News Corp. Has Faith

Rupert Murdoch isn't above calling on the Almighty for a little help. His company, News Corp. (NYSE:NWS), recently did just that.

According to an article in The Hollywood Reporter, the company's Twentieth Century Fox Home Entertainment unit revealed plans to target the faith-based marketplace. The division wants to promote films that have a Christian angle and release them for distribution on DVD. In addition, some of the projects will also see distribution at the box office, although they won't necessarily be huge releases; for example, the first project, titled Love's Abiding Joy, will run in fewer than 250 theatrical locations via The Bigger Picture, the theatrical distributor for the movies. The name of the brand is FoxFaith.

News Corp. is betting that the buzz behind movies with religious themes will continue long into the future. Obviously, the ground has been set by the overwhelming success of movies such as Mel Gibson's The Passion of the Christ, (distributed on DVD by Fox) and Disney's (NYSE:DIS) The Chronicles of Narnia franchise. To be certain, these mainstream pictures -- which grossed hundreds of millions of dollars -- didn't appeal just to the very spiritual, but targeting that demographic proved to be a marketing coup and reaped many box-office bucks.

That Twentieth Century Fox wants to do this kind of DVD distribution is a sign of the times -- the theatrical marketplace has been facing challenges from competing media diversions and collapsing release windows (i.e., the time a movie appears on other media after a box-office run). Fox wants to be conservative on the expenditures to promote the films, so focusing on DVDs is the way to go; the Reporter states that Fox will acquire only films with budgets of less than $5 million and will then allocate $5 million to sell the film to the target audience. You can't do that with a film that will run in thousands of multiplexes, since significantly more capital is required to get people in the seats.

One of the advantages to this kind of business is that it can be done on the cheap -- by now, everyone knows that movies are becoming so expensive that they are a risky proposition from a return-on-capital point of view. (The recently fired Tom Freston made this point concerning Viacom's (NYSE:VIA) studio operations.) Nevertheless, content is king, especially in the movie industry, so studios must constantly build out their portfolios. By operating conservatively, more projects can be explored to increase the odds of finding one or two hits a year.

Time Warner (NYSE:TWX) also has become serious about maximizing the DVD market by releasing films for the medium. As nascent disc formats such as Blu-ray and HD-DVD arrive in force, one can safely assume that new opportunities will arise for such specialized content. With all of this on the horizon, News Corp.'s plan to cater to faith-based demographics would seem to be a heaven-sent business move.

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Fool contributor Steven Mallas owns shares of Disney. The Fool has a disclosure policy.