Murdoch Drives a Limping News Corp. Onward
Murdoch sidestepped whether he would be in the market for acquisitions, telling one analyst that "we get better returns by building rather than buying," but he also said "that doesn't mean that we wouldn't take any great opportunity." Already, since April, Murdoch's company has put an estimated $200 million into struggling German pay-TV operator Premiere to take a nearly 40% stake. That company is being renamed Sky Deutschland, to better fit into the Sky family of satellite TV services that News Corp. controls. That News Corp.-controlled group currently includes BSkyB in Britain and Italy's Sky Italia.
For Murdoch, the German play represents a key thrust to expand BSkyB's successful digital strategy to what he calls "the continent's healthiest economy" and to roll out more channels and lure customers, as he has done in Italy with top-flight sports events and digital video recorders. In Britain as well, his Sky operation has become one of the country's fastest-growing Internet and phone service companies.
Defiant in the Face of the Ad Slump Elsewhere in Murdoch's sprawling empire, which includes the Fox film and TV operations, The Wall Street Journal, and other newspapers throughout the world, the mogul hardly was sounding a retreat even as poor advertising savaged many of his operations. "Nobody is going to cut their way to global competitiveness," he said at one point. "We need to look for new opportunities that may come our way…and to better align our business with future growth opportunities."
Murdoch wasn't saying where—or even whether—he intended to buy anything, despite a war chest of more than $6 billion cash. But he said he wasn't contemplating closing any of the company's print outlets, despite a massive decay in that business. Instead, he is holding steady on hiring, even at hard-hit print assets, including The Wall Street Journal and his British newspapers. Still, Murdoch conceded that classified advertising would never return to its once lucrative prominence and said changes in digital delivery of content are badly damaging the role of display ads.
In the boldest statement yet among media executives about steps to revamp the sickly journalistic business model, Murdoch stressed that he is intent on charging for online content from his publications, and would try to emulate the success in that area enjoyed so far by The Wall Street Journal. "People will pay for quality journalism, and to cut back on staff would be to cannibalize that," Murdoch said. He specifically said he has resisted cutting back on the staffs of his London newspapers in the event that one or two of his competitors close down.
Chase Carey, News Corp.'s newly installed president, also said that the company was contemplating ways to expand its lucrative cable-TV presence into more overseas markets and was looking to find a way to get added revenue for some of its more popular shows, including American Idol and NFL football. He did not discuss how that might occur. News Corp. shares were little changed in aftermarket trading.