Murdoch Says the Gain of Buying The Journal Was Worth the Pain
Friday, August 10, 2007
Rupert Murdoch wanted the Wall Street Journal badly enough to endure a summer's worth of hurt feelings.
"That's . . . why I spent the better part of the past three months enduring criticism that is normally leveled at some sort of genocidal tyrant," the 76-year-old global media tycoon said yesterday during a conference call on News Corp.'s fourth-quarter results. "If I didn't think it was such a perfect fit with such unlimited potential to grow on its own and in tandem with News Corp. assets, believe me, I would have walked away."
News Corp. plans to close its $5.6 billion purchase of Journal parent Dow Jones by the end of the year and then hit the ground running.
Murdoch said he would move "fairly quickly" to sell the Ottaway community newspapers division, a chain of eight dailies and 15 weeklies that merged with Dow Jones in 1970. Ottaway has papers in New England, Pennsylvania, Oregon and California. Small dailies and weeklies are the sole bright spot in an otherwise declining industry, but Murdoch bought Dow Jones for the Journal and its ability to sell national and international financial news.
None of the Ottaway papers is geographically close enough to Murdoch's New York Post to effectively combine printing facilities to help reduce losses at the Post. When Tribune Co. was on the block, Murdoch had said he'd be interested in joining a bid for the company to get access to the production facilities of Newsday, the Long Island daily owned by Tribune.
Newspaper analyst John Morton pegged the value of the Ottaway papers at $140 million to $160 million and said they could be sold as a unit or individually. Dow Jones sold six of its Ottaway papers last December to Community Newspaper Holdings for $288 million.
Murdoch said News Corp. plans to spend money to beef up the Journal's U.S. and overseas editions quickly. He ruled out staff reductions.
"I think certainly we don't ever need firing plans at all," he said. "If people have been saying that it's against their principles to work for me, we'll of course respect that if they wish to leave. But we're going to be in a hiring mode almost immediately."
News Corp. plans to use the Journal and its reporters to help start Fox Business Network (FBN), a rival to the CNBC cable business news channel, in October. CNBC, however, has a content-sharing contract with the Journal that runs through 2012.
Murdoch called the contract "an obstacle," but said there was no plan to buy it out when he takes control of the Journal. He said a workaround could be possible that would enable the Journal and FBN to "mutually benefit."
For News Corp.'s fiscal fourth quarter, when ended June 30, the company reported a profit of $890 million on $7.37 billion in revenue, up from $852 million on $6.78 billion in revenue in the comparable quarter last year.
For the fiscal year, News Corp. earned $3.43 billion on $28.7 billion in revenue, up from $2.31 billion in profit on $25.33 billion in revenue for fiscal 2006.
Fourth-quarter results were driven by improvement in the company's cable and satellite television divisions, which offset a downturn in the film division, Twentieth Century Fox studios. Operating income at the company's broadcast television division was down for the year, and News Corp. has said it will sell nine of its smaller stations to reduce its exposure in the relatively flat U.S. broadcast market.
Murdoch said Fox Interactive Media, the company's online division, which includes MySpace, FoxSports.com, AmericanIdol.com and other properties, became profitable for the first time in the past fiscal year. He noted that MySpace had its most popular day ever last week, recording 4.3 billion page views.