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Table of Contents
Title Page
Copyright Page
Dedication
PREFACE
Introduction
CHAPTER 1 - Start Spreading the News
CHAPTER 2 - Crazy Like a Fox
CHAPTER 3 - Hooked on Cable
CHAPTER 4 - The Sky’s the Limit
CHAPTER 5 - Wheeling and Dealing
CHAPTER 6 - Rupert 2.0
CHAPTER 7 - The Battle for Dow Jones
CHAPTER 8 - All in the Family
EPILOGUE
Acknowledgements
NOTES
INDEX
PORTFOLIO
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First published in 2009 by Portfolio,
a member of Penguin Group (USA) Inc.
Copyright © Paul R. La Monica, 2009
All rights reserved
LIBRARY OF CONGRESS CATALOGING IN PUBLICATION DATA
Monica, Paul R. La.
Inside Rupert’s brain / Paul R. La Monica.
p. cm.
Includes bibliographical references and index.
eISBN : 978-1-101-01659-6
1. Murdoch, Rupert, 1931- 2. Mass media—Biography. 3. Mass media—Management.
4. Businesspeople—Biography. I. Title.
P92.5.M87M66 2009
070.5092—dc22 2008028601
[B]
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To Beth. For everything.
PREFACE
News Corp. chairman and CEO Rupert Murdoch is the man that many in the media love to hate. Murdoch is often demonized by journalists who work for competitors because of his political views and willingness to dictate news coverage when he sees fit. While Murdoch is far from being a saint, he has been often unfairly criticized by those who fail to understand that at the end of the day, the media business is still a business and that Murdoch likes to make money. In Inside Rupert’s Brain, Paul R. La Monica takes a more sober and less emotional look at the controversial Murdoch’s successes and failures. For better or for worse, Murdoch has transformed the news industry, Hollywood, and the rest of the media world. And very often, competitors who have criticized him have eventually gone on to imitate him, a fact that thrills Murdoch, the original media maverick. Still, Murdoch is a career newspaperman and the one thing that he has craved has been journalistic respect, something he has never been able to achieve by owning tabloids and a cable news channel that is largely viewed as having a right-wing bias. And with the media business in a period of flux, there are concerns that his $5 billion gamble on Dow Jones may have been an overpriced mistake that had more to do about ego and less about profit.
INTRODUCTION
“We’re cooling on the idea of buying Dow Jones. The Wall Street Journal is obviously a wonderful brand. But I don’t think we’d ever get it or they’d ever sell it.”1
That’s what News Corp. chairman and CEO Rupert Murdoch said to an audience of media executives at a conference sponsored by McGraw-Hill in New York, about the possibility of his media conglomerate buying the venerable publisher of the Journal. The date was February 8, 2007.
A little less than three months later, Murdoch’s News Corp. launched its bold $5 billion, unsolicited takeover bid for Dow Jones. The offer valued Dow Jones, which had been struggling as more and more advertisers and readers were fleeing print for the Web, at a staggering 65 percent premium over its closing price the day before the bid was announced.
News Corp. announced its bid on May 1, 2007, and while it would ultimately take Murdoch three months to convince the Bancroft family that controlled Dow Jones to agree to a sale, there were few doubts that he would eventually succeed. After all, while some media experts scratched their heads about why Murdoch would offer such an exorbitant sum for Dow Jones, many other media watchers knew that the bid was a perfect gambit.
Murdoch offered as much as he did in order to ensure that he would have no competition. And, as it turned out, that was precisely the case.
Offering $5 billion for Dow Jones wound up being too much to ask for investors such as Ron Burkle, a billionaire who made his money through supermarket properties, as well as Brian Tierney, the owner of the Philadelphia Inquirer and Philadelphia Daily News. The $5 billion price tag even scared off cash-rich publicly traded companies such as General Electric, Pearson and Microsoft.
The takeover bid from Murdoch, coming so soon after he publicly said that an offer was not likely, is a perfect example of Murdoch’s maverick nature. Murdoch transformed News Corp. from a mere regional newspaper publisher to a global media giant with a leading presence in television, movies and now the Internet.
“Look at Murdoch and his history. News Corp. has gone from being just an Australian newspaper company and evolved that into a U.S. media and global satellite company. If anyone has the DNA to adapt and change, it’s Murdoch,” said Alan Gould, an analyst who covers News Corp. for Wall Street investment bank Natixis Bleichroeder.2
But has Murdoch, with the purchase of Dow Jones, done a deal that will come back to haunt him? It’s easy to understand why critics would say that buying a slow-growth newspaper publisher is a mistake. After all, with newspaper ad revenues plunging as readers abandon traditional print publications for blogs and other online news sources, many are proclaiming that the print industry is dying.
Some suggest Murdoch may also grow tired of Dow Jones if it does not wind up generating the type of strong growth that he will clearly demand from it. After all, a hallmark of the Murdoch strategy is his almost ceaseless deal making. And Murdoch has often quickly fallen out of love with assets he’s acquired. During his tenure running News Corp., he’s owned and sold brand-name publications such as TV Guide, New York magazine and the Village Voice, for example.
More recently, News Corp. bought the L.A. Dodgers baseball team in 1998 and sold it in 2004. The company also bought a stake in U.S. satellite television business in DirecTV in 2003, only to turn around in 2006 and announce that it was selling the stake to Liberty Media, the conglomerate owned by John Malone, a media rival and occasional thorn in Murdoch’s side.
Some would argue that Murdoch has been savvy, buying and unloading assets at the right time, milking them for maximum profit. But others might argue that Murdoch’s constant wheeling and dealing is an example of someone who is too willing to make aggressive bets on certain businesses regardless of whether they fit in his current portfolio. It hints at impulsiveness on his part as well.
To be sure, Murdoch has made his share of curious business decisions—strategic moves that have not always panned out the way that he, or News Corp. shareholders, would have hoped.
But another trademark of Murdoch’s career is his willingness, more so than most other media executives, to take bold chances. His decisions have been scrutinized and often criticized by analysts, investors and insiders of the famously skeptical media industry.
However, Murdoch, more often than not, has had the last laugh.
“Investors have initially disagreed with the vast majority of News Corp.’s/Mr. Murdoch’s acquisitions/investments historically,” wrote Richard Greenfield, an analyst with Wall Street research firm Pali Research, in a report shortly after News Corp. announced its intention to buy Dow Jones. “Yet, the overwhelming majority of these deals/investments have created substantial value for News Corp. shareholders.”
For example, when News Corp.’s Fox broadcast network debuted in 1986, few thought that a fourth prime-time network would be able to survive in a world that had been dominated for decades by ABC, CBS and NBC.
Yet Fox not only survived but thrived and has been responsible for some of the biggest pop culture media phenomena of the past two decades, including the show’s long-running animated hit The Simpsons, teen soap opera Beverly Hills 90210 and singing contest American Idol.
The latter show has been such a ratings juggernaut since it debuted in 2002 that executives at the other networks openly talk about the futility of programming against it and, with an almost reverential sense of awe, refer to Idol as the Death Star of prime-time television.
Murdoch also defied the odds when he took on Ted Turner in the cable news race. When News Corp. launched Fox News Channel in 1996, few believed that there would be enough of an audience to justify the existence of a second twenty-four-hour all-news network.
But yet again Murdoch’s bold move paid off. Fox News, which boldly proclaims that the network simply has its news personalities report and lets viewers decide, now routinely beats archrival CNN in the ratings. Fox News is widely criticized by some media experts and Democratic politicians as simply being a mouthpiece for the Republican Party. But the network clearly tapped into a desire for more conservative viewpoints on television news, similar to the way many right-wing talk shows have thrived on radio.
Murdoch also has taken dramatic steps to make sure that News Corp. would not be left behind in the digital media race, most notably by purchasing MySpace. News Corp. decided to acquire Intermix Media, the parent company of the popular social networking site, for $580 million in July 2005. At the time, some analysts worried that Murdoch was paying too much for the still-unproven company.
