Rupert Murdoch is a) addicted to newspapers, b) addicted to power, c) needs to break the rules, or d) all of the above. Murdoch's interest in buying Newsday, despite owning the New York Post, Wall Street Journal and 2 New York City TV stations has evoked a lot of emotion. It has all the makings of a power play to be the dominant producer of news and editorial to the New York region. It has the feel of a company determined to really step up the heat on the New York Times. It is a move that is completely in the face of the FCC. But, does it further his efforts in digital? Does it help his shareholders?
On one level, Murdoch has always been about newspapers whether in Australia, the UK or the US. He paid a mighty sum for the Wall Street Journal and I, for one, was relieved that the paper was in the hands of someone who respects newspapers and news. There was a lot of hand wringing around that deal and what kind if editorial control Murdoch might exert; it hasn't taken long to find out, (please note the recent departure) but at least it has been pretty obvious. The changes in the paper have also been clear. As the paper migrates towards more of a general interest publication, and more of a direct competitor to the New York Times, one can wonder whether it will remain as relevant to its core readers.
One also has to wonder if his plans for the WSJ are really in the interest of his shareholders. It is less than clear that there will be a great return both based on what was paid as well as the due to the long term prospects for the industry. While monthly stats are no longer available, double-digit declines in ad revenues in March at the New York Times does not bode well, nor do the double-digit declines experienced at many large metropolitan papers. The WSJ will be less impacted by the declines in employment and real estate listings being posted elsewhere in the industry but will still feel the downdraft from potentially weaker consumer spending.
Based on the historic focus of the WSJ on the financial markets, one could have argued that it could outperform the industry longer term as it was must have information. Its online offerings also made sense and were able, in contrast to most, to charge for subscriptions. These points made Murdoch's acquisition slightly more palatable but, in my view, the migration to more general interest content carries some risk, although the focus could remain online. More after the jump
The New York Post is a somewhat more whimsical paper and more in line with the tabloids Murdoch owns elsewhere. Circulation has performed well under his ownership proving that a more entertaining read sells.
Ownership of Newsday would extend Murdoch's ownership in the region; there is likely little overlap of Post and Newsday readers, especially as the latter generates almost all of its circulation on Long Island. Prior efforts to extend Newsday's readership into NYC were not wholly successful. It is a solid franchise that, like its peers, has fallen on hard times. Ownership by Murdoch could lighten it up a bit and, one has to wonder, if Murdoch would plan to try to bring it back into the city to compete against the Daily News.
It isn't hard to envision some type of joint production of all of Murdoch's print properties in the region as well as joint distribution and sharing of news. Cross promotions of the three truly distinct print properties could have some positive, albeit likely modest, circulation impat but adding in cross promotion with the stations could prove more beneficial. Clearly, this is an industry that has fallen on hard times, making it tough to imagine why Murdoch or others would want to buy in but also making it essential that there is a plan to reduce costs. Yet having noted this, it doesn't feel as though the motivation to own Newsday is purely economic in its foundation.
Murdoch is an openly competitive person as is his organization. He seems to want to show both the industry and the New York Times what he is made of. Just being successful at any of these individual properties would be a worthy goal and a way to jab the industry.
While many will bemoan the consolidation this would seem to represent, not the least of which will be the FCC, it could be a model for what needs to happen nationally. Is it conceivable that too much news is being created that can't all be supported by advertising? The ability to cross leverage news production across multiple vehicles is compelling and probably preferable to losing an individual property's voice altogether.
It is hard to imagine that the FCC won't try to shut this idea down, or some government organization, but then again, it is Murdoch. He doesn't get shut down often. In fact, this feels like a defiant act against the FCC as if to really push the issue once and for all. He has a temporary waiver for his second TV station; trying to purchase another local newspaper (v. the national Wall Street Journal) could put that waiver at risk.
As someone who would like to see the FCC cross-ownership rules relaxed, I still have some hesitation about Murdoch owning this many properties in one region. I have already found that I read the WSJ with more skepticism, trying to ascertain his motivations for choice of coverage or lack of coverage (e.g. readers of the Wednesday edition in Ohio were not informed as to who won the Pennsylvania Democratic primary). I would have concern about his using the power of the press to promote his own agenda. I think the FCC will have a hard time accepting this but question whether they can withstand any potential pressure to push it through to save another newspaper.
If I were a NWS shareholder, I would be angry. The average NWS shareholder doesn't own it for its newspapers; in fact, they likely own it despite the newspapers. They own it for the promise of digital and other NWS businesses. Newsday wouldn't appear to further the digital interests, the area in which the WSJ competes online is crowded. So, perhaps, it is all personal in the end.
Lauren Rich Fine is a Practitioner in Residence at Kent State University's College of Communication and Information. Until recently she was a Managing Director at Merrill Lynch in Equity Research.
By Lauren Rich Fine