Brunswick Review Issue 1

Master Of The Media

Rupert Murdoch: The founder, chairman, and chief executive of News Corporation, is arguably the world’s best known media entrepreneur.

Starting with a small clutch of assets inherited on his father’s death in 1952, Murdoch’s empire now takes in a wide range of newspaper, music, television and film interests throughout North America, Europe and Asia. These include everything from The Wall Street Journal and The (London) Times to 20th Century Fox, Harper Collins, BSKYB and Star TV.

David Yelland, a partner in Brunswick’s London office, a former editor of The Sun newspaper in the UK and deputy editor of The New York Post, met Murdoch in his office at news corporation in midtown Manhattan in December 2008.

A low table divides two pale sofas, which face each other as you enter the large, airy and bright office. We sit facing each other across a table laden with books. A recent history of The Times. A monograph of Australian contemporary art. Over to the right is Rupert’s large desk. Behind it is a large framed photograph of Keith Murdoch, his father, a journalist and editor who covered the First World War disaster at Gallipoli for The Times of London (his son subsequently part-funded a 1981 movie about the event). On the desk is a copy of The Times, which Rupert has owned since 1981.

Other family portraits jostle on the shelf above the picture of his father, principally one of Rupert, his wife Wendi and his two younger children: Grace and Chloe. Beyond the desk at the far end of the office is an entire wall made up of a large-and-backlit green-on-blue map of the world, black dots showing the major News Corp centres. To the right are six large television screens displaying Fox News Channel, the Fox Financial Channel, New York’s Channel 5 and Channel 9 (all of which he owns) as well as two other channels. Adjacent to the televisions – and opposite the desk – is a wall of glass which looks out onto the corner of 49th Street and Sixth Avenue. The muted traffic horns and sirens mark this out as the very centre of New York City.

As you enter the office there are three roomy work stations each occupied by personal assistants, led by the ageless Dot Wyndoe, Rupert’s personal assistant and gatekeeper for the last 46 years.

Yelland: This isn’t the New York I know – it seems to have lost its confidence.

Murdoch: Oh, that’s America. I’ve just been in California. It’s the same there. The stuffing’s been knocked out of it. London must seem pretty bad and I don’t just mean the housing market. I mean generally.

Yelland: There’s a time delay. In the UK the country hasn’t quite realized, whereas here (in New York) the networks are wholly negative. It’s reached the mass market, ordinary people.

Murdoch: When the money dries up you’re going to find people not going to restaurants, not shopping, the beginnings of trouble. In another three months time it will be like it is in New York. I don’t think there’s any place to hide. I’ve been bearish for more than a year but I never thought it would get this bad. As each month goes past I see a worse future. When does it bottom, how long does it stay on the bottom? When will it turn back up again? I don’t know. It certainly will. It might be a year. It might be three, maybe four years. And when we come out of this we may have a different looking world.

Yelland: And this equally affects China and Asia?

Murdoch: Oh sure.

Yelland: Is there an anti-business feeling in America? Or is it anti-banker?

Murdoch: It’s too broad to say there is anti-business feeling in America. In this country people admire success. What they don’t admire is golden parachutes and there’s no question in the last few years that greed took over in Wall Street. All these bright young people coming out of business schools went crazy. I think they deserve every bit of derision and criticism, frankly. But I don’t think that applies to general industry. In the financial world, the rewards got completely out of proportion to general society’s standards. I know that some people have lost – on paper – tens of billions of dollars. People have lost fortunes. The oligarchs have as well.

Yelland: When you look across the London titles you feel good about them, I imagine?

Murdoch: Yes I do. The Sun’s pagination is high and we’re also hitting record revenues with The News of the World. Mind you, look at The Sunday Times. It is the only Sunday paper to show an increase in circulation year on year.... and it’s looking great. But it’s horrible in advertising. The national advertising seems to have dried up a lot. It’s not that they’re going somewhere else. They’re not going to television or to other newspapers, it has just dried up.

Yelland: You are full color now. You can print full color on the new presses. Has that made a difference to revenues?

Murdoch: A bit.

Yelland: But all the papers seem bigger? The Times is fatter? Are you selling extra ads?

Murdoch: Well maybe James1 is giving James2 a bit more space. Seriously, in London our papers are financially strong even if we don’t make much money for a year or three years... but we will come out of this with our franchises infinitely stronger... we will use our leadership and our strength to gain market share.

Yelland: What do you make of The Times business section?

Murdoch: Great. First class. First of all Robert Thomson3 was there with Patience Wheatcroft (as Business Editor). Then we put James (Harding) in and we had Robert supervising and nurturing. Now James is in charge (of the whole paper). The two of them talk a lot. I’m not saying either of them gives an order to the other, of course, but it is a nice partnership. It’s good. 

Yelland: How many UK newspapers will close?

Murdoch: It depends how long this goes on. I think The Independent and the Daily Express will come out a lot weaker. If Tony O’Reilly4 wishes to lose $15m a year in order to say he’s got a paper in London even though he doesn’t agree with a word in it, that’s his privilege. So The Independent: I suppose you put a question mark over it. The Daily Mirror is a little bit like the Express in a way. You can squeeze the costs right out and the circulation goes down.. but it always goes down more slowly than you think. Enough to make you very depressed but still enough to make some money. It’s improved but its circulation is still diving

Yelland: Richard Desmond5 at the Express has taken a lot of cash out of the business since I was at The Sun, hasn’t he, and the sales have gone down – but he’s still in business!

Murdoch: Exactly. The sale goes down slower than you think.

Yelland: What do you make of the Daily Mail and its Editor Paul Dacre?

Murdoch: I admire many aspects of it. I am not worried about them passing The Sun or anything like that. Dacre is a very strong editor, a very strong character there. But he does tend to beat you over the head. I’m not saying I disagree with his causes; they are middle England causes. You can have it from him too many times in one edition. You know, he might calm down! But he is an extraordinary journalist.

Yelland: Have you got bright people coming up in the London papers? Do you think a bright kid of 21 goes into newspapers these days?

Murdoch: Well I’d go into newspapers like a shot. Of course! I keep saying the future of newspapers may not be in print, on paper, but if you’ve got a trusted brand as a news provider then you can charge for it. I think you’re going to find papers like the Wall Street Journal, the Financial Times and The Times raising their price if advertising continues to get harder. I think they can take price rises. We have put the Journal cover price up from a dollar to $1.50 to $2 all in one year and the circulation of single copy sales has increased. We need to raise the subscription price strongly.

Yelland: You’re rationalizing the way you print the Journal in the US. Can you explain?

Murdoch: We can use the big newspapers in the cities – we can print on their plants and distribute on their trucks. We don’t need to own all our print centres. The numbers you save all add up. We might save $3m in one city and $2m in another but the numbers all add up. Newspapers are nickle and dime businesses. You have to remember that.

Yelland: I’m slightly surprised to hear you talking about raising cover prices. You always used to say newspapers should be as cheap as possible. Is that just in the mass market?

Murdoch: Well I would have said that before in all markets. But it’s not possible to keep a paper like the Journal cheap and have well over 1,000 journalists.

Yelland: How happy are you with the Journal at the moment?

Murdoch: It’s a work in progress. I’ll be a lot happier in a year. I would like to expand it in all kinds of different areas but it’s not a time to be expanding. Robert Thomson is changing the culture brilliantly. I get nothing but compliments about the paper. Even allowing for the usual – you know – the usual fact of people blowing smoke there’s no question that Robert is exceptional and the paper is much, much better.

Yelland: I see that Breaking Views (the online financial commentary service) has gone from the Journal, that you have expanded the Heard on the Street column, stuck it on the back page and given it some design impact. You’ve recently hired a number of Lex writers from the FT. Is that the fulcrum of the battle between the Journal and the FT?

Murdoch: We don’t really consider ourselves to be in a big battle with the FT. It has a very British, European attitude. We are a total free market paper. Philosophically we are very different. And we are infinitely bigger. We have a circulation of between 1.6m-1.7m. I don’t want to underestimate the FT.

Yelland: People say the Journal is targeting the New York Times. Is the whole deal a play against the New York Times? Is that what this is all about?

Murdoch: No it isn’t but it’s happening anyway. A lot of the big papers in this country have grown very pretentious – monopoly papers like the Chicago Tribune, the Los Angeles Times and the Philadelphia Inquirer. For economic reasons they are now cutting out foreign bureaus and becoming much more local. Some of them don’t know what they are doing. It’s leaving the top 10 per cent or 20 per cent strata of people who want something more in this country. They are going to feel they need us or the New York Times. They want something more. The New York Times has a lot of good parts to it but its editorial agenda is all over the front page and right through the paper. It’s not what the readers want. It’s an opportunity for us. Of course the NYT outsells us here in New York, but outside of New York we outsell it three to one. We have a great opportunity.

Yelland: Do you worry that you overpaid for Dow Jones?

Murdoch: No! It will turn out okay. You’ve got to realize that Dow Jones is not the Wall Street Journal. That’s only half the business. The other half serves the financial industry around the world and is going fine. It is making great progress. But its market is more difficult.

Yelland: You seem very confident America isn’t going to swing left.

Murdoch: Well, look at Mr Obama. Nearly everything he’s done so far is a continuation of foreign and defence policy. He has been very strong, very pragmatic. He is faintly left of centre. He is stronger in every aspect than (Bill) Clinton. I would say Hillary will be much stronger as secretary of state than Bill Clinton ever was. Bill Clinton loves to talk but he allowed the Islamic threat to grow. She’s a tougher character. But make no mistake, Obama is going to be the boss. Look at who he has chosen. He’s got a very strong, practical and hard headed team.

Yelland: The Journal has been critical of Obama’s cabinet choices, though.

Murdoch: They didn’t ask me about it! I thought that was the Journal having a little bit of amusing leg pulling. It was just a little bit of well-intentioned mischief making. We have asked about the attorney general. I don’t know what he will be like but I’ll tell you, it’s not as political as Kennedy making his brother Bobby attorney general, is it?

Yelland: What do you make of UK politics at the moment?

Murdoch: I’m a long way away from it. It’s difficult to judge. I think there’s a lot to worry about in Britain... but I like Gordon (Brown). I think he is a man of great principle and I like his Calvinist approach to work. He’s criticized for being too much of a micro manager. On the other hand you look at David Cameron6. He’s a very nice man, a great family man, a man of great charm. But what does he really feel in his stomach? Is he going to be a new Thatcher, which is what the country needs? The UK desperately needs less government and freer markets.

Yelland: But we’re going to get more government, aren’t we?

Murdoch: You see figures like 70 per cent of all jobs in Newcastle are government ones – and it’s the same in other cities. It is terrifying.

Yelland: New York’s just as bad, isn’t it?

Murdoch: New York State is, yes. The new governor is trying to do something but he is blocked by the state assembly. The biggest crisis here in New York is education. We have made progress but there’s a long way to go. We have to do much more.

Yelland: Can I ask which of your competitors keep you up at night?

Murdoch: Nobody. We have a lot of respect for a number of people. I think all the other major US (television) networks are doing a good job. We are all struggling with lower audiences as viewing is fragmented. I don’t think it’s an idle boast to say that our studio (20th Century Fox) is the best run and most profitable. We take risks but our people there are very tough on costs and deals. If an agent comes to them and says here’s a great script and film and here’s an actor that wants 10 per cent we may look at it and say no. If you can’t justify it we won’t make the movie. Let someone else make it.

Yelland: Do you think the stability of News Corp’s management – Peter Chernin, Roger Ailes and Les Hinton have been with you for ever – has been a competitive advantage?

Murdoch: Next year we are going to give Les a party for his 50th anniversary. We don’t have fights, we tend not to fire, we have loyalty. We transferred the esprit de corps from Australia to the UK and then built it here.

Yelland: Turning to the Michael Wolff book (which I haven’t read in full…)

Murdoch: I haven’t read it either

Yelland: …he gives the impression that a lot of your acquisitions – BSkyB, The Sun in the late 60s, the original Fox network, and The National Football League – all happened by chance. What do you say?

Murdoch: BSkyB was pure vision. The Sun was pure vision. They said it was ridiculous at the time. But then they said only the Daily Mirror could sell like that. But we beat it.

I’m not sure you could put the NFL bid down to vision, but it certainly changed the game. Many people said we had overpaid at the time but we were right, dead right. We sensed that one of the owners of the NFL rights, one of the networks – CBS – was getting very tight about how they were going to bid for it next time. That deal absolutely made the Fox Network. You’ve got to realize that more than half our affiliates were little UHF stations like Channel 66 in Tucson. No one had ever heard of them, nobody ever went to them. But when the Dallas Cowboys were playing, the public had to watch them and they found the channels and that was the breakthrough.

Yelland: The Wolff book doesn’t talk about sport. It always seemed to me that sport was the power behind the expansion of broadcast here. The NFL, the Premiership in the UK, the Bundesliga for Premiere, the Italian league for Sky Italia and so on. It’s tribal, isn’t it? Do you think that’s understood sufficiently?

Murdoch: Well, that’s just understanding what people want. You learn from newspapers that sport sells. It is the sport in the papers that makes people buy them. There’s a passion there. It is the great common denominator.

Yelland: Can I ask you about China?

Murdoch: China will open up. Starting slowly, but it will. Starting in two or three years when the next regime comes in. There’ll be things you can do there. There are things you can do now but it is all censored. We have big activities for Dow Jones: news wires and things like that. Business news wires. I like China.

Yelland: How do you respond to questions about succession?

Murdoch: It will look after itself.

Yelland: Are journalists too negative?

Murdoch: Too many are pessimistic, pessimistic about their own trade. They are worried about their jobs, for example outsourcing sub-editing to other continents. It’s incredible what’s happening. So if they are worried about their job security it’s entirely understandable. I don’t think that applies to a paper like The Sun. With The Sun you have a degree of security because of its success… and the flame haired lady walking in the corridor!7

Yelland: Everything that’s ever written about you talks about you as powerful. Do you feel powerful?

Murdoch: I think it’s hugely exaggerated. You can do things with the papers if you edit them. I think what I do is choose my editors. I choose my editors and then I watch them. What power have they got? They can set an agenda or they can turn up some scandal. But can they succeed in telling people how to vote? I don’t think they can. They can have views but it’s just part of the noise.

Yelland: Even the attack on the former British Labour leader Neil Kinnock in The Sun when it was edited by Kelvin MacKenzie? Did that not influence the outcome of the 1992 UK general election?

Murdoch: Maybe it did, maybe it didn’t. I don’t know. A paper like The Times can zero in on something, like it did on the recent business with the Speaker of the House of Commons and the police. The Sun can run an endless campaign like it has on a battered baby – and it can have an effect because it keeps at it.

Yelland: Can the world’s great media companies, including News Corp, survive the internet and even prosper from it?

Murdoch: Of course all media companies should survive the internet challenge although they will have to make many changes. The internet is still in its young days, both our response to it and our use of it will have to evolve.

Yelland: What next for News Corp?

Murdoch: Continued development of our great franchises.

Yelland: What is the achievement you are most proud of?

Murdoch: Probably Wapping8. I think it has led to the preservation of a vigorous and competitive press, which really doesn’t exist anywhere else in the world.

MILESTONES

1931 - Keith Rupert Murdoch, AC, KCSG born 11th March 1931 in Melbourne, Victoria, usually known as Rupert Murdoch

1952 - Murdoch inherits Adelaide News, an Australian mid-size daily, and the Adelaide Sunday Mail. From these assets Murdoch created News Limited

1956 - Murdoch began publishing Australia’s first and most successful weekly television magazine, TV Week at Southdown Press in Melbourne

1964 - Launches The Australian, Australia’s first national daily newspaper, which is based first in Canberra and later in Sydney

1968 - Murdoch expands into Britain. He succeeds in beating rival publisher Robert Maxwell to the acquisition of The News of the World

1969 - Acquires the daily newspaper The Sun and turns it into a tabloid format

1972 - Acquires the Sydney morning tabloid The Daily Telegraph

1973 - Purchases San Antonia Express-News. Soon afterwards he founds Star, a supermarket tabloid

1976 - Purchases the New York Post

1981 - Takes over The Times and Sunday Times in London

1985 - Murdoch becomes United States citizen. News Corp buys TCF Holdings Inc., parent company of 20th Century Fox Film and, separately, seven television stations from Metromedia for $1.55bn. These deals create what is to become known as Fox Broadcasting Company

1987 - In Australia he buys The Herald & Weekly Times Ltd, the company his father once managed

1993 - Murdoch acquires Star TV, a Hong Kong company founded by Richard li (son of Li Ka-shing) for $1bn and subsequently sets up offices for it throughout Asia

1995 - He announces a deal with MCI Communications to develop a major news website, as well as founding a conservative magazine The Weekly Standard. In the same year, News Corp launches the Foxtel pay television network in Australia in partnership with Telstra

1996 - Murdoch decides to enter the cable news market with the Fox News Channel, a 24-hour cable news station

1999 - Significantly expands his music holdings in Australia by acquiring the controlling share in a leading Australian independent label, Michael Gudinski ’s Mushroom Records; he merges that with Festival Records and the result is Festival Mushroom Records (FMR)

2003 - Acquires a 34 per cent stake in Hughes Electronics, the operator of the largest American satellite TV system, DirecTV, from General Motors for $6bn

2004 - Announces he is moving News Corp’s headquarters from Adelaide, Australia to the United States

2005 - News Corp buys Intermix Media Inc, which holds MySpace.com and other popular social networking - themed websites for $580m. On September 11, 2005 News Corp announces that it will buy IGN Entertainment for $650m

2007 - Purchases Dow Jones, owner of the Wall Street Journal, for $5.6bn

1 James Murdoch who runs Europe and Asia
2 James Harding, Editor of The Times
3 Former editor of The Times, now Editor of Wall Street Journal

4 Proprietor of The Independent
5 Proprietor of Daily Express

6 Leader of the Opposition Conservative Party
7 The Sun newspaper Editor Rebekah Wade
8 The east London print plant to which Murdoch secretly moved his UK newspapers in 1986, setting in train a revolution in the industry