Murdoch's Fox Returns To China With 'Simpsons' Stores

| About: Twenty-First Century (FOX)

Summary

After years of standing on the sidelines, Rupert Murdoch is finally taking a step back into China with plans to open stores based on the popular TV series "The Simpsons."

Some are scratching their heads at this particular concept, since the TV series is relatively unknown in China and was actually banned here until recently.

This announcement is probably a teaser for bigger events, including a 20th Century Fox theme park for China and possibly a new film production tie-up.

Bottom line: Fox's (NASDAQ:FOX) new "Simpsons"-themed China stores will meet with lukewarm response and will pave the way for announcements later this year of a new Chinese theme park and film production joint venture.

After years of standing on the sidelines, media mogul Rupert Murdoch is finally taking his first big step back into China with plans to open a new chain of concept stores based on the popular TV series "The Simpsons." An executive with Murdoch's Twentieth Century Fox, which owns the animated TV series, discussed this particular plan last year, even mentioning the "Simpsons" name at that time. Still, some are scratching their heads at this particular concept, since the TV series is relatively unknown in China and was actually banned here until recently.

This announcement is probably just a teaser for the bigger events that will come later this year, including announcement of a 20th Century Fox theme park for China, and possibly a new film production tie-up. Fox is actually playing catch-up to other major Hollywood studios in all three areas, following its withdrawal from the market with the sale of its main Chinese TV station to Shanghai's China Media Capital (CMC) in 2010.

Fox's consumer products division chief Jeffrey Godsick first disclosed the retail plan last spring, saying at the time that Fox planned to open 50 stores in China by the end of this year (previous post). Now the company has taken the next step by formally announcing it will open its first-ever "Simpsons" concept stores in China starting in March (English article, Chinese article).

The first store will open in the popular Sanlitun area of Beijing in two months, while the second will open in Shanghai in June. The shops will sell the usual array of "Simpson"-themed items, including T-shirts, hats, shoes and cellphone cases, and Godsick says he plans to eventually open up to 100 outlets.

Godsick says Fox chose the "Simpsons" as a launch vehicle for its China homecoming due to local familiarity with the show's characters. Perhaps that's partly true, and some people in big cities like Shanghai may be familiar with the show. But it does seem that many people here in China don't know much about the series, and few have any feelings toward its characters. After all, "The Simpsons" was banned in China until just 2014, amid broader restrictions on foreign cartoons and also due to some of the show's episodes that touched on sensitive issues.

Disney Role Model

Fox's lack of recognition contrasts sharply with Disney (NYSE:DIS), whose characters are widely known to most Chinese. Disney has used that fact to its advantage, making big money in China with sales of Disney-themed merchandise and brisk business at its expanding chain of local Disney stores.

In this instance Fox might want to look more closely at another rival, Warner Bros (NYSE:TWX), which opened a few stores in Shanghai based on its characters about a decade ago. Those stores were quietly shuttered a few years later, after Chinese consumers failed to show much interest in characters like Bugs Bunny, who is well known in the US but has little or no recognition in China.

All that said, I do think the new "Simpsons" stores could do a little better than Warner's, since Chinese consumers are far more sophisticated now than they were a decade ago and the retailing landscape has evolved significantly. But I also think the goal of 100 stores looks like a pipe dream, and these shops will remain a niche business for Fox in its China homecoming.

The big events will be the announcement of a 20th Century Fox theme park later this year and also a potential Fox film production joint venture, most likely with CMC (previous post). A theme park would follow in the footsteps of Disney, whose Shanghai Disneyland is set to open this year. A production joint venture would follow a similar tie-up announced between Warner Bros and CMC last year (previous post). I'm a bit dubious about the prospects for a Fox theme park and these new "Simpsons" stores, but at least we should applaud Murdoch for finally returning to China after a five-year absence.

Disclosure: None.