News Corp Now Atop News Industry - and Making Moves Like a Leader
Important Details: News Corp, which became the number one news company worldwide in 2008, is asserting its leadership among its peers. News Corp now is the worldwide leader in news revenues, according to the recently released Outsell report, News Providers & Publishers: 2008 Final Market Size and Share Report, July 28, 2009. It totaled almost $6.8 billion in news-related revenues, even though news revenues account for only 20% of its diversified (cable, broadcast, satellite, movies) News Corp’s overall revenues. It is also one of the most global of news companies with 45% of its revenues in UK/Europe, 37% in the US, and 18% in Australia. For the first time it has passed the long-time global revenue leader, Gannett, due to its December 2007 purchase of Dow Jones.
Yet the News industry is still highly fragmented. As leader, News Corp has but a 5.5% global News market share, with Gannett now at 4.9%. No other company can claim more than 3%.
News Corp CEO Rupert Murdoch is making his voice increasingly heard in this fragmented world.
He’s made new headlines over the last month, as he has moved his company into a lead dog position in the paid content derby.
First, he surprised many by commenting, on an Aug. 5 News Corp earnings call, that his company’s websites would be moving to a paid model within a year. That comment has electrified an industry that has spent the better part of 2009 debating the pros and cons of forcing readers to pay for online content and in evaluating would-be payment platforms and middleman companies.
It turns out that was just a prelude. Since then, News Corp’s moves have been coming fast and furious.
First, word emerged that his London-based Sunday Times would launch a paid product, probably in November.
Then, we heard that he was closing his three-year-old afternoon free tab, The London Paper (500,000 circulation), after enduring $21 million in losses over the past 12 months.
Then, News Corp hired Goldman Sachs to shop the Dow Jones Indexes, an age-old B2B business.
Finally, it’s been reported that News Corp has been rallying big US news companies — including the New York Times, the Washington Post, Tribune, Hearst and maybe others — around the idea of a paid content news portal. While none of the potential partners are talking — and know they are being scrutinized by a revitalized U.S. Justice Department Anti-Trust Division under Christine Varney — it looks like the portal idea would be Hulu-like, which as Outsell recently suggested (see Insights, Hulu Points a Way Toward iTunes for News, June 3, 2009) may be the only way to effectively get consumers to pay for news.
Implications: At 79, Rupert Murdoch has emerged atop the news world, driven by the singularity of ambition and a sense of deal-making that surpasses most of his peers. It’s a rich irony that just as he’s arrived on the top of the heap, the heap is shaking like jelly, down 25% in revenues year over year, and unsure how to make a sustainable, profitable future in a world certain be more digital than print-based.
The flurry of News Corp moves signal that Murdoch understands that time is his company’s greatest enemy, as he makes new plans after a $2.8 billion writedown related to the Dow Jones-related acquisition and a recently announced $3.4 billion annual net loss for the company overall. Yes, a budding economic recovery may offer a bit of a breather — consumer recoveries bring more consumer advertising — to beleaguered publishers, but the problems of the news industry are so deep as to require unprecendented action.
Like US Federal Chief Ben Bernanke last year, Murdoch appears to be pulling out all the stops, knowing that some of the moves may work and others won’t, but that it’s almost impossible to separate them out at this point.
Close free print, in the tepid and declining print ad market. Test out a paid online site. Stake out a paid future — but make sure you’ve got your colleagues on board before you fully embrace it.
Outsell welcomes the urgency that Murdoch brings to the industry. Despite what we believe will be a 12- to 18-month respite for news publishing, given a bit of float in an up economy, the transformational issues of a downizing industry that still derives more than 85% of its revenues from print (see our Market Report, Top 15 US News Companies: Print-To-Digital Market Size and Share, July 21, 2009) demand such urgency.
What’s critical, of course, is how that urgency is expressed.
In News Corp’s case, we’d have to give the CEO’s team an incomplete in acting on the post-Dow Jones vision of an integrated, worldwide print-and-digital news and information company. News Corp’s Dow Jones websites –WSJ.com, Marketwatch and Barrons — call out for out for better individual consumer identity, better nesting and niching of the brands and their offerings. Its WSJ mobile app was late to the market, and while it offers video, it lacks some social features that other national sites offered earlier. The company’s new Fox Business Network cable channel is struggling to find enough viewers to officially land in ratings data. MySpace, once seen as confirmation that an aging Murdoch “got” the web, has fallen behind the Facebooks and Twitters in momentum. Synergies — long the promised fruit of merger and acquisition — have been much more elusive in real life.
On the plus side, News Corp is laying a smart new foundation, moving its news production into a more efficient publish-once, distribute-many-times system, powered by Eidos Media. Murdoch has made the quite justifiable point that publishers must try to control their own destinies, staying out of the Kindle newspaper test, as Amazon demands 70% of revenues and wants to maintain direct customer relationships. And, of course, News Corp continues to build on the success of the paid/freemium WSJ.com site, pulling in about $100 million a year in subscription fees that are the envy of the industry.
As summer ends, and publishers make real decisions — some with long-lasting consequences — on pay walls, portals and partnerships, they’d do well to separate out the needs of the moment and those of real, long-term impact. Rupert Murdoch makes a fine and highly watchable Pied Piper, but publishers will do well to evaluate track records as they follow along on his path.