of tech companies moving around. It seems like they should be asking themselves why do these guys all want to sell their media assets.

Well, I don’t think you can put it all in one bucket. I think, actually, what’s happened is there’s kind of the pack has kind of separated, right. There’re certain firms with certain characteristics that make them particularly attractive in the future. You can think about owning IT. You can think about the level of excellence creatively in a firm. You can think about international reach, and more than reach, depth actually, in big markets that really matter. We often talk about investing in markets that in success will really change our lives, as opposed to kind of being spread too thin on the toast. We’d much rather be a big investor and keep places where we really believe in.

I think for us, having done all those things, and the business getting to a certain scale, and continuing to grow, it was just a question of if there were, in the presence of another opportunity, they may be more attractive and can accelerate the business further and create a global platform for video consumption and creation. We think that’s very, very attractive, a platform like that, particularly in an environment where, as you said, you do have multiple new players kind of circling or investing heavily in the space. You do have really a revolution in terms of the barriers to entry for downstream distribution really coming down, the untethering of kind of bundled video from infrastructure.

We think those two things mean that if, you know, content really is going to be king, and we see the quality that we’re producing, and the breadth of it, and how much engagement it’s driving, if content really is going to be king, the opportunity to build platforms with that is really profound. That’s where you look at it and say, okay, how do I do that? Can I do that alone, or do I have a lot of counterparty risk? Do I have to buy other programs from people, et cetera? I think what you want to do is eliminate, to the extent you can, the amount of counterparty risk you have. You really want to be a free agent to build those platforms and populate those platforms with programming that’s proven to be really exciting and engaging for customers.

It seems like one common thread here is that the buyers, the perceived buyers, the perceived threat to the established media guys, are really distributors that have direct access to the consumer, whether it’s AT&T or Netflix, and then theoretically we’re waiting for Apple to really get into it, and Google, and Facebook, and Amazon are all playing around to different degrees. Would things be different had you guys moved more quickly to sell your own stuff directly to consumers?

We are one of the biggest direct-to-consumer firms in the world. If I look at our Hotstar business in India, which is a mobile video app that we launched a few years ago, you know, we have 145 million monthly uniques now interacting directly with the platform up to two billion minutes a day, actually, across that platform in India. The Sky business, with the SkyGo over the top business, and now TV, alongside the overall kind of more traditional, but digital and very different from the MDBPs here, 23 million families, households, and many, many more customers interacting with that platform there. And then in our joint venture with Disney and Comcast, the Hulu business has accelerated tremendously over the last year, and is now a 20 million plus-

Up until recently in the U.S. you were primarily in the bundled TV business. You were in the bundle that was good for you. You recently in the last couple of years, you said we’re going to start breaking out from that, but you haven’t gotten there yet. Disney, quite clearly, is saying, look, we want to take on Netflix doing what they’re doing directly. It’s the rationale, in part, for buying you. Everyone says they want this direct business. Was this something that you had ambitions to do in the U.S. and just didn’t get to in time?

I think it’s I think we’ve been doing. We did it through the joint venture with Hulu, generally speaking, as a real strategic priority for us over the last number of years. But we were never in the ... I guess since we sold our stake in DIRECTV, we really haven’t been in the direct-to-consumer business directly other than the Hulu piece here, but that’s changing. No, I don’t think ... I think we did get to it. I don’t know ... I just explained to you how we got to it.

Do you think the media guys in general-

I think it’s one of the reasons why this company is valuable. It’s one of the reasons why we’re growing so fast. If I look at our [crosstalk 00:11:51].

It’s not because of Hulu, though. It’s because of your film assets.

No, it’s our Asian assets. It’s our European assets. It’s the quality of those businesses. It’s the quality of the creative output, and brands, and national geographic effects, our film company, et cetera. That’s what’s really driving it. I think that’s a good thing. I think that’s why it’s a really good component part when you’re trying to build something bigger. Whether or not you can do it organically or inorganically is kind of the key issue. Whether you’re buying or selling is semantics. It’s about the combination of these firms.

Do you have advice for the people who are not media companies who are buying media companies, whether they’re traditional distributors like AT&T or the tech guys who haven’t traditionally been in media and are out looking at it, and maybe they want to buy something directly or maybe they want to buy their own stuff and distribute it? What have you figured out about media that they might want to know?

Well, I don’t know what I’ve figured out, but I would say it is interesting that there aren’t that many firms that have been able to be successful in a big way with a diversity of content in a consistent period. There’s only a handful of big movie studios ... maybe shrinking, depending on how you define the ones on the bubble. There’s only a handful of really big scripted television producers in the world that really do it on a global basis and are successful at it. And I think part of that is managing ... You know, managing creative business is quite challenging. I don’t think it’s that different. I think every part of every business, every great business, is creative.

But understanding how to manage a creative business, understanding the diversity of output you’ll be required to have and to encourage, and also, in our case at least, we’ve been very entrepreneurial in how we do it. We really try to empower our creators, and our creative partners, and our creative executives to go out and really try to push the envelope in terms of kind of changing the way we tell stories constantly, trying to really do things that are excellent, we often fail. And I think being tolerant of failure is important.

But that’s something that every great company should be able to do. So, I think the one issue that we see with the kind of, you know, the dabbling, right? If you look at an apple. Is it ... Going piece by piece, one by one, show by show, et cetera, is gonna take a long time to really move the dial and having something mega.

I do think that’s gonna be very challenging. But look at the kind of investment that Netflix is required to make in anticipation of potentially their not being able to acquire rights from outside programmers. They’re just doing a huge amount of original production. Those are enormous bets. And when you add on top of that, you know, live sports, and things of that nature, there are huge costs and huge barriers to do that.

But Netflix has sort of made it look easy, right? A few years ago, they were selling your repeats. You guys were happy to sell repeats. Really, just a handful of years ago, they got into with The House of Lies, right?

Cards.

Cards, thank you. House of Lies is on Showtime, I think. And they’ve zoomed it up, and, right, they’ve been throwing a lot of money at it. We don’t actually know how things are performing. They have a lot of subscribers, it seems to work. It seems like if you’re willing to throw a lot of money at the problem, and more money than the traditional media companies are willing to spend, you can solve for this.

Well, we spend a lot more than them on a global basis. A lot more.

Whenever we do a chart that shows their content budget versus yours, excluding sports-

Yeah, but you’ll be looking at Fox Network’s group, or whatever it is. But when I add up the volume around the world, looking at Sky, Star, the Fox businesses, National Geographic, and our sports business, we invest an enormous amount on screen for our customers. Not to mention our film business, right, which is a huge production commitment every year, as well.

So, I don’t think it looks easy, I think it actually looks hard. And I know they’ve done a great job in many ways, really delivering a user experience for customers that has raised the bar, I think, for competitors, generally. So what’s really great about seeing Netflix succeed is that I think the user experience has become kind of front and center for people. And for many, many years, we’ve had this kind of calcified, sort of established MVPD business here in the US, with the same number of players. We had the some hopes when AT&T and Fios kind of started to grow, but they’re not anymore.

But you really haven’t had that much competition, because you’ve had these franchise cable monopolies that famously kind of haven’t ... Well, their customers hate them, because they deliver a terrible user experience. And that’s kind of ... We know that. So, now you have this new layer of competition, you’re actually seeing investment. I mean, Comcast with Xfinity is a good product. If I look at the Sky Q business in the UK, and rolling out in Germany and Italy now, it’s another step change above that in terms of user experience.

What people love about Netflix is there’s no ads in it.

Yeah. That’s also ... That’s a lot of what we do with our on demand platforms as well, right?

And one of the things you like to do, for example, Hulu, is give the customer an option to say, “Listen, I’ll have a limited ad experience, or I’ll pay a premium to have no ads ...”

Like four bucks more, right?

Yeah. It’s very popular.

But the majority of Hulu customers are still buying the cheaper version with ads, right?

Randy is here, but I think it’s ... about evens.

Do you think that’s because people are just not used to the idea that they can buy their way out of the ad experience? Or do people like ads?

No, I think they make a choice. I think they say, “You know, for four bucks, I’m getting a limited ad ... Four bucks extra, I can do it this. For four bucks less a month, I’ll have limited ads. It’s not a terrible experience, the ads, it’s a much lighter load than you see in broadcast or cable generally.”

So, I think they make a choice. And I think once you empower the customer, and you make it really transparent, that it’s really about how they’re valuing their time, and how they’re valuing and dealing with their priorities, then also they complain a lot less about the ads, because they’ve been given a choice and empowered. So a lot of, I think, what the whole industry is doing is trying to figure this out.

I think the advertising business is one that does look very, you know, really trick going forward in scripted entertainment. You know, in the short term, you’ll have hits, you’ll have bits and pieces, but just ... And I’ve said this many times before, when you invest an enormous amount in telling these stories as well as we can, and kind of achieving the suspension of disbelief, and you really have the customer or the viewer enjoying what they’re seeing, and you interrupt them to communicate something about KitKats, or beer, or something like that, it’s just not a good experience. So I think we have to do much, much more investing in making it better.

So you guys are playing around with making it shorter, are you doing these six-second ads, and targeting, but do you think that eventually it’s just a question of, you’re either gonna give them ads, or not, and we keep ... Every year, we have a discussion, “Well, is TV advertising finally gonna tip over? Because viewers are down, et cetera, subscriber numbers are down.” And it keeps ticking up, or at least flat. Do you think TV advertising is gonna tip over at some point?

I think it’s gonna be hard to distinguish kind of digital video advertising from TV advertising, but I think linear TV advertising-

Videos that run while I’m watching a TV show ...

Yeah, look, but I think that’s ... I think you’re gonna see continued growth there, but you’re gonna see ad formats develop very differently, right? If I can get paid more by two second little impressions that scroll by in a newsfeed, which is miraculous, by the way, then people will do that. In shorter spots, less interruptive. I think there’s a lot of innovation that can happen there, but I also think we’re focused, and I know we are focused on, particularly some of our premium scripted entertainment, by delivering it ad-free, just straight up.

And not having it part of the business model, so our FX Plus, FX Premium business that you can buy as a ... a slightly lower cost kind of premium channel on top of your Comcast subscription or whatever it is has zero ads, and is a great experience with some of the best scripted entertainment like Atlanta or the Americans, or whatever.

And that’s a great service. In Europe, our Sky Atlantic business is largely without ads, and uninterrupted, and our big shows. And we’re gonna continue to do that.

The next two speakers are on stage are Evan Spiegel from Snap, Sheryl Sandberg from Facebook. They run advertising businesses. In Sheryl’s case, it’s a really, really big advertising business. Do you think they ought to be considering selling something directly to consumers, and not having it be an ad-supported business?

I mean, maybe you’re gonna be talking to them about ... I think-

Yeah, but I’m asking you first.

I think the ad business ... I think the question there isn’t so much, “Well, we have these ads and it works like this, but if you don’t want them, you’ll pay X, right?” The question is, you have this data, and you have this compact with your customers. It’s a little more straightforward than like this super long terms of conditions that nobody reads.

And you have to decide, “Do I have a natural right to maximize profitability around my customers’ privacy? Or I’ll just charge them to buy themselves out of it.” I think that’s ... I don’t think that’s the right question to ask, I think it’s more about the ad model in a social network. Is that driving the right behaviors? Is engagement, above all, driving us to lowest common denominators to just have more clicks, and more time, and all of that stuff. I think that’s probably true. And then [crosstalk 00:20:29]

You haven’t even answered my question.

And then when you have a communication platform, I think it was Jerry Linney, or said the other day that a communication platform connecting billions of people where every single conversation is mediated by somebody spending money precisely to manipulate them is probably not something that’s ... I think, from a societal perspective, you know, a great thing to have.

But then you have the second issue which is they look less like an ad business, and more like an attack surface, at this point. I mean, from a national security perspective, as well, you really worry about this kind of a platform. And I hope that they’re dealing with that as seriously as they say they are.

It attacks, just to spell it out, attacks service because they’re open to the world?

Well, we look at all the stuff that goes on in that platform, be it from ... you know, you can have Neo Nazis, or foreign governments, or political actors, or whatever. It’s easy to do. You can just buy people’s accounts, and buy their identities. There are these farms, right, that you can do that. And you just go and recreate those, and go and manipulate the whole environment. That doesn’t seem great.

Your father’s been an outspoken critic of Google in the past, Facebook now, News Corp in particular, and the sister company, complains a lot about Facebook, but do you think that at some point that Facebook turns around and comes to companies like yourself and says, “All right, we’re gonna follow this cable model, and we’re gonna pay you X amount per year, and you’re gonna give us your content, you’re gonna stop complaining so much.” Is that realistic?

I would doubt it, but I do think in that sort of a ... as simple a way as that, I would say though that I think there is a question, and we work closely with Google and Facebook on some of these issues more and less successfully, depending on the week. But I think at the end of the day, when you have that much commerce, and that much sort of enterprise being driven by what’s populating the platform, be it indexed sites for search, and the content associated with that, the actual content that’s on YouTube and other things, that are copyrighted materials that people have invested in a lot.

I think there is a question of how much these platforms invest in that. And that’s something that I don’t think has been really resolved. That said, you know, YouTube has been a great partner since they’ve started YouTube TV, which is a great, new kind of competitor in the digital video space. We supply all of our brands to them. They’re growing really fast, as is Hulu’s live service, and some others in that space. And you know, but there are places where you’d like people to do better in terms of piracy, in terms of taking stuff down, and so on, and so forth.

I don’t know if you saw the news today, but Roseanne Barr got fired by Disney for a tweet.

I noted that.

You run a big media company. Have you ever wanted to fire someone for one of their tweets? Or gotten close to it?

Well, my father gave up Twitter, so, you know ... So that was ... I think people tweeting in the public space is always just, there’s risk there, and I think firms that are associated with people and that you have ... you know, if you have colleagues, or staff, or creative partners like that, there’s a balance between them having an independent voice out there, and then what are they doing for their brand, and for the business overall? And you have to be careful about that.

I mean, your business, a lot of your business you were describing is based on talent, people who have an out-

Mm-hmm.

Personality, right? Do you have to consider now, “Well, we like what you do, but we’re worried that you might express this opinion, or that opinion on social media.”

Well, you do have ... I mean, in certain instances, you actually contract around that, right? So you try to have certain norms. But otherwise, you have to decide, you know, when is somebody crossing a certain line? I didn’t follow the Roseanne thing closely, but clearly, she crossed a line, and they decided to move on on the show and be done with it.

Giant hit show, they decided they didn’t want to run anymore.

It was only one year, though, right? So.

Yeah. Still.

I mean, it only just came back.

You don’t get giant hits very often in TV. As you know.

Yeah, but look, you have to make the right call, right? I mean, it’s not really about just keeping that audience going. It’s about what’s the right thing to do, what’s the right thing for your company, for the brand, for your customers, but also for your colleagues inside the business, and do you believe in things, or do you not?

And you have to try to ... You do have to be mindful, that you have to tolerate a huge diversity of voices, because all of your creative partners, all of your journalists, all of these people have independent identities in ways to broadcast, et cetera. And they’re not all going to agree with each other. And you’re not going to agree with them all.

Speaking of brands, and identities, and things you agree with or don’t agree with, my educated guess is your politics are very different than the politics you see on Fox News? Giant asset for 21st Century Fox...

I try to keep my politics sort of separate from the business.

Yeah, so I said it’s my educated guess that they’re different. Do you have any regret about stuff that’s on Fox News, and the influence that Fox News has on overall population and our president in particular?

Look, I think in a really diverse company that has ... You know, we have a lot of output, in news, as well, right? And TG Venti Quattro, or Sky News, and Fox News, or Star-News when we had it, they’re all different. And they have ... And they’ll have different voices, and different things. And then within them, you have a lot of diversity.

I think one of the things that a lot of people don’t realize is they might focus on a certain set of commentators, or sort of opinion show leaders, but they don’t actually look at the whole output there, as well. And I think that there’s ... So I think there is a lot of diversity, if I look at ... You know, between Sean Hannity, and Shep Smith, and Chris Wallace, there’s a big spectrum.

Right, but the most popular people on Fox are the opinion people, or the Fox and Friends show, and you guys will ... The standard argument is that’s opinion, it’s not news, it’s different, but the stuff that is influencing a lot of the debate, and very clearly influencing the president, comes from the people you would describe as opinion.

Well, I couldn’t possibly comment on the president’s television habits. According to the-

Executive time.

Well, according to the Small Business Administration, he’s working so hard that he couldn’t be watching that much cable TV.

I heard that.

We can only hope. But look, you have to have a diversity out. You have to have a diversity of voices there. So, while I’m going to agree with everything that goes on, every single channel that we own or every producer makes, I’m also very proud of the diversity that we foster from National Geographic to FX to Fox News to the Deadpool movie last week. They’re great.

Last summer after the President said there’s good people on both sides of the Charlottesville Nazi march, you made a point of donating a million dollars to the ADL. You didn’t make a public statement, but it was a semi public statement. It was clearly in opposition to what President Trump had said. Did you get any feedback internally about that?

I mean, I got some feedback internally. A lot, actually. And all of it very positive, actually. A lot of colleagues wrote to me privately, et cetera. I don’t need to say what they said. But I think a lot of people in the country felt sick that week and were worried about this trend, et cetera. I think this question of hate speech and hate groups both having platforms to organization, to my point early, that are very, very effective but also then being normalized, particularly around things like neo-Nazi in the streets of Charlottesville or Boston for example, marching around. It’s very scary and I think we’re also at a point where it’s super important to remember what all that means. Our Holocaust survivors are dwindling as time goes on. Super important to record their stories and to make sure we’re talking about their stories all the time and reminding people what happens when this stuff gets out of hand and what did happen to a major population. So I just felt it was important to reach out to people and encourage them to the same. It was more solicitation and trying to lead by example. I hope that everyone does more of it.

I’m going to let the applause go for a second and then I want to open up to questions for you guys. Because I’ve got more, but I bet you do as well.

I can’t see anybody.

John Fortt: Hi. John Fortt from CNBC. With the #MeToo movement, #TimesUp, a number of folks in entertainment, including inclusion writers are at least talking about it at this stage, there’s a lot of heat around the subject of diversity but I’m wondering, how much of this cultural moment is just going to pass? Is there specific things that you are doing and that you see others in the industry, in positions of power doing to make sure that there’s actual lasting change in the cultures of how media businesses are run so that five, ten years from now, we won’t be in the same position?

James Murdoch: Well, that’s a great question because you worry about these things when you have suddenly this explosion of noise around an issue. Is it really going to create longterm behaviors and culture change that is necessary? And I think, number one, there’s a bunch of things going on there in terms of ... you have the broad diversity issue and inclusion issue and then you have the kind of #MeToo sort of harassment abuse. And they’re similar. I mean, I guess they’re related. But they are kind of different. I think number one is we have to do the best job that we can around making sure that when we’re hiring, particularly in the creative side of the business where you don’t have as many female or people of color directing shows and so on and so forth, that frankly, we just have to make some rules.

At FX, for example, which is our biggest volume of kind of scripted production, we’ve done that. And John ... has really led from the front to say he’s going to have a much more diverse slate of directors and writers and so forth, and that’s working. I think he’s actually for years been promoting a super-diverse output in terms of creators. If you look at that output any day. So I think we have to do that as an industry. I think what we have to do is make sure we have new talent coming in to the business at a ... level. People who are finding the industry accessible to come and tell their stories and have jobs. So, for example, it’s small thing but, you know, for a number of years, we’ve been very involved with a thing called the Ghetto Film School, which takes promising young storytellers out of communities that wouldn’t necessarily feel like they had accessibility to this industry and give them a top-notch, almost college level degree in film and television production. And then aid them as a network of graduates of that program to then get jobs, get their union cards, move into the industry, et cetera. And that’s really starting to bear fruit.

And I think we have to be very, very clear that not just in ... the people in front of the camera that you’re showcasing diversity, but all the way through the company you’re doing it as well. We feel pretty good about, for example, if you look at our numbers in women in powerful positions in the business, of our senior managers. I think almost 40% now are women from a vice president up and that’s kind of a dumb statistic, but it’s good relative to everything out there. But we want to do more of that.

Peter Kafka: I promised I wouldn’t ask all about Fox News for half an hour, but I can’t help myself. You spent tens of millions of dollars settling harassment charges and other complaints about the culture at Fox News. Do you think that that has been solved there, that whatever problem had been going on was systemic has been fixed?

Jeez, you never say it’s ... You look at all of this crazy stuff in the news industry, news and entertainment industry but I mean, it looks like nobody can keep their pants on. It’s unbelievable. We all know, we’ve seen it across all these different companies and all these different people and you never thought you would have seen that. God, I mean, if they don’t know ... If somebody doesn’t know now at Fox News that nothing is going to protect them if they behave that way, that would be incredible to me. So we’ve been really clear. We’ve communicated it as best as we can. We’ve had to deal with some legal issues. There’s nuance in some of these things.

You mentioned canceling the Roseanne Show. You know, our number one was the O’Reilly Factor. We had to make a decision, right, around some allegations that came to light and we made the decision. So I think when you lead like that, people get the message pretty clearly.

I think this larger message of inclusion and diversity in the overall industry is a hard one. We’re not really going to know for another five, ten years how sustainable it is. But I think real breakthroughs have been made and I think in terms of ... Look at the #MeToo stuff. Little things like changing our policies around where you can have certain kinds of meetings and how many people have to be there, you hate to have to micromanage that, but if you can guarantee that you’re not going have casting meetings in hotels with only one person in it, then you’re probably going to eliminate the opportunity for abuse across a pretty broad swath. That’s our goal.

Peter Kafka: I want to give you guys a chance to ask a couple more questions but you’ve got to ask them quickly and then James has to answer them quickly.

Dan Benton: Hi. Dan Benton. I’m over here. I’m a public market tech investor and I have a big position in Tesla. You are on the board of Tesla. Do you think that Elon and the company are treated fairly by the press, number one, and number two, do you think it’s an effective countermeasure to engage in 3 a.m. Tweet storms?

James Murdoch: Well, look. I would say one thing about the press, and no offense to all the press in the the room but if you ask yourself the question, if there’s something that you actually have direct knowledge of and know something about, and you read an article about it in the newspaper or on a website or wherever it is, how many times is it perfectly accurate? Never, right? Yet, we look at all the other stuff that we have no direct knowledge of and we go, “Oh, well, The New York Times said X, Y, or Z.” Or Peter Kafka said it, it must okay-

Peter Kafka: Probably.

James Murdoch: I think there is sometimes a problem in terms of the way to business press covers all companies. And they get interested in a particular subject and they maybe lose the forest for the trees, or they want to write about politics when they should be-

But it’s fine when the business press writes how great his cars are.

Wait. I’m not ... There are challenges in business coverage generally. And the way that the company and Elon will respond to that, it’s really his call.

Last question here.

Alex Shurman: James, Alex Shurman at CNBC. Peter gave this sort of a game effort but I’m going to try one more time. Talking to other legacy media CEOs when Fox decided to sell the bulk of their assets, there was genuine shock, surprise. Something changed from 2014, when you were looking to buy Time Warner to now with you and your father deciding to sell. Was that a realization that Fox is no longer that well position on content spend, given the various new players out there, or was it something else that was the driving motivation to say, “Now is the time that we are going to sell?”

James Murdoch: So look, if you just go back to Peter’s question before, first of all, we’ve been talking for years about how fast things change in our industry, right? So ‘14 to ‘17 is some time when you’re kind of iterating as fast as this industry can or is starting to. But no, it has nothing to do with content spend. I mean, look. We’re competing really will. We just finished a cricket auction in India, two of them actually. One for the India Primary League and one for the BCCI. And in both instances, big digital competitors were there and we have a great monetization platform there. We were able to invest the appropriate amount, a large amount and secure, really, the bulk of cricket broadcasting for the next five to seven years in to country, which is a pretty good position to be in, in terms of if somebody new wants to come in, there’s nothing to buy in cricket.

So I think that just shows that I don’t think that’s the case at all and what I was explaining before as well, from our scripted investment, our film investment, our sports investment around the world, we spend ... we invest a ton in this stuff and it’s not really a question of not being able to compete with other people.

What I was trying to explain was I actually think the reason that we’re looking at this combination and with Disney that we’ve agreed to, is that we think the resulting firm is a really attractive business. Precisely because we actually have a velocity and a scale in our business that’s very complimentary with theirs. They recognize that. And the combination is going to be on that that’s just that competitive and more innovative going forward. Clearly that’s been recognized as we see from Comcast saying they plan on making an offer in the future.

But the reason they’re doing that is actually because what we’ve built over many year at 21st Century Fox is a pretty unique set of assets that are really well positioned to go and do this. And our view is that inorganically is going to be the best way to sort of accelerate the beginning of whatever the next phase of this end game is.

And I didn’t really get there before, the point about sort of the pack separating, all these businesses are a little bit different. I think what we’ve done, the choices we’ve made, where we’ve invested in what, have really separated as from some of the pack that maybe subscale or haven’t invested enough or are struggling with some of their legacy models where we’ve been able to really innovate faster and I think it’s put us in a good position.

Alex Shurman: In other words, there was nothing left out there that, from your assessment, that you said, “If we buy this, we can be competitive with the various forces that are out there”?

James Murdoch: You have to take into account relative scale as well.

Alex Shurman: So you could have waited for Time Warner, for instance?

James Murdoch: I could have waited until we were three times the size of Disney. I don’t know when that’s going to happen, right? I mean, you have to look at what’s the right combination and the buying versus selling is sort of semantics if you’re focused on maximizing value for shareholders and actually getting the right deal that’s going to create the right firm to go and compete going forward.

Peter Kafka: Okay. We tried, Alex.

Alex Shurman: We did our best.

Peter Kafka: James, you’re great. Thank you for coming. I appreciate it.

James Murdoch: Thanks, Peter. Thank you, everyone.

This article originally appeared on Recode.net.