Crystal Ball Gazing In Reverse

Michael Hedges July 9, 2012 Follow on Twitter

With barely a fortnight passing since the news that News Corporation will split into two, one for entertainment and one for publishing, media watchers continue to look for the tsunami that often follows an earthquake. It hasn’t materialized. Stock traders welcomed the news while newspaper people lamented, all quite expected if somewhat rehearsed. As always, there’s more to follow and veritable industry has sprung up to take the challenge.

And it’s not as if News Corporation chairman Rupert Murdoch has gone into hiding, licking his wounds as his allegedly beloved newspapers are spun into the obscurity of a much diminished holding company, unable to damage the profit and loss statement of the television and movie business. The venerable business daily Wall Street Journal “may be called WSJ,” he hinted to CNBC America (June 28) in a robust defense his publishing business. He’s “proud” of the 2007 Dow Jones acquisition, US$3 billion in write-downs notwithstanding, calling it “very cash positive.”

The Wall Street Journal (WSJ), new name or not, will certainly be the flagship of the spun-off publishing company. Under News Corporation ownership the WSJ has “de-emphasized” business news, reported Poynter.org (July 20, 2011), and reduced long-form reporting. But the intention was always to take on the New York Times (NYT) for influence in the US market. Not short on irony, sources reported by the Guardian (June 21) said NYT chairman Arthur Sulzberger has interviewed outgoing BBC Director General Mark Thompson for its CEO position. Mr. Thompson knows something about competing with Mr. Murdoch at a very high level.

And the US market, apparently, matters most to Mr. Murdoch. During the round of interviews during ‘split-week’ he blamed “the English” for troubles ranging from pesky laws to Members of Parliament, phone-hacking and the failed attempt to acquire the part of pay-TV company BSkyB he does not already own. For all of that, he will punish the UK.

“I think we've moved on in our own thinking on (BSkyB),” said Mr. Murdoch to the Fox Business channel (June 29), which he owns. “There are billions and billions of dollars. If Britain didn't want them, we've got good places to put them here. I am a lot more bullish on the US than on the UK. I would be a lot more reluctant to invest in new things in Britain today than I would be (in the US).”

Quick like a bunny, BSkyB issued a report (July 5) touting its contribution to the UK economy. The company employs 22 thousand in the UK and “supports” another 100 thousand “through supply chains. And it creates a ton of tax revenue; over GBP 900 million in corporate taxes, customer VAT payments and staff employment taxes. “We hope that Sky's story provides a good example of the important contribution that a successful British company can make,” said BSkyB chairman Jeremy Darroch in a statement, “particularly at a time when economic growth is harder to come by.” UK media regulator OFCOM is yet to issue its report on whether or not News Corporation is a “fit and proper” owner.

The icy climate in the UK (actually rainy and windy) exacerbated, perhaps, News Corporation’s separation into two companies. Mr. Murdoch’s predisposition for playing with politicians contributed immeasurably to the predicament in the UK, where he’s now considered toxic among the powerful.  Warmer climate (hot actually) in the US is far more congenial; Hollywood is there along with a new and needy set of politicians.

When addressing staff of tabloid News Of The World upon its closing exactly a year ago the now deposed News International chief executive Rebekah Brooks pointed in the future’s direction. “We have more visibility perhaps with what we can see coming than you guys,” she said, quoted by Sky News (July 9 2011). “I am tied by the criminal investigation but I think in a year's time, every single one of you in this room might come up and say ‘I see what she saw now’.” She was oh, so right.

See also in ftm Knowledge

Rupert Murdoch and News Corporation

News Corporation is a highly competitive media giant a global, multi-media footprint. From paywalls and pay-TV to tabloid troubles and new ventures the media industry watches Rupert Murdoch. Update includes family ties, succession plans and other News Of The World. 172 pages PDF (April 2011)

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