Rupert Murdoch has quit the boards of the various News papers and News International. News Corp says that this is in preparation for the coming split of operations into two separate News Corp groups, print media and entertainment.
That’s about all News has had to say on the subject. The actual resignations happened last week, and they’re only now getting addressed by external news sources. Both Bloomberg and Australian News Corp rival The Sydney Morning Herald ran more or less exactly the same information regarding the split. News didn’t run anything itself that I could find, and apparently some of the notifications to other papers were by email.
“Last week, Mr. Murdoch stepped down from a number of boards, many of them small subsidiary boards, both in the U.K. and U.S.,” New York-based News Corp. said in an e-mailed statement yesterday. “This is nothing more than a corporate housecleaning exercise prior to the company split.”
In addition to resigning as a director of News International -- the publisher of the Times, the Sunday Times and the Sun newspapers in the U.K. -- Murdoch left the boards of Newscorp Investments and Times Newspapers Holdings, according to U.K. regulatory filings.
Bloomberg cites “shareholder pressure” as the cause of the split of News, but the more likely scenario is quarantining the loss-making print media. The Murdoch family and its allies on the board have absolute control of the decision making process.
Murdoch, in fact, has himself been scathing about the returns from the newspaper division for years. The print part of News Corp is small, expensive beer compared to FOX and other News Corp entertainment assets. The very high prestige value London Times, acquired by Murdoch in the early 80s, is the jewel in an otherwise rather tatty selection of turgid tabloids. At the bottom of the heap was The News of the World, justification if ever there was for a rationalization of the print media business model.
The irony is that the News Corp papers, as online businesses, would have far lower overheads. The obsession with print in new publishing is truly remarkable in an era where people only buy hard copy if they have to, and print costs are gigantic in relation to the eternally shrinking revenue newspapers generate.
Leaving a sunken ship makes sense. Further rationalization of the print media is to be expected, although local news interests are obviously likely to be part of any big restructuring. It also looks like the group restructuring is likely to affect the rest of the News group in a streamlining exercise. It doesn’t really stack up to create a simple split of existing interests without doing some value-adding in terms of the management tier of the group.
The general theory among News Corp watchers is that Murdoch wants to distance himself and News Corp from the UK mess, but that’s really not looking hard enough at the bottom line. Print revenues have dropped 32% in the period 2008-11. Adding payouts to people with hacked phones hardly helps. It’s possible that the print section is being isolated for sale, or to ensure better controls of future moves. Sale is unlikely in the short term, but the control issues are obvious.
Looking for a better model
There’s another factor- News Corp may well have outgrown its original model to the extent that the print media are like the wrong size short pants, worn for a few years too long- They just don’t fit any more and are starting to look ridiculous. Some tailoring will certainly be required to fit News Corp in future decades.
Ironically, Australia’s News Corp papers, where News Corp started, may be the future model of the group’s print interests. These papers are highly competitive with their opposition, well-established and highly diversified in terms of their revenue streams.
This group includes:
The Daily Telegraph
Many other Australian local and city newspapers around the country
The News Network- An instant link to other News Corp interests (there are many of them, all listed together.
News Australia is a very efficient, straightforward grouping of operations. I know from experience talking to News Corp staffers myself about commercial issues like press releases that they’re very well organised and that things get done very quickly. No sign of organisation senility at all in daily business.
The news print media should be watching very closely how Murdoch resuscitates his print interests in this new move. The joke is that Murdoch, for so long the ogre/tyrant of news media, is likely to be the one that finds the way out of the jungle for everyone else. One of the reasons for that situation is that nobody else even seems to be looking for a way out. The AP group, the main News Corp rival in the US, simply followed Murdoch’s paywall with its own paywall. Everyone else seems to be happy to go broke while bleating about costs.
If you follow the very bumpy ride news media have been having for the last 10 years, keep an eye on how the News Corp split pans out. It will be very interesting to see what they produce as the new model.
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