Common wisdom says that media magnate Rupert Murdoch, 80 today, is tidying up his empire with retirement in mind, hence the bid to buy the 61 per cent of pay-TV broadcaster BSkyB his News Corporation doesn’t already own.
And the rather generous decision to buy daughter Elizabeth’s Shine TV production company for £415m with Liz rejoining the News Corporation board.
Even Murdoch can’t hold back the sands of time for ever of course although it’s worth noting that American business moguls (of which Aussie Rupert is now officially one) do go on for a long, long time.
America’s other media giant, Sumner Redstone whose family own CBS, Viacom, MTV and Paramount, will be 88 next birthday (May) making Murdoch look like a strip of a lad.
And Murdoch has recently demonstrated that he’s lost none of his grip, steering his bid for BSkyB away from the Competition Commission by promising to park Sky News (not sell as some dozy commentators have suggested) and calming down (perhaps temporarily) the storm over phone hacking at his UK tabloid newspaper the News of the World.
There are also some signs that his derided online paywall strategy at The Times and the Sunday Times is actually starting to work.
The Times in particular has been Murdoch’s Achilles Heel. Since he bought it in 1981 it has lost tens, maybe hundreds of millions of pounds. He would argue (privately) that it has given him political influence in the UK and to a degree across the world that far outweighs in value its paper losses.
But Murdoch is addicted to newspapers (the traditional Australian family business) and, although he’s made money from some of them like the Sun and News of the World, The Times and another trophy acquisition the New York Post have drained money from News Corp’s coffers.
Undeterred he bought Dow Jones, publisher of the Wall Street Journal for a chunky $5.6bn in 2007, only to write off $3bn of its value a couple of years later. The WSJ doesn’t lose money like The Times does but $3bn is a tidy sum and one which shareholders in News Corporation would have been up in arms about had Murdoch’s family not controlled the company through their 38 per cent stake.
But this is why Rupert will (probably) hang on to executive power longer than some expect. Whoever takes over from him (most likely son James who runs News Corp’s UK and Asian operations although Rupert may decide to carve up the empire) will not have the same emotional commitment to newspapers.
If the Sky deal goes through News Corp will be primarily a TV company with the Fox network in the US, Sky in Britain, Germany and Italy and Star in Asia and the Far East.
All these businesses are driven by subscriptions more than advertising, although advertising is obviously still important.
You could go so far as to argue that Murdoch isn’t really interested in advertising, certainly that he doesn’t understand it as well as he knows copy or subscription sales.
The Times, for example, depends almost wholly on advertising to survive (which it wouldn’t, of course, without Murdoch’s generous subsidies).
Any successor with complete management control (family or not) would be inclined to offload these burdensome paper products.
Rupert Murdoch’s reaction would be: over my dead body.