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Erik Wemple
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Posted at 04:50 PM ET, 07/11/2011

News flash: News Corp. not crumbling

There’ll be no erasing the voicemail-hacking scandal that’s rocking News Corp. Monday brought fresh allegations that journalists under Rupert Murdoch’s corporate umbrella targeted former Prime Minister Gordon Brown through various unsavory avenues. Bank account? Check. Legal file? Check. Family medical records? Check. Voicemail-hacking attempts? Of course.

London is erupting, and so is the media.

Wrapped in the news about Brown is the shocking revelation that News Corp. titles other than News of the World — last week’s scandal sheet — practice unethical journalism. The Sun and the Sunday Times are star players in pursuing the former prime minister.

Now cue the frothing and apocalyptic coverage.

The Mirror reports that Rupert Murdoch traveled to London to “save his crumbling empire.”

The Independent asks, “Is the age of the Murdoch establishment nearly over?”

ABC wants to know: Will “Murdoch’s company go down?”

When writing about the failure of tabloid sensibilities, it’s best not to succumb to tabloid sensibilities. Murdoch’s crumble-resistant empire will be just fine, as anyone who’s read this document will attest.

It’s the company’s annual report, the subject of a previous blog post. One lesson from the report: Britain cannot threaten News Corp. It can harrumph; it can preach; it can launch “inquiries”; but it is too much of a little rancho to puncture News Corp.

Here’s why: In 2010, about a quarter of the company’s $32 billion in revenue came from films — such as Alvin and the Chipmunks: The Squeakquel. (No evidence that the Chipmunks phone-hacked the Chippettes before the Battle of the Bands.) Another 20 percent of revenue came cable tube, meaning, essentially, Fox; another 13 percent from Fox broadcast television. Get the idea?

As Murdoch himself boasts, 2010 was a good year for News Corp. Among the few dark corners of the document is this: “For the fiscal year ended June 30, 2010, the U.K. newspapers’ revenues decreased 2% as compared to fiscal 2009, primarily due to lower circulation revenues . . .

So here’s a scenario: The British public outcry about News of the World, the Sun and the Times forces the company to bail on those properties all together. Good! News Corp. dumps money-losing/marginally profitable newspapers. At the same time, it retains its state-of-the-art British presses, printing the titles of any outfit that wants to distribute newsprint. The Telegraph is already on board. None other than the Guardian has gushed over just how sleek the machines are. As long as newsprint is consumed in Britain, News Corp. will profit. Thus it goes with this company, where crises spend little time converting to opportunities.

And in a story full of ironies, here’s one more: Murdoch used his acquisitions of English newspapers to fuel an international march across the mediasphere. In turn, his company fattened itself on revenue from entertaining Americans.

Now he could afford to overpay to acquire other properties he wanted on his roster. He wanted the Wall Street Journal, so he paid $5 billion for its mother company, Dow Jones. It was worth a fraction of that.

Why the premium? Because the Bancroft family didn’t trust Murdoch and his history of unethical journalism. Call it a corruption tariff. That tariff just got a boost from News of the World and voicemail hacking.

The tariff is visiting News Corp.’s campaign to buy a greater share of British Sky Broadcasting. The transaction must undergo a sticky regulatory process, one that parliament members today shouted about in a raucous hearing, with one member saying that it’s “time we sent this nontaxpaying Murdoch [to] whence he came.”

Murdoch, it should be noted, already has a controlling stake in British Sky Broadcasting. But at News Corp., controlling never suffices. One must dominate.

By  |  04:50 PM ET, 07/11/2011

 
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