By paulgillin | June 24, 2008 - 7:47 am - Posted in BusinessModel, Murdoch, NewMedia, Newspapers

Rupert Murdoch (Forbes photo)Could Rupert Murdoch save the US newspaper industry? He may have his chance sooner than anyone imagined because things are worse than anyone predicted

The New York Times sums up the industry’s recent gruesome financial news and speculates that continued losses are “raising serious questions about the survival of some papers and the solvency of their parent companies.” Richard Perez-Pena’s piece says that 14% revenue declines in May against already weak 2007 numbers were worse than anyone expected and no one knows where the bottom is. While analysts agree that the bleeding has to stop sometime, they have no idea how bad things will get before that time arrives. With debt defaults looming, the most likely scenario is that weak players will consolidate with stronger ones.

If consolidation is the trend, then who will be the consolidators? Looking at the current sorry lineup of candidates, News Corp. looks like the only logical winner. If Rupert Murdoch plays his cards right, he could end up sitting on top of a much bigger empire than anyone envisioned when he made his daring bid for The Wall Street Journal less than a year ago.

Murdoch and his COO, Peter Chernin, were at the Cannes International Advertising Festival last week and were asked about the industry downturn. “We are going to plough right ahead and hopefully increase our share of the market wherever we can,” Murdoch said. Chernin added that it was “time to take market share if weaker competitors go away.”

That time may be soon. There is widespread anticipation that either Tribune Co., McClatchy and/or Philadelphia Media Holdings will default on loan covenants this year, which would immediately put them in play. Journal Register and Sun-Times Media Group are on life support. These companies collectively represent scores of US newspapers that could conceivably be bought for pennies on the dollar within the next year.

And who better to buy them that News Corp.? The company has a diversified media business with strength in its Fox television holdings and MySpace social network. Murdoch is confounding his critics by messing with the inviolate Wall Street Journal editorial model and actually gaining market share against The New York Times, which must be freaking out right now. Sure, Murodch walked away from the bidding for Newsday, but perhaps he’s simply waiting for a much bigger opportunity: the chance to own a publishing empire that includes Chicago, Los Angeles and much of the southeastern US. With Tribune and McClatchy, he’d have that. For a few dollars more, he could add Journal Register’s extensive midwesern holdings and the Philadelphia Inquirer.

With that kind of throw weight, Murdoch could do some interesting things to leverage economies of scale. And those properties could do a lot worse than to have Rupert as the boss. When you consider the alternative scenarios of bankers or professional investors taking over businesses they know nothing about, then the prospect of ownership by a savvy and successful media tycoon looks pretty palatable. As controversial as Murdoch’s tactics sometimes are, the man has a remarkable track record and a vision for the future of media. He is also one of the few publishers in the world who is investing in newspapers right now. Over the next 12 months, Murdoch could have an unprecedented opportunity to turn his vision into action on a much larger scale.

What do you think? Please weigh in with your comments.

Comments

comments

This entry was posted on Tuesday, June 24th, 2008 at 7:47 am and is filed under BusinessModel, Murdoch, NewMedia, Newspapers. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

Comments Off on Is Murdoch the Industry's Savior?

Comments

  1. June 24, 2008 @ 11:15 am



    Newspaper Death Watch Asks: Murdoch Industry Saviour?

    Seems plausible … radically reworking existing models seems like something that needs to happen and something Murdoch is willing to do, especially considering the diversified media power he controls. Paul Gillin writes "[…] Murdoch could do …

    Posted by Ernesto Burden
  2. June 26, 2008 @ 8:19 pm



    If the only one left to save the the industry is Murdoch, I think it would be better to just let it die.
    Murdoch is evil.

    Posted by ChrisM70