Tuesday, July 31, 2007

Mr. Fox buys his henhouse

I was one of the 60 journalists who quit after Rupert Murdoch bought the Chicago Sun-Times in 1984, turning the paper into something that, as Mike Royko put it, a decent fish wouldn’t want to be wrapped in.

So, I understand the fear and loathing that the employees of the Wall Street Journal feel at the prospect of News Corp. owning Dow Jones. But they may be surprised to hear me say that I think Murdoch will act decisively to protect the integrity and quality of the assets he is buying for $5 billion.

Although Murdoch’s henchmen made a hasty hash of the Sun-Times with page-one screamers like “Men Can Have Babies, Too,” you have to believe that someone willing to shell out five big ones for a trophy like DJ will be far more sensitive and thoughtful than to send in the clowns who pillaged the Sun-Times 23 years ago.

As Murdoch and his team soon learned, the radical remake of the Sun-Times was an embarrassingly poor business decision, proving to be as repugnant to readers and advertisers as it was to the newspaper’s staff. Murdoch extricated himself from the situation a few years later, when he sold the paper and plowed the profits, and then some, into the television stations that today are part of the Fox Network.

After suffering through a series of idiosyncratic – and worse – owners, the Sun-Times, happily, has been rehabilitated by the most enlightened management it has seen in two decades. (Disclosure: I am a consultant to the company.)

Notwithstanding the long-ago fiasco at the Sun-Times, Rupert Murdoch didn’t build one of the world’s largest media companies by habitually making bad decisions.

Quite to the contrary, he typically has a unique business plan for every property in his vast and varied portfolio, shrewdly targeting each to a well-defined audience and advertising niche. That’s why the Times of London is staid and stately – and American Idol is not.

“Under Murdoch's ownership, the [London] Times has expanded its staff,” reports the Washington Post. “The paper now has about 495 journalists, including the online unit, and 20 foreign bureaus, a number that has doubled in recent years.” Impressively, its circulation, which had been stagnant at about 200,000 for decades, now tops 670,000 – a gain unmatched by any American newspaper.

Although the Fox News Channel is a notorious pulpit for neo-con bullies and the New York Post teems with tales of Paris Hilton and Pervy Pete, each exploits large and lucrative market segments that were left wide open by the conventional, just-the-facts-ma’am media. Proofs of their success are readily apparent. The ratings of Fox News are twice as high as those of CNN and the Post’s circulation in the six months ended on March 30 gained 7.6% while the industry average fell 2%.

It doesn’t follow, however, that Murdoch’s skill at turning dross into gold means he will turn the Dow Jones properties into political bludgeons or scandal sheets.

Murdoch is paying a handsome premium to acquire the company to extend its valuable brands around the globe through the print, television and Internet assets he already controls (and intends to buy or build). In so doing, Murdoch would gain access to a hefty share of the premium advertising revenues associated with the media products that serve the most sophisticated and affluent people in the world.

As reported in the New York Times and elsewhere, Murdoch historically hasn’t been squeamish about pushing his political and commercial agendas with the senior managers who run his media companies. But I think he will be more circumspect than ever at the DJ properties, because the whole world will be watching – and eagerly documenting any missteps in competing publications and the blogosphere.

At the end of the day, the power of the marketplace will keep Murdoch honest.

The business and financial reporting in the Journal, Barron’s and the other DJ brands are rightfully respected as being thorough, dispassionate and insightful (notwithstanding a few wobbles in reporting on the News Corp. overture).

Eroding the credibility of the DJ properties would insult the intelligence of the readers and viewers that News Corp. covets, devaluing the franchises and perverting the premise of this very expensive transaction.

That would be dumb. And Rupert Murdoch isn’t dumb.


Anonymous Anonymous said...

Why do you assume that Murdoch is buying Dow Jones as an investment, rather than as a tool for promoting his worldview? He's rich enough not to care whether he ruins the WSJ.

3:09 PM  
Anonymous Anonymous said...

I agree with your sentiments about Murdoch's intelligence when it comes to operating companies. But while he might not tinker as much on the editorial side, you can be assured his touch won't be as light when it comes to the production side of the house.

Witness what he is doing at the papers he owns in the United Kingdom, where he is cutting production workers by more than two-thirds through a combination of automation and extending the supply chain to vendors.

I'm not saying it's the wrong approach; in fact, in other manufacturing industries, those tactics have been employed for years if not decades.

It will be intriguing to see if he will be willing to invest the same money in the United States to upgrade DJ's older printing infrastructure (notwithstanding the money DJ just spent to add color and reduce the web widths of presses in its 17 U.S. printing plants).

3:47 PM  
Anonymous Anonymous said...

Murdoch will push his own agenda through the DJ products and make an already conservative paper, the Wall Street Journal, super right wing.

6:21 PM  
Blogger Unknown said...

The Wall Street Journal is read (presumably) by businessmen and investors who are looking for sound business news on which to base their decisions. If the Journal strays from the serious and objective reporting of news, those readers will quickly go elsewhere. They can't accept an ideological slant on business news, it would literally cost them money. Many ideologically driven conservatives already complain that the WSJ news pages have a "Liberal" bias; that is not surprising, given that Reality has a notoriously Liberal bias. Murdoch can't afford to change the reporting too much, but of course he can make the editorial pages even more right-wing, which will make the obvious contradictions with the news pages even more glaring. So I'm not too worried about the quality of the reporting, and look forward to an even more hilarious editorial page, if that is even possible.

10:42 AM  
Blogger asha said...

The WSJ's integrity is already compromised. Murdoch is king and whore monger of a media monopoly through which he disseminates the radical reich wing agenda. It's that simple but, of course, he will be clever about it. In any case, the glory days of paper are past. It's like a white cloth. If you wonder if it's dirty, it is.

12:42 PM  
Anonymous Anonymous said...

If you actually believe "the market will keep Rupert honest," there's some swamp land in Florida I'd like to sell...

12:36 AM  
Blogger Jim Bowman said...

If you've seen the Sun-Times lately, you will know that its presumably enlightened editors have instituted a firmly British (I think) tabloid philosophy and mentality. No men having babies yet, but lots of wild stuff anyhow.

The top dogs, by the way, are aliens, including the publisher, whose wife-columnist holds sway in ridiculous fashion. She's a girl gone wild.

10:24 AM  

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