The true cost is the 50 per cent uplift a successful deal to buy all of British pay-TV BSkyB would have contributed to News Corporation’s just-announced annual profits of $2.89bn.
BSkyB made £1bn or $1.6bn profit in its last financial year, making the $12bn or so News Corp was prepared to pay for the 61 per cent of the company it doesn’t own a comparative snip.
News Corporation with all of BSkyB would be a much bigger company and one with a more reliable revenue stream than it has currently when profits seem to depend increasingly on delivering an Avatar-style blockbuster from film studio 20th Century Fox. Recently it hasn’t.
So a business, News Corp’s UK newspapers including the now defunct News of the World, that only contributes one per cent of News Corp’s profits (Rupert Murdoch’s own figure) has prevented it becoming half as big again.
Shareholders who were gunning for the Murdochs now have other things to worry about as all their investments are poised on the brink of a long and slippery slope.
So Rupert was able to tell them yesterday in a conference call that he’s staying in charge (with COO Chase Carey, he said the two of the them worked as a team) and that son James still enjoyed the ‘confidence’ of the company (this may change of course).
He also said that the company was no longer pursuing big deals (like BSkyB) but was now content to build on its existing businesses.
This process seems to include some pretty fierce cutbacks at News International, with one of its two main profit drivers, the News of the World, no longer around. A Sun on Sunday, if it happens, would find replicating the NoW’s sales or profits difficult.
At some point attention will turn to the loss-making Times and Sunday Times. The point of The Times in particular has always been its supposed influence among the UK establishment but these days even chums like British PM David Cameron and other assembled Tories find the Murdochs too hot to handle.
A crazy foreign buyer for The Times would probably have his (or her) hand bitten off.