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60. Richard Murdoch and The Downturn

60. Richard Murdoch and The Downturn

Since we started to look at the state of the newspaper industry, one of the few people we haven’t heard from yet is Rupert Murdoch. Rupert’s News Corp. is one of the largest, most successful media groups on the planet. It owns FOX television network, MySpace, and the Wall Street Journal along with hundreds of other properties. The Wall Street Journal also has the distinction of being one of the new online newspapers that charges for its content.

For the three months leading up to December of 2008, News Corps posted a $6.4 billion loss which amounts to a 42% fall in operating income. Since the beginning of this year he has revealed that many of these losses can be contributed to the shift of advertisers to the web, where revenue from ad sales is much smaller.

He goes onto say, in May 2009 interview with the Australian Broadcasting Company that classified revenue, once a major driver of newspaper revenue is, “undoubtedly migrating to the web – probably not to return.”

Murdoch does, however, seem optimistic. He states in a May 2009 post on Marketwatch (a site that News Corp owns) that, “There are emerging signs in some of our businesses that the days of precipitous declines are done and that revenues are beginning to look healthier.” the businesses that he is talking about are his cable networks, which have seen a sharp rise in advertising income while his television stations and newspapers have seen a fall.

He also states, bucking the recent trend set by the New York Times and Washington Post that he would not distribute his content through the Kindle.

News Corp is approaching this problem somewhat differently than its competitors, creating pay-walls around its content at every opportunity. Thus far, it’s working, though we need to take into account that the Wall Street Journal provides that sort of highly niched financial content that tends to do well behind pay restrictions. The question is whether this model or one more attuned towards generating advertising income will be more successful in the long term.

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