By Jessica Toonkel
NEW YORK (Reuters) - Rupert Murdoch is banking on Americans' love of live sports and breaking news for a new, slimmed down version of his Fox TV business after selling the company's film studios and international operations to Walt Disney Co <DIS.N>.
The 86-year-old media mogul's play is based on the fact that sports and news still attract viewers watching in real time - and the advertisers that want to reach them - even as more people watch their favorite shows on demand after they air or online, skipping commercials completely.
"Are we retreating? Absolutely not," Murdoch told investors on Thursday. "We are pivoting at a pivotal moment."
Disney's $52.4 billion purchase of Twenty-First Century Fox's <FOXA.O> film, television and international businesses, announced earlier on Thursday, leaves Fox with a smaller but more focused set of assets, based on Fox News Channel - the U.S. No. 1 news cable network - and its broadcasts of sports such as National Football League and Major League Baseball.
Murdoch, who started in the news business 65 years ago when he inherited his father's newspaper, is keen to adapt to new ways of reaching customers. The new Fox will keep the technology it has been working on and is developing an online streaming video service to boost online audiences for its programs, executives said.
The new Fox will be about a third of the size of what it is now, with about $10 billion in annual revenue, company executives said. If investors value the new company with the same or a greater multiple as the current Fox, it would suggest a market value of at least $20 billion.
Its smaller size may mean it has less leverage when negotiating with cable and satellite companies to carry its content or bidding for sports rights to air on its network.
Nevertheless, Murdoch challenged investors to trust him, saying he faced similar doubts when he launched Fox News 21 years ago and Fox Sports 1 in 2013.
"Content and news relevant to you will always be valuable," Murdoch said.
LESS IS MORE
Fox's reduced size was not an immediate concern for investors.
Mario Gabelli, chief executive of GAMCO Investors Inc, which is a Fox shareholder, told Reuters he is not worried about the new Fox's size given that competitors such as Sinclair Broadcast Group Inc <SBGI.O> are smaller.
The U.S. Federal Communications Commission's recent move to roll back regulations that prohibit owning a television station and newspaper in the same market means the new Fox could grow by buying a string of papers and stations, Gabelli said.
Contrary to recent speculation, there are no plans to fold the new Fox into News Corp <NWSA.O>, the news business including the Wall Street Journal that Murdoch split from Fox in 2013 and in which he still owns a large stake.
"We haven’t thought about combining with News Corp and if we do it's way, way into the future," Murdoch said on Thursday.
However, a smaller Fox may be at a disadvantage competing for sports rights from deep-pocketed digital rivals such as Facebook Inc <FB.O> and Amazon.com Inc <AMZN.O> as well as traditional competitors, said Brian Wieser, an analyst with Pivotal Research.
Fox's deal to carry Major League Baseball's games is up for renewal in 2021 and its deal with the NFL is up in 2023.
Twenty-First Century Fox CEO James Murdoch said the new Fox still would have the required scale and will compete for sports rights.
Murdoch is also banking on Fox News Channel continuing its success as the top-rated cable news network, despite the fact that the median age of Fox News' viewers is over 65, according to Nielsen. The median age of rival MSNBC's viewers is also over 65, while CNN's is 59.
"For some advertisers Fox News is an important way to reach their customers," said Barry Lowenthal, president of The Media Kitchen, a New York-based media buyer. "But the challenge for them is how do you bring in the younger consumers."
(Reporting By Jessica Toonkel; Editing by Anna Driver and Bill Rigby)