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Monday, 30 May 2016 16:09

Inside the Murdoch Makeover of National Geographic

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In spring 2012, the National Geographic Channel was about to premiere Diggers,

a reality show about a couple of amateur sleuths who look for buried artifacts using metal detectors. During the promotional rollout, the National Geographic Society told David Lyle, chief executive officer of the network at the time, that concerns had been raised about the show. In the real world, scofflaws sometimes rifle roughshod through delicate archaeology sites while brandishing the devices. Might Diggers inadvertently make the situation worse? Lyle assured everyone at the society that the show was categorically anti-looting. To stave off its critics, Diggers eventually went out and hired several archaeologists to serve as minders and chaperones on set. “If we were making that show for Discovery, we wouldn’t have had to do any of that. Why did the society care? A couple of people at a couple of universities wrote letters,” Lyle says. “They hated getting letters.”

For years a culture clash had been brewing within the cloistered, sober halls of the National Geographic Society, a social club-turned-nonprofit organization founded in Washington in 1888 and devoted to the mission of increasing and diffusing geographic knowledge. Some NGS executives were irritated by the reality-TV shows that had come to dominate the network, which was majority-owned by Rupert Murdoch’s News Corp. The worry was that the lowbrow shows were damaging the society’s credibility and upstanding reputation. Behind the scenes, they had attempted to quash several projects before they aired. The TV people kept fighting back.

By the time the NGS board hired Gary Knell, former head of National Public Radio, to replace longtime CEO John Fahey in January 2014, the Diggers flap had blown over, but the cultural tensions were still simmering. Among other things, the internal strife was generating bad publicity. On a blog, societymatters.org, Alan Mairson, a former National Geographic writer and editor, highlighted again and again how the NGS’s traditional focus on science, exploration, and discovery was being overtaken and undermined on cable TV by more titillating topics such as sex and drugs, paranormal activities, and true crime. He lambasted the society’s leadership for subsidizing its “good works” with “tabloid trash,” often illustrating those critiques with a photo of Murdoch laughing.

Photographer: Getty Images

Knell agreed with some trustees that the network’s editorial direction had gone awry, but he also knew that the highly profitable network, not the august, yellow-bordered magazine, was the NGS’s lifeblood. In the months that followed, Knell came to believe the brand was suffering from a split personality. It was one thing on TV, another thing in print, and some beastly hybrid online. As much as any particular programming, he determined, the dissonance was what was hurting business. For example, various sales teams were approaching potential advertisers separately and with very different pitches. Knell suspected the internal friction would further jeopardize National Geographic during an existential fight for relevance.

So in May 2015, a little more than a year into the job, Knell decided to clear the air. He organized an off-site retreat for the society’s 20 trustees to discuss the future of the organization. He invited several business partners to attend. “The two-day retreat was held at the U.S. Institute of Peace—which you shouldn’t read anything into,” Knell says. “There was a good feeling in the room.”

Founded in 1984, the federally funded, nonpartisan institute is dedicated to reducing violent conflicts around the world. Its modernist Washington headquarters, topped by a billowing, translucent roof, is just off the National Mall, not far from the Lincoln Memorial. Among the key guests arriving for Knell’s retreat were a handful of top executives from 21st Century Fox, which had split from News Corp. in 2013. For years, the NGS and Fox had worked together, running the National Geographic Channels, a lucrative family of four domestic and foreign cable brands, of which Fox owned 70 percent and the society owned the rest. Crucially, Fox sent Chase Carey, then the company’s chief operating officer, and James Murdoch.

The youngest of Rupert’s three children from his first marriage, James, 43, has spent much of his career abroad, from Hong Kong to London, overseeing various outposts of the family’s far-flung media empire. Along the way, he served as CEO and later as non-executive chairman of BSkyB, the European telecommunications giant, of which his family’s company owned a controlling stake. In 2011, as a phone-hacking scandal engulfed the company’s U.K. newspapers, James returned to New York, where the company is based. In July 2015 he took over for his father as CEO of 21st Century Fox. (He and Rupert Murdoch declined to be interviewed for this story.)

From a certain perspective, the powwow at the U.S. Institute of Peace couldn’t have gone better. In September, the National Geographic Society announced it would sell all of its media holdings—including its flagship magazine, its TV channels, and its book publishing division—along with a handful of ancillary businesses, to a new, for-profit company. Fox would pay the society $725 million and become majority owner of the new venture, dubbed National Geographic Partners. The society would hold on to 27 percent and control half the seats on the new board. By taking a step back from the media business, the NGS would be free to focus on its philanthropic activities supporting scientific exploration, conservation, and education. And by paying the society a substantial sum, 21st Century Fox would gain tighter control over the expression of the National Geographic brand in print, on TV, and on the Web.

Not everyone saw this as good news. Various observers fretted that Rupert Murdoch’s conservative worldview, particularly his boisterous skepticism about global warming, might warp National Geographic’s editorial mission even more than the amateur treasure hunters. On Twitter, Greenpeace called the marriage “bad news for nature lovers.” In a clip on YouTube, Jane Goodall, the celebrated primatologist and former explorer-in-residence at the NGS, told The Winnipeg Free Press that at first she’d assumed news of the deal was a prank. Critics circulated mock versions of future National Geographic covers, with headlines ranging from “The 10 Most Reagan-esque Animals” to “The Joy of Coal.”

But while these commentators focused on Rupert’s political views, it was James who drove the deal. “[He] came and spent time with the trustees,” says Jean Case, chairman of the society’s board. “We became sufficiently convinced that his passions in these areas are very real.” Known among business associates as the most environmentally progressive of the Murdoch clan, he and his wife, Kathryn, run Quadrivium, a nonprofit foundation dedicated to a range of causes, including scientific education and the protection of oceanic fisheries and other natural resources. According to biographer Michael Wolff, Rupert sometimes refers to James as his “tree-hugger son.”

The $725 million investment was his first major move as Fox CEO. The deal has received strong support from his older brother Lachlan, Fox’s executive chairman, who is an avid rock climber and underwater photographer. In addition to the media assets, Fox picked up National Geographic’s travel business, which arranges tours to places such as the Galápagos Islands, and its licensing division, which lends its name to everything from bird feeders to backpacks to bedsheets and coffee beans. The success of the brand will likely hinge on the financial performance of the TV network—and its ability to navigate a market that’s being shaken by the unbundling of cable packages and rapidly changing viewing habits.

While some observers are still concerned that the Murdochs will drag the National Geographic brand down-market, the TV network is undergoing a radical makeover in the opposite direction. Fox is investing hundreds of millions of dollars to reinvent it as a more highbrow destination—a kind of HBO for science and adventure programming. “It’s better shows, it’s bigger talent,” says Courteney Monroe, CEO of the TV network. “The shift is right for the time. But, first and foremost, it’s right for the brand.”

National Geographic has been a staple of middlebrow American culture for almost a century. By 1926 the magazine had 1 million paying subscribers (or members, as they have long been known), according to Explorers House: National Geographic and the World It Made, by Robert Poole. As a nonprofit, the NGS poured surplus revenue back into its operations, giving rise to an erudite, university-like culture, replete with generous employee perks and fierce bureaucratic skirmishes.

In the 1980s the magazine’s subscriptions and newsstand sales hit a peak of about 10.9 million monthly readers, but after 1990 they began to decline. (Today it has a U.S. circulation of roughly 3.3 million, according to the Alliance of Audited Media.) Hoping to make up for falling print revenue, the NGS invested in everything from Hollywood movies to world-music albums to IMAX theaters to mobile games. Most of these media forays struggled. At one point the society teamed with Paramount Pictures to co-produce K-19: The Widowmaker, a submarine action flick starring Harrison Ford and Liam Neeson. The movie, which had a $100 million production budget, generated only $65 million in global ticket sales, according to Box Office Mojo. In 2006 the society paid an undisclosed sum—which one former executive says was upward of $100 million—to acquire Hampton-Brown, a leading publisher of English-as-a-second-language educational material. The move used a sizable chunk of the organization’s endowment (which by 2009 was hovering at less than $200 million) yet never generated significant profits. The media investments that did succeed—like the society’s 2005 hit documentary March of the Penguins—failed to translate into sustainable business models.

Cable TV was the exception. Throughout the 1960s, National Geographic produced nature documentaries for broadcast TV networks, starring the likes of Jacques Cousteau. When cable took off in the early ’80s, the NGS considered starting a channel but ultimately decided against it. That left the door open for the Discovery Channel, which started in 1985 and has since grown into a rich and formidable crosstown rival.

In the mid-’90s, the NGS reconsidered cable. Launching a network from scratch requires a hefty investment, in the ballpark of several hundred million dollars. Aware of the risks, National Geographic met with various potential partners and eventually hooked up with Murdoch.

The negotiations took nearly a year, according to Rick Allen, a former National Geographic executive. In the end, the society secured several controls, including separating TV rights, which went to the channel, from digital rights, which stayed with the NGS—and setting up a society-staffed fact-checking operation to vet shows before they aired. “The analogy I gave my colleagues at the time was that we’re playing pickup basketball with Shaquille O’Neal,” Allen recalls. “Shaq is 340 pounds. We’re 180. He doesn’t have to try and hurt us. All he has to do is lean on us, and we’re in trouble.”

The National Geographic Channel went on-air in the U.S. in 2001. Between the society’s brand recognition and Murdoch’s leverage, the network quickly spread across the U.S. and around the world—it now reaches 440 million homes in 171 countries. By the end of the decade, according to a Harvard Business School case study, the TV division was generating tens of millions of dollars in profit annually for the NGS.

Even as it grew more profitable, sprouted additional channels (including NatGeo Wild), and thrived overseas, the network was getting trounced in the U.S. by Discovery. In 2011 the network brought in Lyle as its new CEO. A gregarious Aussie, he’d spent the past several years in Los Angeles, running the Fox Reality Channel.

The National Geographic Channel began cranking out a slate of relatively low-cost reality shows. For the first time, the channel scored several pop culture hits, including Wicked Tuna, in which teams of salty New Englanders chase down Atlantic tuna; and Doomsday Preppers, about gun-toting survivalists preparing for Armageddon. Ratings grew, and so, too, did the net operating profit at the National Geographic Channel, which, according to Lyle, jumped from $72 million in fiscal year 2011 to $133 million in 2014.

On several occasions, the society’s standards and practices department attempted to alter or kill a series in development. Lyle says that in the spring of 2012, on the eve of the premiere of Wicked Tuna, the NGS tried to shut down the show over concerns about overfishing. Emergency meetings were held. In the end, the show proceeded on the condition that the channel create public service announcements highlighting the vulnerability of tuna populations.

Lyle says another fight broke out in 2013 over Killing Kennedy, a movie based on the book by Martin Dugard and Fox News anchor Bill O’Reilly. There was nothing overtly partisan about the TV adaptation, which starred Rob Lowe as John F. Kennedy. Even so, Lyle says, a certain faction already concerned that the channel was becoming overly Foxified objected to the show because of the O’Reilly connection. The issues got hashed out, and Killing Kennedy aired, generating significant ratings. The TV executives bristled at the interference. “Without the revenue from the channel,” Lyle says, “they wouldn’t have been able to pay the power bill to keep the lights on.”

As the years passed, Fox’s desire to control the NatGeo brand grew more urgent. According to Stephen Giannetti, a former executive at the network, representatives from Fox routinely inquired about buying out the society’s 30 percent stake in the network. “It was a conversation every year,” Giannetti says. For a long time, the NGS resisted.

Following his appointment as the society’s new CEO in January 2014, Knell found himself staring into what was arguably a more hostile environment than the Antarctic wastes, the “death zone” on Everest, or anywhere else the NGS routinely dispatched photographers—namely, the modern media marketplace. The forecast didn’t look good. And the more Knell dug into the NGS business model, the more concerned he grew. How, he wondered, would an independent nonprofit organization keep up in an age of shifting distribution channels, migrating ad dollars, and diminishing returns for legacy media brands?

Knell believed that to survive, the various factions within National Geographic needed to unite. The place to start was TV. In the summer of 2014, Lyle stepped down. Afterward, National Geographic announced that an internal candidate, Monroe, was taking over. A marketing executive, Monroe had arrived at the network a couple of years earlier from HBO, where she’d spent more than a decade creating campaigns for hit shows such as Sex and the City and The Sopranos.

A new programming vision began to take shape. The shifting strategy was informed, in part, by the commercial success of Cosmos: A Spacetime Odyssey. The 13-part documentary series, which aired in 2014 and starred astrophysicist Neil deGrasse Tyson, was produced by Family Guy creator Seth MacFarlane and ran across several networks owned by Fox, including NatGeo. Cosmos applied rich, Hollywood production values to a wonky, scientific subject. Viewers and advertisers loved it.

In January 2015, Monroe got a call from Peter Rice, chairman and CEO at Fox Networks Group. “He said, ‘What if we blew up what we are doing?’ ” Monroe recalls. “ ‘You worked at HBO for a long time. What does the HBO version of National Geographic look like?’ ” In April of that year, Monroe presented a new, upscale version to the network’s board. James Murdoch sat in on the meeting. “It was universally embraced,” says Monroe.

In May, Murdoch attended the off-site retreat in Washington where, for the first time, he met with the society’s trustees. Whatever reservations the National Geographic Society harbored in the past about selling more of its assets to Fox quickly dissolved. Four months later, Fox and the NGS announced the sale. A round of layoffs at the society soon followed. Knell believes that if the NGS hadn’t made the deal with Fox, things would only have gotten worse. He sees better times ahead. “21st Century Fox is a visionary company,” he says. “We were able to minimize some of our risk, and Fox got a brand they can really expand and back.”

“What does the HBO version of National Geographic look like?”

In March, inside a private dining room at New York’s Park Hyatt hotel, Monroe unveiled the new programming strategy to a crowd of media buyers. The channel’s development slate is brimming with boldface names. Alex Gibney is producing a miniseries about the global water crisis. Brett Morgen is making a biopic of Jane Goodall. Scott Rudin is developing a series about the events leading up to the nuclear meltdown in Chernobyl. And Darren Aronofsky is creating a series called One Strange Rock.

Each series will be backed by hefty marketing and production budgets. Under the previous regime, the network spent about $300 million a year on roughly 450 hours of programming. Monroe will now expend $400 million on 150 hours. “Our strategy before was more of a volume play,” she says. “It was a lot of low-cost hours. Quantity over quality. We’re inverting that.”

National Geographic’s ambitions are likely to put the network on a crash course not only with Discovery, but also with HBO, Netflix, and Amazon. “The audience doesn’t necessarily go where the dollars are spent,” Lyle says. “The part you don’t know is whether your ratings will increase proportionally.” The society is happy with the network’s direction now, he says, but what will programming look like in five years should the strategy fail?

With overall cable ratings declining in the U.S., media conglomerates are looking overseas to find new audiences. NatGeo wants its strategy to appeal to audiences from Central America to Europe to Asia: “Big shows in our genres—science and adventure—should translate around the world,” Monroe says. “The hope is that these become big, global franchises for us.”

The digital, print, and TV teams are now all under the same roof and, in theory, working toward the same goals. “There were people in certain quarters who were holding their noses about what was happening on the television side,” says Declan Moore, CEO of National Geographic Partners. “It’s a lot easier for them to lean in if they see more thoughtful, informative programming.”

The strategy will get its first major test this fall. In November the network will air a new miniseries called Mars, produced by Ron Howard, Michael Rosenberg, and Brian Grazer. The magazine will publish a package of stories about Mars. The book division will publish a Mars book. The Web team will go hog-wild with Mars content. Monroe jokes that National Geographic Expeditions will begin booking tours to the red planet.

Months after the deal was announced, James and Lachlan Murdoch remain actively engaged in Fox’s prized new asset. Every year the magazine’s photographers congregate at the society’s headquarters for an exhibition of their work. This year the Murdoch brothers attended the seminar and mingled, admiring the shots of camel silhouettes and lightning-struck villages. In November the magazine published an issue devoted to climate change. Susan Goldberg, editor since 2015, says that afterward she received a congratulatory note from Murdoch, saying he’d “gathered his family around” to read through the important issue. She says he’s made only one editorial suggestion to her. “James is an environmentalist,” Goldberg says. “He said, ‘I wish we could do more stories about why people don’t believe science.’ ”

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