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Thursday, June 28, 2007

Rupert Murdoch & WSJ

Former Fortune managing editor Eric Pooley caught with Rupert Murdoch while the negotiations with the Dow Jones board over editorial independence for the Wall Street Journal were being conducted

Its an interestig interview that reveals the mind of a sharp businessman inside Rupert Murdoch. The fact is that cChange was coming to the Journal whether Murdoch bought it or not. Like other newspapers, it has to change and adapt. And its relative inability to change and adapt until now certainly can't be blamed on Murdoch.When Murdoch talks about the future of newspapers, Ericn notes that it gives a sense of how contemporary he really is. Circulation and advertising revenues are ebbing away everywhere, he notes, proportional to broadband penetration.

Murdoch has a lot of interesting things to say :

The $5 billion price tag is easily absorbed by a company that earned $2.3 billion on sales of $25.3 billion last year and has little debt. But if the financials are simple, everything else about the deal is complicated. "The price of the Journal," says Murdoch, "is $60 plus vitriol."

Murdoch swears, that if he gets the newspaper, he has no plans to alter its journalism. "There'll be no change in the Journal's business coverage," he says flatly — but he does mean to expand its reach. He'd like the newspaper to be a national counterpoint to the New York Times in setting the country's agenda.

How does he respond to this bleak picture? By musing about investing even more in newspapers. "What if, at the Journal, we spent $100 million a year hiring all the best business journalists in the world? Say 200 of them. And spent some money on establishing the brand but went global — a great, great newspaper with big, iconic names, outstanding writers, reporters, experts. And then you make it free, online only. No printing plants, no paper, no trucks. How long would it take for the advertising to come? It would be successful, it would work and you'd make … a little bit of money.

He also notes that the Journal leadership has tried to maintain the print circulation by not giving everything away online, but the percentage of heavily discounted print subscriptions is rising rapidly, a sign of ill health. WSJ.com has more than 900,000 subscribers, making it the largest paid-subscription site on the Web, but less profitable, Murdoch suspects, than it might be with a hybrid model — with free users driving ad sales and premium users willing to pay for high-end content. "But it needs to be studied carefully," he says. Murdoch sensed the power of the Web not so much as a user but as a businessman who watched the bottom line. In late 2004, he says, he "began to feel the erosion of advertising in print and even the stalling-out of ads on television and decided to pay better attention to this. He confirms having discussed with Terry Semel for a stake in Yahoo but with Terry gone, he may have to start discussions all over again, but in the tradition of Newscorp style, an undeterred MySpace goes ahead to launch MySpace TV to take on the likes of YouTube.

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