Three years ago, News Corp. (NWS) Chief Executive Rupert Murdoch bought The Wall Street Journal publisher Dow Jones for more than $5 billion, an insanely high price for a floundering company in a moribund industry. Murdoch is ignoring the naysayers again as he targets the New York Times Co. (NYT).
The Australian media tycoon takes no prisoners when he competes against his enemies like the Times, which conservatives consider the liberal media elite's high temple. According to Reuters, the Journal is slashing its subscription prices by about 80% as it prepares to launch its New York edition. It's not clear yet how the Times will respond.
Update: The Audit, Columbia Journalism Review's business news blog, argues that the Reuters story is wrong. For one thing, the Journal's prices have been lower than the Times' for a while, which is one of the reasons why the Journal reportedly loses about $80 million a year while the Times is profitable. Bottom line: the rates discovered by Reuters are not new nor are they shocking.
Risks That Pay Off
Making a profit in newspapers is not a priority for Murdoch. He has held onto the money-losing New York Post for years. The tycoon's attachment to newspapers borders on the irrational. It's the industry that helped make him rich, and you'd think ink runs through his veins. He's also equally passionate about combating liberal media bias. It's what drives him to embark on risky media ventures that appear to do little to bolster the bottom line of New York-based News Corp. Occasionally, though, the gambles pay off big.
Naysayers argued in the 1990s that a second all-news channel would never top Time Warner's (TWX) CNN, a sentiment which turned out to be spectacularly wrong. The channel is now a huge moneymaker for News Corp and recently posted its best ratings ever.
Fox Business News, which got off to a slow start after launching in 2007, has added well-known broadcasters like Don Imus and John Stossel to bolster ratings, which have showed gains off a small base. Fox Business' audience, though, continues to be dwarfed by General Electric's (GE) CNBC.
Right Time for a Newspaper War?
Since acquiring Dow Jones, Murdoch has bolstered its general interest news coverage. Though critics have argued that the paper's influence on business has waned, its latest average daily circulation figures, from the Audit Bureau of Circulations, showed a 0.61% gain, a rare bright spot in a dismal report. The Times had a 7% decline during the same period.
Questions abound about whether the time is right for a newspaper war. Advertising spending, which cratered in 2009, is expected to rebound slightly this year. Analysts expect online advertising spending to overtake print this year for the first time.
Researchers at Borrell Associates are forecasting a 2.4% rebound in newspaper advertising in 2010 and for spending to rise in the single digits over the next few years. The biggest gains will come in local advertising, according to Borrell. It remains unclear whether there's enough high-end advertising spending to support the new Journal edition and The New York Times.
But facts, figures and forecasts matter little to Murdoch, who has been on a decades-long crusade to remake American society. More often than not, he has been successful.
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