Analysis: Get Ready for Rupert of Wall Street
By Alex Ben Block for Hollywood Today
HOLLYWOOD, CA. (Hollywood Today) 5/7/07 – If you think News Corp. will give up its fight for Wall Street Journal parent Dow Jones because of an initial rebuff, you don’t understand Rupert Murdoch, and what he sees that others miss. Now that he has his target in his sites, Murdoch’s history is that he will do whatever it takes to make the deal.
Fox owner Murdoch’s initial offer, seen as generous by Wall Street, is only the beginning of a campaign for a group of media properties he has coveted for years. In the past, Murdoch has been known to spend months, even years, going after acquisitions, returning again and again until he wears down the owners with promises and barrels of cash.
In this case he already has nearly half of the controlling Bancroft family on his side, and it is likely only a matter of time and money before he wins enough of the rest to get his way. The Bancrofts have control of the ownership of Dow Jones, but they are not a united group. In a Wall Street Journal story on the family (5/4) one Bancroft expresses concern for their journalistic legacy, saying he opposes Murdoch, and then adds: “But if the number (the price offered) gets too high up there, what can you do?”
Even protests like those from minority partner the Ottaway family over the weekend, will have to withstand a determined onslaught. “The reputation of The Journal and Dow Jones for serious, accurate and objective work, would be damaged if Rupert Murdoch and his News Corporation take over Dow Jones,” said James Ottaway. “(The New York Post) regularly runs biased news stories and headlines supporting his friends, political candidates and public policies, and attacks people he personally opposes.”
If it takes a bit more cash to make the Bancroft family forget about protecting the family jewels, then Murdoch will likely offer it eventually, but only to close the deal.
More money? That may shock the numbers crunchers but things add up differently the way Murdoch figures. He isn’t just looking to buy a company, but to add an important element to his holdings whose synergy will bring him far greater wealth and power.
Murdoch has done this again and again throughout his career, making it pay off far more often than those few times it has come back to haunt him. Murdoch knows that the price he overpays will be nothing compared to the return his investment will bring over time, and the long term value of the assets he is building.
For instance consider his history with the Fox network. When Murdoch bought the Metromedia stations from John Kluge, they said he over paid for the stations. They didn’t understand that it would be the basis for the 4th American TV network and would geometrically increase the value of the stations and his holdings.
When Fox Broadcasting had problems getting carriage on cable systems in the early days, Murdoch “overpaid” for rights to National Football League games, which made it impossible for cable systems not to carry Fox. They had to have the programming, especially sports, that the paying customers wanted. He later added the Emmys and other high profile events for the same reason, until Fox was able to grow its own franchises as it has with “American Idol.”
When Murdoch wanted “TV Guide,” then the most important mass circulation magazine driving TV viewing, he again “overpaid.” That gave him the power to make sure Fox shows were promoted. It also led him into the Gemstar deal, which ultimately resulted in costly losses, proving Murdoch doesn’t always get it right.
For years Murdoch wanted DirecTV to complete his global domination of the satellite TV business. He already owned powerful satellite interests in Europe and Asia. It took several efforts and once again he “overpaid,” but got what he wanted. When DirecTV didn’t turn out as he hoped, he sold it off. Murdoch may want to acquire properties but he is still very pragmatic and knows there are times to get out.
Murdoch was a late convert to new media, but once he was convinced it was the future, there was no stopping him. That is why News Corp. “overpaid” for My Space, the social networking site, in a deal that in retrospect now seems like it was a bargain.
In this latest deal, Murdoch knows Dow Jones would provide a perfect platform to help launch Fox’s new business channel, which has been over three years in development, under Roger Ailes, who helped Murdoch turn Fox News Channel into phenomena, a financial success and a powerful political force.
Murdoch said in an interview with the Wall Street Journal in recent days he may re-name the new business channel to take advantage of the Wall Street Journal brand if he makes the acquisition. He knows that brand has global resonance. That is why acquiring Dow Jones would give the new channel instant credibility, and access to worldwide news gathering.
As a side bonus, it would also severely hurt arch competitor G.E./NBC’s CNBC business channel, which currently has a deal with the Journal for editorial cooperation. That makes it the perfect Hollywood play – a deal which helps your company and hurts competitors.
While newspapers in general have problems competing with online media, the Wall Street Journal is in a different situation. First, as a national business paper, it has an audience that has money and a real need for the information it offers. Second, the Journal is the rare print product that has built a significant base of paid subscribers online; so its economic model is much stronger than the typical consumer daily.
Murdoch also sees this as an opportunity for him to do what he likes best, get back down with the rank and file and shake things up. The WSJ also reports that if he gets Dow Jones, Murdoch plans to take time off – six months or more – to work full time on re-inventing the Journal for the new media age, and to reflect his own style and politics.
Murdoch has also reportedly told the Bancroft family that if he gets Dow Jones, he will set up a separate board to oversee the paper and guarantee its journalist integrity. However if you think the paper would not change under his ownership, you haven’t been paying attention to what Murdoch has been doing over the past half century in Australia, England and in the U.S.
Murdoch lets each of his media exist at its own level. So after he bought the Times of London, for instance, much to the horror of the British establishment at the time, it remained a news oriented, factual, serious newspaper; but it also got a new layout, a livelier approach and its politics shifted to reflect Murdoch’s conservatism. There might not be naked girls on page 3, as in Murdoch’s’ London tabloid, The Sun, but his imprint is very much on the paper today.
Murdoch appreciates not only the profits and synergy but also the political power that comes with a company like Dow Jones. He told the Journal reporters he wanted to see more reporting on politics, as well as a more global approach, to the Journal. He has used his power to develop relationships with many political leaders, and it has paid off time and again when he needed favors or to lobby for government assistance of some sort.
The tabloid headlines of some of his papers, and the off the wall programming and movies from his networks and movie divisions, his take no prisoners approach to many unions, have at time made it appear that a mad man is in charge. But Murdoch is anything but mad. He is quietly determined and very calculating in the value of the big deals he does; and he knows in this case, with the Journal and his news channel, one and one really will add up to three or more.
Murdoch has lusted after the Journal for a long time. He will be patient, tough and determined in his pursuit; and it would not be wise to bet against him. Since he rose from the back waters of Australia, Murdoch has been opposed and reviled at nearly every step of the way. He just shrugs it off and keeps moving forward, leaving his critics in his dust.