Saturday, June 2, 2007

My, What Big Cheques You Have, Mr Murdoch!

“All newspapers are run to make profits. Full stop. I don’t run anything for respectability. The moment I do, I hope someone will come and fire me and get me out of the place — because that’s not what newspapers are meant to be about.”
- Rupert Murdoch.
Great analysis from David Carr at the New York Times:
* First, the deal will be made at some point, regardless of what the Bancroft family said last week. Brute-force capital, like flood waters, always finds a way to break through.

* Despite his allaying words to the contrary, Mr. Murdoch would operate The Journal, including its editorial operations, as he sees fit. As Mr. Murdoch himself has said throughout his relentlessly acquisitive career, he buys things to run things.

* There is business synergy in the deal — between the News Corporation’s proposed Fox Business cable TV channel and The Journal, for example. But far more important is Mr. Murdoch’s own version of synergy, which puts business, media and government all in a single vertical. Owning The Journal would give him a powerful leverage in all three.

* The price that Mr. Murdoch is offering — $60 a share — is a multiple of ego, not earnings. He may have some other super-secret plan to squeeze more value out of the company, but the deal would give him something that, for all of his stellar business achievements, he’s never achieved in this country: a seat at the gentlemen’s table.
Carr also provides a few case studies to ponder:
In 1969, he showed up as a white knight when the Carr family (not my people, by the way) were struggling to maintain control of News of the World in London. He assured them that a family member would remain chair and that he would acquire no more than 40 percent of the stock. Not.

In 1976, Dorothy Schiff, owner of The New York Post, found a sympathetic ear and a promise of editorial continuity for her paper, but a cadre of British and Australian journalists began remaking the paper and staff as soon as Mr. Murdoch gained control. As owner of the Post, he took the lead with the newspaper unions on behalf of all the New York newspapers during the 1978 strike and then cut a side deal.

In 1981, he romanced both Harry Evans and his then fiancée Tina Brown for The Sunday Times and The Times of London, but that, too, came to tears. In the mid-1980s, Mr. Murdoch engaged in a dialogue with British newspaper unions even as he built a new printing facility (gilded with razor wire no less) that would render them beside the point...

“When I used to work with Katharine Graham, she used to say his name and then almost spit on the ground,” said Mark M. Edmiston, managing director of AdMedia Partners, an investment bank. “But capitalism is built on the highest and best use of capital and he understands that. Money has no conscience.”

Neither, many would argue, does Mr. Murdoch.
Neither, of course, do the Bancroft family. I won't be shedding a tear for them when (not if) Murdoch gets their paper. What concerns me is what Rupert Murdoch might do with not just a media empire, but also a virtual stranglehold on global financial data. Many powerful business people read the Wall Street Journal, and not just for the pro-Bush editorials.

UPDATE: Murdoch has just sold his 7.5% stake in Fairfax. It's called "cashing up" for the big deal.

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